The construction sector is to face up to 35-40 pct this September/October warned construction firm, Morgan Sindall.

The company, whose share price rose in early trading saw sharp cuts across school builds and social housing, which would not affect trading. It's position is strengthened by that rivals, Connaught is close to running out of cash:

"I'm more concerned about 2012 and 2013 - we have orders for this year. But we've all been expecting this downturn for some time. Construction is going to be flat to falling slightly over the next two years." said John Morgan, Chairman of the Group.

"School building is being cut dramatically, road building will be cut dramatically, and we'll have to wait and see what happens to health and social housing," added Morgan.

Morgan Sindall, which has secured the contract for Cross Rail preparatory work at Whitechapel, competes directly with Connaught on social housing:

"Morgan Sindall has reported slightly better figures today, driven by the combined construction businesses reporting stronger margins than expected and cash, although clearly the outlook for that business is worsening going forward with looming UK Government capex cuts." said RBS analyst Mark Howson. "That said, we expect Morgan Sindall to still be able to pay its current dividend in 2012F, and we believe the group could make further cost savings. We retain our Buy stance."

Construction support group Mitie meanwhile was down 3.94p, or 1.84 pct in today's trading, whilst Connaught went down 11p.

FTSE