Britain's construction sector shrank at its sharpest rate for almost three years in August, according to official data, fuelling concerns that the economy slowed in the third quarter.

The Office for National Statistics (ONS) also said the UK's trade deficit narrowed in August, which was larger than expected and is also set to drag on growth.

The ONS said Britain's building output in August compared to last month plunged by 4.3%, its biggest fall since December 2012.

It said new construction projects in August fell by 3.6% compared to July, while repair and maintenance work slumped by 6.5% in the same period. In the three months to August output fell by 0.8%, compared to the previous quarter.

The UK economy has outpaced many other developed countries for much of the last two years, but economists fear growth has slowed in recent months alongside the global economy.

On Thursday the Bank of England's Monetary Policy Committee voted to leave rates at 0.5%, where they have been since March 2009.

The ONS also released the latest data on UK trade today, which showed that Britain's deficit narrowed to £11.1 billion in August compared with £12.2 billion in July.

Economists had expected a smaller shortfall of £9.6 billion.

The report said the export of goods lifted by £800 million to £23.6 billion in August, buoyed by a rise in sales of chemicals and cars.

Howard Archer, chief UK and European economist at IHS Global Insight, said: "Seriously bad news for overall for third quarter gross domestic product [GDP] growth prospects as construction output plunged in August and the trade deficit recorded another appreciable shortfall as exports remained relatively limited despite improving after a sharp drop in July."

Mr Archer added the data backed his view that GDP growth is likely be no better than 0.5% in the third quarter, and could be weaker still.

The Bank of England estimates UK growth in the third quarter will come in at 0.6%, which is down on the second quarter of the year when the economy grew by 0.7%.

David Kern, chief economist of the British Chambers of Commerce, said the country's trade deficit "remains a major national problem".

Mr Kern added: "Greater efforts are needed to support our exporters and to secure a long-term improvement in our trading position.

"The service sector, which recorded a surplus in trade, will be increasingly relied upon to help improve our trade deficit."