Building activity, including residential construction, has declined for a fifth month in a row, a monthly survey by AIB has shown.
The bank's sampling of purchasing managers in the construction sector indicated there were falls across housing, commercial and civil engineering.
The survey said that a continuing downturn in the sector had gathered pace in September.
It showed sharper reductions in activity and new orders by businesses, while employment decreased for the first time in seven months.
The headline index fell to 43.7 in the month, from 45.9 in August, implying a faster pace of contraction in the sector. The September reading is the lowest since December 2022
AIB Senior Economist John Fahey said: "Residential construction activity contracted for a fifth successive month, albeit at a marginally slower pace compared to the previous month.
"Meanwhile, the commercial sector remained in contraction territory for a second month running, with the pace of decline accelerating," he said.
"Civil engineering continued to report the sharpest falls in activity, with the pace of contraction at its most pronounced since October 2022," he added.
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He said that new orders, viewed as a leading indicator of activity, also "paints a weak backdrop for the sector."
But he added that despite the challenging operating environment, construction firms retained an optimistic view that activity levels will increase over the coming 12 months.
Meanwhile, approved housing body Respond will complete almost 1,000 new social and cost rental units this year, it has announced.
The organisation said this would be its highest annual output to date.
It is currently building 3,458 homes across Ireland.
Respond spokesperson Niamh Randall said: "It is critical we are enabled to continue to deliver homes now and into the future to meet Government targets and addressing urgent housing need."
The organisation said projects it had completed during the year included 334 social and cost rental homes at Seven Mills in Dublin, 18 social homes in Blackpool in Cork and 97 social homes in Drogheda, Co Louth.
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Minister for Housing James Browne said his Department would study the latest AIB survey which shows a contraction in construction activity.
Mr Browne said there were "conflicting information" regarding the sector.
He said he expected the impact of the Budget's VAT cut for apartments should begin to deliver results in the first three of months of next year.
He added there were 40,000 apartments which had planning permission.
He said it takes three to four months for projects to get finance.
