Residential construction activity fell again in October, indicating that the sector’s improved performance in the first half of 2010 may now be reversing, according to a new survey.

“The decrease in residential construction was solid and the second in successive months,” the Markit/CIPS construction report says.

Overall, it says October data provided further evidence that the recovery of the UK construction sector peaked in the summer.

Markit/CIPS’ index reading of 51.6 in October was the lowest in the current eight-month sequence of expansion. Only the commercial sector reported a rise in activity.

Construction companies also announced a further round of job cuts.

New order books did increase during October, though the rate of growth eased for the fifth consecutive month.

Anecdotal evidence suggested that the volume of new tender opportunities was decreasing, as customers were reluctant to commit to new projects.

“The recent growth in the construction sector seems to be petering out,” said CIPS chief executive David Noble.

“Further declines look inevitable as nervy customers and a spendthrift public sector put firms in a precarious position. Construction will have to look much harder for new contracts going forward, so it’s no surprise that many are cutting jobs and reducing purchasing activity to provide a safety net against further falls.

“The high hopes of earlier in the year seem to have given way to dire predications on what the future may hold.”