Construction activity in the UK fell at its fastest rate in 11 years, in the fourth consecutive month of decline.

The Chartered Institute of Purchasing and Supply (CIPS) said its Construction Purchasing Managers Index, which measures activity in the sector, shrank from 43.9 in May to 38.8 in June - the largest fall since records began in April 1997.

A reading below 50 indicates that activity is contracting, and today's shrinking figures emerge as Taylor Wimpey, Britain's largest house builder, admitted it has failed to secure nearly £500 million in emergency funding as demand for its houses plummets.

CIPS said the house-building index contracted substantially in June, for the seventh month running, dropping to a record low of 25.6 from 32.7 in May.

CIPS revealed that employment in the construction sector had fallen after nearly two years of growth, as Taylor Wimpey said it would cut 900 jobs.

The institute said: "The performance of the housing industry was by far the worst, with activity levels falling steeply.”

Howard Archer, chief UK and European economist at Global Insight, said: “With the housing market set to deteriorate further, the commercial property sector in dire straits and government finance for infrastructure projects limited, the construction sector looks to be in for an extended, very difficult time.”

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