CONSTRUCTION orders dipped sharply in the second three months of this year as new data provided another jolt to the UK economy.

The figures from the Department of Trade and Industry (DTI) show orders fell 16 per cent against the previous three months and by 12 per cent compared with the same quarter a year ago.

The decline reflects strong performances in previous quarters, although analysts believe it also mirrored a general squeeze in confidence.

Simon Rubinsohn, chief economist at Gerrard's stockbrokers, said firms' finances were also being diverted by wage deals in a tight labour market.

He said: "This is more evidence that things are not going so well in the economy.

"It is not good news, but not necessarily indicative of where these sectors are going just yet."

The figures come in the week thatnew data confirmed the manufacturing sector was officially in recession.

The Bank of England failed to provide any comfort on Wednesday as its quarterly report indicated the economic downturn may have further to go.