The number of UK sectors experiencing falling output was at its highest level in 29 months in October, as demand for goods and services decreased.
The latest Bank of Scotland UK Sector Tracker revealed that last month 12 out of 14 sectors recorded a contraction in output, up from nine in September and the highest number since May 2020; when the UK was first in lockdown.
Output contraction was caused by falling demand, with 13 of the 14 sectors recording a decrease in new orders in October, up from nine in September, as rising inflation caused more businesses and consumers to rein in spending and investment.
Demand for goods in the chemicals (29.5), metals and mining (31.1) and household products (38.4) manufacturing sectors fell at the fastest rate in October. A reading below 50 indicates contraction, while a reading above 50 indicates expansion.
Providers of software services was the only sector monitored to see increased demand (59.7) in October. As a result, the sector recorded the strongest output growth (60) of any sector, followed by food and drink (58.4). The food and drink sector also saw the slowest fall in demand (49.9) of any manufacturing sector.
Since July, more than half of the UK sectors monitored by the tracker have consistently reported falling output and demand.
There were also early signs of a labour market slowdown in the UK. Employment (52.4) rose at the slowest rate in 20 months in October, while the overall manufacturing sector recording its first drop in headcount since December 2020.
Relative to the previous month, four sectors - chemicals, metals and mining, household products and banks - recorded a decrease in staffing levels in October, the highest number since February 2021 and versus just one sector in September.
Firms in these sectors said they chose not to replace workers because of lower customer demand, or difficulty finding suitable replacements in a competitive jobs market.
Jeavon Lolay, head of economics at Lloyds Bank Corporate and Institutional Banking, said: “The indications from our report suggest that the UK economy may already be in recession.
“With both our domestic challenges and global headwinds unlikely to materially recede in the short term, the key question revolves around how long this downturn may last.
“The Autumn Statement laid bare the scale of the challenge ahead to repair the fiscal finances and restore growth - while the former inevitably necessitated some difficult decisions, the fact that fiscal and monetary policy are working together is clearly positive.”
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