Ongoing economic uncertainty is putting the brakes on new building projects, with firms reluctant to take risks.
As a result, UK construction activity slowed in July to its lowest levels in almost a year.
Construction firms have reported that clients are failing to push ahead with planned projects. This has led to a slowing down of employment growth across the sector, while the fall in value of the pound has increased the cost of imported materials.
Chief Economic Adviser at EY Item Club, Howard Archer, said: "Weakened economy activity, a lacklustre housing market and appreciable economic and political uncertainties threaten to be a damaging combination for the construction sector over the coming months."
In March's Spring Budget, Chancellor Philip Hammond stressed the need to boost productivity levels and announced the government's commitment to further investment in technical education.
The Chancellor also unveiled measures designed to boost house-building and infrastructure, as the housing shortage continues.
However, Duncan Brock, from the Chartered Institute of Procurement and Supply, said: "Housing, the shining light of the sector, eased marginally, but produced the slowest growth since April, as parallels with the darker days of Brexit, worries about the UK economy and post-election uncertainty can be seen across the construction sector."
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