Data published by Markit and the Chartered Institute of Procurement & Supply (CIPS) found that commercial building experienced the steepest fall in over six years, while civil engineering activity fell for the first time in 2016.

Residential construction also declined, though the rate of contraction slowed after experiencing a three-and-a-half year low in June.

Randeesh Sandhu, CEO at development lender Urban Exposure, said: “The UK construction sector has felt the force of Brexit.

“The sector has significantly slowed on the back of political and economic instability causing investors to pause on investment decisions and firms have been left wary of investing or expanding.

“It is therefore imperative that the new cabinet provides a clear direction for the UK to calm markets and increase stability so that further delays to investment decisions are prevented.”

David Noble, group chief executive at CIPS, explained that a weaker pound drove material costs upwards at the fastest pace since March 2015 and purchasing activity fell for the second consecutive month.

“The picture is still unclear around whether this direction is fixed for the coming months or is a short-term reaction and the aftershock of the UK’s referendum decision,” David added.

Tim Moore, senior economist at Markit, admitted that construction firms had reported economic uncertainty as having a material negative impact on their order books.

Reduced volumes of new work also led to a fall in employment for the first time in over three years.

However, with order volumes and purchasing activity both dropping at a slower pace than in June, Tim suggested there may be light at the end of the tunnel for construction firms.

“There were also some reports that demand patterns had been more resilient than expected given the uncertain business outlook.

“Construction firms generally suggested that clients had adopted a wait-and-see approach rather than curtailed or cancelled forthcoming projects during July.

“While there is little to suggest an imminent turnaround in business conditions, a relief factor appears to have softened the fall in business optimism among UK construction companies.”