ACTIVITY in the construction sector came within of whisker of stagnation last month, sliding to a four-month low as housebuilders endured a tough start to the year.

The latest Markit/CIPS UK construction purchasing managers' index (PMI) recorded a reading of 50.2 in January, down from 52.2 in December, with economists predicting a figure of 52.0.

Any reading above 50 separates growth from contraction.

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In a gloomy update, the industry saw housebuilding activity shift into reverse and growth in commercial and civil engineering stutter as market uncertainty took its toll on new orders.

It comes after output in the manufacturing industry unexpectedly slipped in January as the industry grappled with a double-whammy hit of slowing growth and escalating costs.

Sam Teague, economist at IHS Markit, which helps compile the survey, said: “January’s PMI data indicated a difficult start to 2018 for the UK’s construction sector, underlined by business activity growth slumping to a four-month low and new orders sliding back into decline.

“A contraction in housebuilding added to lacklustre commercial building and civil engineering markets, and reduced inflows of new work suggest overall activity could slip into decline in February.

"Furthermore, cost pressures remained intense, fuelled by shortages of input materials and high costs for imported products."

Employment was also struggling across the industry, drifting to an 18-month low in response to the fall in activity.

Despite the cheerless performance, firms said they were feeling more confident about future growth and expected a jump in the number of new projects.

The PMI update comes after the latest slew of official data showed Britain's economy unexpectedly rose in the fourth quarter.

The Office for National Statistics said gross domestic product grew by 0.5 per cent in its initial estimate for October to December, following growth of 0.4 per cent in the third quarter.