The volume of construction projects, such as the installation of security fencing
, dropped during the last three months of 2010, according to data from the Royal Institution of Chartered Surveyors.
Its latest Construction Market Survey shows that spending cuts and a lack of commercial finance hit the industry hard.
Five per cent more surveyors reported construction workloads as falling rather than rising during quarter four - that is an improvement on the figure reported between July and September; however, figures vary significantly when looked at from a UK-wide perspective.
Northern Ireland and Scotland, for example, recorded the largest falls in activity with net balances of -52 and -23 respectively.
The South East/London region was the only area in the UK to report positive activity.
What's more, the cost of material rose significantly, with 56 per cent more surveyors reporting a rise in costs.
Last month, steel giant Tata said it would raise the cost of steel by £95 per tonne, blaming the impact of the recent Australian floods.
"The rebound in the construction sector seems to have run out of steam," RICS chief economist Simon Rubinsohn said.
"Although bad weather at the end of the year will clearly have had some impact on responses to the survey, the bigger picture here is of an industry under significant pressure as public spending cuts begin to bite, while there is little sign of a private sector recovery across large parts of the country."