Construction activity declined sharply in December, contracting for the third month in a row, as economic uncertainty continued to impact on building plans.
The BNP Paribas Real Estate Ireland Construction Total Activity Index fell to 43.2 in December, down from 46.8 in November, and below the 50 benchmark that signals no change.
The negativity hit all three categories captured by the survey.
The biggest drop was recorded in civil engineering while the lowest level of decrease was seen in commercial projects.
House building activity, key to the Government's Housing for All Plan, also fell for the third consecutive month.
New orders declined alongside total activity, with fresh business falling for the ninth month running and at the greatest rate since August.
Employment also fell, as did input buying, supply delivery times lengthened, while costs rose, albeit it at a softer level than the previous month.
BNP Paribas said the indicators show that after a strong start to last year and a weaker second half, building companies are not expecting an immediate rebound.
"They initially took a wait-and-see approach to shrinking order books, maintaining their staff headcounts and continuing to purchase materials," said John McCartney, Director & Head of Research.
"But after nine months of new business contraction, panellists have now begun running down stocks and not replacing employees who leave."
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However, confidence in the year-ahead outlook remained positive, with sentiment up on November.
"This may reflect recent developments which should assist with current viability challenges. Input price inflation has moderated to its slowest rate for 21 months," said Mr McCartney.
"In addition, the Government’s Croí Cónaithe scheme is being rolled out to subsidise apartment developments that would otherwise not be profitable to build," he said.
"Further Government actions, including relaxing mortgage restrictions and raising the shared equity scheme price ceilings, may also underpin builders' confidence that they will be able to sell properties at prices that make development viable," he added.
The Construction Industry Federation acknowledged that last year had been a challenging one for the industry.
But it said its experience is that its members had a positive ending to the year and have a busy pipeline of work in commercial and civil engineering.
"Housing completions were expected to be in line of upwards of 26,000 units in 2022, but housing commencements have been declining, and housing output will remain very challenging for 2023 due to rising costs, interest rates and the planning backlog," it said.
"Contractors and civil engineering are expecting a busy pipeline of work in 2023, but it is vital that infrastructure projects committed to in the NDP are delivered to ensure construction activities continue at the pace necessary to develop essential infrastructure."
