There was little to cheer about when the markets closed last week. Shares across most of the construction and building materials sector dropped, pushing the sector overall down 2% to 2924.

The sombre mood deepened when the government unveiled plans in the Queen’s speech for a corporate manslaughter bill that may threaten company directors with imprisonment or fines.

In the support services sector Jarvis suffered yet another blow when problems emerged on two of its remaining contracts, one a hospital project in Highgate, north London, and the other at Lancaster University. Its share price dropped 10% to 11p.

Further misery was heralded by contractor MJ Gleeson, which announced a reorganisation of its construction arm that involves a closure of two offices, costing an estimated £4-5m. But the price of its shares dropped just 1% to 206.5p, partly because Gleeson had forewarned the City when it announced its annual results in October.

With bad news abounding, it is little wonder that the sector was down last week. Housebuilders were among the most badly hit, not helped by a damning report published by rating agency Fitch. It warned housebuilders that they faced heightened financial and political pressures, “which could cause profound and far reaching change”. Shares in Persimmon and Westbury fell 6% to 618p and 376.75p respectively. Shares in Bovis Homes fell 4.7% to 505p. The other major housebuilders were hit, though to a lesser extent. But the toughening market will mark out the men from the boys, giving companies the opportunity to show their strengths.

Companies like Crest Nicholson, which has marked itself out as a high-quality regeneration specialist, are ahead of the pack. Crest’s shares fell 2% to 338p but longer term it has ridden the peaks and troughs and carved out a successful niche. Government backing is likely to assist such housebuilders through the flat market that is likely to lie ahead in the next couple of years.

On a positive note Galliford Try was one of few companies that saw its shares rise last week. They increased 5.5% in price to 53p.

The All-Share fell less than 1% to 2362.

Angela Monaghan is business editor