Construction firm Morgan Sindall said half-year profits were down 8% to £14.2million despite an increased contribution from its urban regeneration arm.

The trend is expected to continue into the second half, accompanied by continued margin pressure in the construction and the affordable housing divisions.

The company experienced a 2% fall in revenues – from £1,019m in 2013 to £998m – while operating profits before amortisation and exceptional operating items dropped from £16.2m to £15.2m over the same period.

But the business is on course to bounce back next year after posting an increased order book of £2.7bn – up 14% on 2013.

Elsewhere, sister company Lovell said the government’s Help to Buy scheme had instilled more confidence into the housing market and helped boost sales.

It comes as housebuilding surged at its fastest pace for more than a decade last month to trigger record hiring in the construction industry, according to a closely watched survey.

The home building market grew at its steepest level since November 2003, driven by strong demand for new housing projects, according to July data from the Markit/CIPS UK Construction PMI report.

Overall, the index edged down to 62.4, down from 62.6 in June, but activity remained well above the 50 level that divides growth from contraction and was above City expectations of 62.

The data showed that construction activity has grown for 15 consecutive months and that hiring in the sector grew at its fastest level since the survey began in April 1997.

Graham Shennan, managing director of Morgan Sindall, said: “Despite the challenging market conditions persisting into 2014, Morgan Sindall has maintained its ability to secure important contracts and framework wins across the broad range of sectors in which we operate.

“We remain well positioned to capitalise on further opportunities throughout the remainder of the year.”

The company, which has offices on Thorpe Road, Norwich, recently finished an £11.5 million contract to construct the flagship Centrum building at the Norwich Research Park.

And last month it completed the first concrete pour at the £11.6m Enterprise Centre project at the University of East Anglia.