The quarterly construction bulletin revealed output was down by 13.5% year-on-year in the first three months of 2011.
Housing output dropped by 15%, repair and maintenance work fell by 4.3% and new work was down 1.8%.
Infrastructure output increased by 2.6% while industrial and commercial work increased by 11.6%.
Commenting, SDLP Crotlieve Cllr Connaire McGreevy has called on the Assembly to instigate a programme to retrain and redeploy construction workers to areas of employment.
Speaking following the publication of the report into output in the Northern Ireland construction industry, he said: "Sinn Fein and the DUP are at the centre of government yet have failed grossly to boost our construction sector and find innovative ways through the Budget to create employment for those who are out of work.
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"These latest figures show a decrease of 2.8% in output within the construction industry compared to the previous quarter and alarmingly it underlines the continued decline of work which will be worrying for many local firms.
"South Down has a large number of trained construction workers who have had to join the ever expanding dole queue. The challenge for the Assembly is to identify ways to retrain and redeploy these workers so that they can get jobs," he said.
"The SDLP has said previously that the green energy sector is one which is taking off across the world and must be taken seriously by government and invested in order to boost employment and develop new business opportunities.
"Furthermore our tourism sector must be prioritised. We need capital investment in our infrastructure to allow our local economy to grow by drawing visitors here and creating employment for thousands of tradesmen as well as our hospitality industry.
"I am calling on the Assembly to undertake a major programme to retrain and redeploy construction workers so that they are able to obtain green industry jobs and work created by the development of our tourism sector."
Meanwhile, a major Northern Ireland property firm has reported a £36m loss in its latest set of accounts.
Valto is the firm behind projects such as St Anne's Square in Belfast and Junction One near Antrim and in the 18 months to the end of March it showed an operating profit of £4m.
However, that was wiped out through a combination of losses on the sale of investments, write-offs and a £12m interest bill.
Valto also 'wrote down' the value of its investment properties by almost £40m giving a total recognised loss of over £75m.
(GK/BMcC)
