The Construction Industry Federation (CIF) has revised downwards its forecast for the industry this year from its January assessment.
The federation said it now believes the expected improvement in the investment climate during the next five months now appears far less likely to materialise.
Launching the mid-term review this morning, the CIF Director General, Mr Liam Kelleher, said total construction for 2002 is now expected to fall by four per cent, equivalent to a loss of €800 million of work.
He said the industry is now "feeling the effects of the general economic downturn". The knock-on effect has been a reduction in direct employment in the industry, with 7500 construction jobs lost in the 12 months to May.
While public sector contracting and civil engineering is projected to show a growth in volume of four per cent, the CIF expects private sector general building output to fall by 23 per cent.
Mr Kelleher said "our major concern now is the current weakness in the approval of new projects to commence construction in late 2002 and be implemented in 2003 and beyond".
He said the CIF considered delivery of the physical infrastructure under the National Development Plan (2002-2006) was significantly behind schedule and under-funded by €9 billion.
In relation to housing output, he said the CIF predicts output this year will fall below last year's record level of 52,600 units by 5 per cent, although output and demand was strong in the first quarter of 2002.
The Irish House Builders' Association, which is part of the CIF, expressed concern about the new homes statistics produced by the Department of Environment and Local Government. "Close examination of the statistics raise concerns about their accuracy," they said, adding that "there was a compelling case for the Department to examine new ways to measure housing completions".