While commercial activity continued to grow and at a stronger rate than December, housing and civil engineering activity both contracted. Employment in the sector was flat after rising for the previous four months.
Andrew Duncan, director of property at the construction consultancy Turner & Townsend, said January was typically an upbeat month for the sector, and said the disconnect between a fall in employment and rising confidence reflected increasing opportunities but strong price competitiveness.
"Early indications for 2012 are that things have improved since the last quarter of 2011 - and that more work is coming down the pipeline. Certainly there are more bidding opportunities about, even if there is intense competition on price," he said.
"And that's why the encouraging levels of confidence are still not being converted into anything more than meagre levels of new business."
Economists said the survey showed the construction sector was losing momentum.
"Whether the construction sector is expanding modestly or contracting modestly, it undeniably currently faces an extremely challenging environment," said Howard Archer, chief UK economist at IHS Global Insight.
"In particular, the Government's spending cuts are limiting overall expenditure on public buildings, schools and hospitals. On top of this, house building activity is likely to be constrained by persistently weak housing market activity, soft prices and a worrisome outlook."
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