Activity in the country's construction industry slowed sharply in October as uncertainty led to a fall in new business.
The Ulster Bank Construction Purchasing Managers index fell to 42.3 in October, from 44.5 in September. The reading was the lowest since May as companies saw contracting demand and firms continued to cut jobs.
Any reading above 50 signals an increase in activity, while a reading below 50 signals a decrease.
The index monitors three sectors - housing, commercial and civil engineering. The sharpest fall last month was seen in civil engineering as the rate of contraction accelerated to the fastest pace since December.
However, the rate of decline in residential activity eased to the weakest level in the current four year sequence of reduction.
Ulster Bank said that declining confidence was evident throughout the sector. Expectations on future activity dropped to the weakest in ten months, as concerns mounted around the effects that upcoming Budget spending cuts will have on the sector.
The index noted an increase in input costs for the sixth month in a row, driven by higher raw material prices, especially for metal and fuel-related costs. However, the rate of inflation remained only modest.
Staffing levels at Irish building firms fell again last month. Falling workloads and efforts to cut costs were the main factor behind the latest cuts.
Ulster Bank economic Lynsey Clemenger said what is clear from the report is that the construction industry continues to face major challenges given the lack of incoming business.
She noted that new orders fell back for the second month in a row, while companies cited uncertainty about the wider economic environment as a key factor in explaining why clients are holding back on spending.
'The upcoming cuts in Government spending are a concern in terms of what this will mean for activity in the industry in the coming year. It is against this backdrop that confidence in the construction sector in now at its lowest level so far this year,' the economist added.
