Activity in the construction sector continued to decrease in December, for the eighth month in a row, according to the latest Purchasing Managers' Index from AIB.
It found that activity was down in all three categories of construction covered by the survey - residential, commercial and civil engineering - albeit with rates of reduction easing in each case.
The slowest fall in activity was in residential, where the decline was the softest in seven months.
The headline seasonally adjusted Construction Total Activity Index posted below the 50 no-change mark last month, for the eighth month running, signalling a further reduction in total construction output as last year drew to a close.
The reading was up to 48.4 in December, from 46.7 in November, which pointed to the slowest fall in activity since June 2025.
AIB said while construction activity continued to decrease last month, other indicators from the latest Construction PMI "painted a more upbeat picture of the sector at the end of 2025".
The report said new orders increased for the first time in five months, and companies expanded their employment, purchasing activity and usage of sub-contractors in response.
Some panellists reported that project start dates had been delayed, leading to the drop in activity.
"On the other hand, some respondents had raised their activity in line with improving customer demand.
"In fact, new orders returned to growth in December, increasing for the first time in five months as client demand picked up at the end of 2025," it said.
Construction firms confident activity will pick up in 2026
The survey said business confidence improved to the highest level since January of last year.
Construction firms were "increasingly confident" that activity will pick up over the coming year, with sentiment rising to an 11-month high in December.
The Construction PMI said increasing customer enquiries "boosted confidence in the outlook for 2026".
It said the rise in new orders and optimistic outlook encouraged construction firms to expand both their staffing levels and purchasing activity during December.
Both increased for the second consecutive month, albeit at modest rates.
And for the first in six months, firms also posted a renewed rise in their usage of sub-contractors, contributing to a further reduction in their availability.
However, there were difficulties reported in sourcing materials, with the sector facing "a further sharp increase in input costs".
"Although softening from November's eight-month high, the pace of inflation was still above the average for 2025 as a whole," the report concluded.
AIB's Senior Economist John Fahey said that while the Construction PMI survey showed a further fall in building activity levels, the December reading of 48.4 represented an improvement compared to 46.7 in November, "implying a less severe pace of contraction heading into the New Year".
"From a sectoral perspective, the survey indicated that the weakness in activity remained broad-based in December, albeit the pace of contraction eased across all three sub-sectors."
Mr Fahey said the best performing of the three was the residential sector.
"Homebuilding activity declined for an eighth month in a row, although the pace of contraction was the mildest since May. Commercial activity contracted for a second successive month. Meanwhile, civil engineering remained the weakest of the three sub-sectors," he said.
He said the December survey indicated some encouraging signs for the sector.
"The new orders index, which is viewed as a leading indicator, registered expansion for the first time in five months, with panellists noting improved demand and a scaling up of projects."
"Against this backdrop, there was an increase in employment levels in the sector for the second month running," he added.
