Chancellor George Osborne is coming under increased pressure to change course and invest in growth. Yesterday's GDP figures sparked renewed calls for the Chancellor to stimulate the economy and create jobs.
Shadow Chancellor Ed Balls said the latest figures showed the government was "off track" and needed to change economic course.
He predicted the chancellor would have to downgrade Government growth forecasts for a fourth time later this month. This, he warned, would mean revising up again borrowing forecasts.
Brendan Barber, the TUC general secretary, said the weak growth was the result of the government refusing to heed calls for a plan B that "puts growth and fairness first".
While the national GDP figures of 0.5% growth were higher than many expected, construction tumbled by 0.6% after a short-lived rise in the last quarter.
Today the influential Markit/CIPS survey of purchasing managers revealed falling confidence about work prospects in the construction industry.
David Noble, chief executive officer at the Chartered Institute of Purchasing & Supply, said: "Across the sector as a whole, confidence about future business activity plunged to its lowest in almost three years, with optimism fading as constructors come to recognise that there are more challenges yet to come.
He added: "The housing sector continued to deteriorate in October with a decline in activity recorded for a fifth successive month."
With housing starts still running at a record low and the signs of construction heading for a sharp downturn over the next two years, pressure is mounting to stimulate the building industry as a fast way to create jobs and prosperity.
The worsening house building market is now threatening to become a serious political embarrassment to the Prime Minister, after he personally promised a housing revolution to build the country out of the crisis at this year's party conference and this week called for a big infrastructure push.
The extent of the industry's woes were illustrated by Hanson Cement, which has warned that if the market deteriorates further it may have to consider mothballing another cement works in the UK.
MMA Director, Mike Leonard commented "Our Government has accepted the need for more housing, to address the chronic shortage, reverse rising unemployment and drive economic growth.
"We have applauded the good intent of the initiatives the Government has set out but made clear our views that they will not achieve the objective.
"We need a mortgage indemnity scheme to bridge the deposit gap in the private sector and immediate public investment to build 25000 additional affordable homes in 2012.
"An immediate cut In VAT to 5% on green home improvements would also stimulate the economy and reduce energy consumption ahead of the Green Deal which is still 12 months away."