Purchasing activity in the construction supply chain has increased slowly, while the skills shortage damages delivery times and recruitment.
The latest research from business analysts IHS Markit tracks construction activity for 13-30 August.
It shows that purchasing activity increased for the eleventh consecutive month in August, but at its slowest rate since March.
Low stock and labour shortages continued to have an impact on delivery times for products and materials, which reached their lowest in almost three-and-a-half years.
However, despite stretched supply chains and rising energy costs, price inflation decreased to its lowest in two years.
There was a modest overall rise in construction activity, but growth has slowed as builders have mostly caught up with projects that were delayed at the start of the year due to the adverse weather.
Commercial building was the best performing area, closely followed by residential work. Housing activity has slowed to its weakest since March.
Civil engineering projects decreased for the first time in five months, which a number of survey respondents said was due to a lack of new work on infrastructure projects.
Higher workloads led to increased recruitment, but respondents said that the skills shortage was making it difficult to find suitable candidates.
Construction companies said they were “optimistic” that business activity would expand over the next year – but Brexit uncertainty was their biggest worry.
S.M. Lodha, Chairman of Western Thermal Group, said: “The UK government needs to do more to reassure businesses and build confidence within the sector.
“Small businesses in particular will be hesitant and risk adverse to investment in these times of uncertainty.
“They will need reassurance that exporting will allow business growth and sustainability post-Brexit, in order to make the most of investment and export opportunities so the UK can improve its competitiveness in the market.”
Read the full report here.