Growth in the construction industry slowed to its lowest level for 16 months in January.

Data from the Chartered Institute of Purchasing & Supply (CIPS) said its construction activity index fell from 56 in December to 53.9 last month. A figure of 50 shows no change from the previous month, a figure above 50 denotes a rise and below, a decline.

The report said the figure was “at a level indicative of a solid increase in activity, although the rate of growth was the weakest since September 2006”.

Roy Ayliffe, director of professional practice at the CIPS, said: “Concerns are growing over a slowdown in the housing and general economic market, which is beginning to affect new orders.”

Growth in orders dropped to its lowest rate in 11 months, to 56.2 from 58.8 in December. Confidence was at its lowest since December 1998, with future activity reports falling from 66.3 in December 2007 to 64.6.

Although the decline prompted some to call for an interest rate cut this week, Kevin Cammack, an analyst at Kaupthing, said the survey was one of many factors to be considered by the Bank of England. He said: “It could be one of a hundred things that comes into their thinking.

He added: “I think there is a slowdown rather than anything going into reverse.”

The report says firms continued to increase their purchases of materials in January, which meant delivery times lengthened.

Meanwhile, figures from Savills have shown a sharp downturn in commercial development. Its index figure for overall activity in the UK commercial property sector fell by 14.5% in January. This was the third drop in a row.

The figures showed 23% of commercial developers reported a fall in activity in the month, which the majority put down to deteriorating confidence in the economic climate.