Construction growth at six-month low

LONDON (Reuters) - The construction sector grew at its slowest pace in six months in August, a survey of purchasing managers showed on Thursday, hurt by a marked loss of momentum in residential construction.

The Markit/Chartered Institute of Purchasing and Supply construction PMI slipped to 52.1 in August from 54.1 in July. That was below the consensus forecast of 53.2 and more than six points below peaks scaled in May.

Official data last month showed British construction output jumped 8.5 percent between April and June, its best showing since 1982, but the more forward-looking PMI survey suggest this pace of growth will not be maintained.

Employment within the UK construction sector decreased for a second consecutive month. Confidence steadied after a sharp fall in July but remained subdued by historical standards.

"Those who are looking for signs of a slowdown will find plenty to worry about in this month's construction PMI," said CIPS chief executive David Noble.

"The most disturbing is the marked slowdown in the residential sector as this is where much of the recent sector growth has come from. The slight increase in public sector activity disguises continuing uncertainty about the scale of spending cuts which we have yet to experience."

Britain's coalition government, in power since May, has made tackling the public deficit its top priority and spending on infrastructure and public buildings is expected to be severely curtailed over the coming years.

The house-building index fell to a 10-month low in August, suggesting it is being affected by a weakening price outlook. UK house prices fell 0.9 percent in August after a 0.5 percent decline in July, the Nationwide building society reported on Thursday.

"The housing sector was the first to return to growth last year and its sudden weakening will heighten fears that the housing market is entering a period of stagnation, if not outright contraction," said Simon Hayes, UK economist at Barclays.

Construction activity accounts for just over 6 percent of Britain's national output.

(Editing by Ruth Pitchford)