Input prices in construction have fallen for the first time since 2003, according to the latest Ulster Bank PMI.

The drop has been attributed to falling prices in an increasingly competitive operating environment.

Purchasing activity among building firms declined markedly in September, with more than half of all construction managers surveyed reporting a fall.

September’s Construction Purchasing Managers’ Index also showed that conditions in the sector have deteriorated further, with activity and new orders contracting sharply.

The Index posted 32.2 in September, pointing to a steeper contraction than in August with any figure below 50 indicative of a decrease in activity.

The decline in activity was steepest in the housing sector, at 25.5 showing similar figure to that seen in August. The civil engineering sector posted the smallest reduction in projects over the month at 35.8.

The index also indicated employment declined at a slower rate than in August, although the pace of job cutting remained considerable last month.

“Overall, the indices continued to move sideways in September indicating that the pace of decline, though very substantial, has not accelerated further," said Pat McArdle, Chief Economist at Ulster Bank.

“It is noteworthy that input prices are now falling – only the third time that this has happened since June 2000.

"This reflects lower diesel prices and falls in rates charged by sub-contractors which outweighed increases in a range of other inputs.

Expectations regarding the future were largely unchanged, despite the negative news-flow in September,” he added.