Sentiment has dropped to the weakest level since December 2010.
The index posted 40.7 in August, down from 42.2 the previous month.
Index readings below 50 indicate a decrease in activity, while readings above 50 indicate an increase.
John Fahey, economist with Ulster Bank, said that from a sectoral perspective the weakness recorded in August was broad-based, with all three of the main sub-sectors experiencing declining activity.
Civil engineering activity scored 35.6, down from 37.1.
Housing was 39.1, down from 43.2, and commercial was 42.4, down from 42.7.
“Given the persistent falls in activity levels, the construction sector continues to shed jobs, albeit at a slightly slower pace.”
In relation to outlook, Mr Fahey described the near-term prospects as gloomy.
Source: Irish Times.