The fall came despite an unexpected overall rise in GDP of 0.5% and shows construction is once again suffering more than other parts of the economy.
The latest figures are a blow after a 1.1% rise in activity in the last quarter, but are not unexpected after sharp falls in orders figures in recent months.
Even though the news on the general economy is slightly better than expected, the construction figures are a set back to the Prime Minister David Cameron who embarked on a personal crusade to bring about a house building revolution and bring forward infrastructure projects to stimulate growth.
During the last 12 months, the industry output has been on a downward trend. The last quarter of 2010 fell by 1.8.%, shrank again by 2.7% in the first three months of 2011 before the short-lived upturn in the second quarter of 1.1%.
What has been confounding the expectations of forecasters is how long it has taken the public sector cuts to bite.
That the construction industry is showing signs of recession now is worrying given that the impact of public sector cuts is only just starting to be seen in the numbers.
Meanwhile, the private sector is performing far worse than forecasters had initially expected. All this points to a deeper and longer recession.