BRITAIN'S construction industry, which accounts for 6 percent of the economy, shrank in April at the fastest pace in at least 11 years as home building slumped, a survey has shown.

An index based on a survey of purchasing managers at building companies fell to 43.9 from 46.1 in April, the London-based Chartered Institute of Purchasing and Supply said yesterday.

That's the lowest since the survey began in April 1997, Bloomberg News reported. An index of housing activity fell to a record 32.7 from 40.3, and confidence in the outlook was also at its lowest so far.

British home builders are cutting jobs as the country enters its worst housing downturn since the last recession in 1991. Taylor Wimpey Plc has lost half its value this year, and Bradford & Bingley Plc, the United Kingdom's largest lender to landlords, fell as much as 24 percent on Monday after its earnings slumped.

"The housing sector is "worst hit by the effects of the credit crunch," Roy Ayliffe, director of professional practice at CIPS, said in a statement. "May data for the sector heralded a further, more marked contraction."

Bank of England governor Mervyn King said last month that the economy may contract at some point in the next few quarters. Still, policy makers are reluctant to cut interest rates further after three reductions since December as record oil prices keep inflation above the 2-percent target.

"A period of above-target inflation and sluggish growth is ahead of us," said Ross Walker, an economist at Royal Bank of Scotland in London.