Contraction has returned to the construction industry, according to buyers.

A new report from Markit has shown a drop in confidence in the market due to a lack of new business to replace completed contracts.

The Markit/CIPS UK Construction Purchasing Managers’ Index fell to 49.3 in November down from 50.9 the previous month.

A figure below 50 indicates contraction in the market. The index has hit its lowest level since August.

As a result, the outlook for the next 12 months seems to show a severe drop in confidence, the like of which has not been seen since the near-record low seen in December 2008.

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David Noble, Chief Executive Officer at the Chartered Institute of Purchasing & Supply, said: "Parallels to darker days of the economic crisis can be seen in the construction sector, which is under pressure from all sides. Businesses are now set for a bitter end to 2012 with little hope of respite in the New Year.

"Jobs have been slashed in response to the fastest fall in new orders for over three-and-a-half years, confirming the sector’s return to contraction and the lowest levels of confidence seen since the height of the economic crisis in 2008.

"House building continues to witness falling levels of activity and the commercial sector, the shining light of construction earlier this year, is contracting at the fastest pace since late-2009.

"Civil engineering continues to be the one slither of growth in the sector.

"To add insult to injury, input price inflation eased only marginally from the ten-month high in October, courtesy of high fuel and energy costs, leaving the sector in a difficult place as it searches for relief ahead of 2013."

(IT/GK)