Business activity in the West Midlands fell last month for first time since June 2009, according to a private sector survey.
Last month saw a marginal reduction in output as new business dropped off, according to the latest Lloyds TSB West Midlands Purchasing Managers Index.
Anecdotal evidence suggested fragile demand had led to the decrease in new orders.
The Lloyds TSB West Midlands Business Activity Index which measures the output of the regions manufacturing and service sectors posted 49.5, down from 52.1 in September.
Readings of exactly 50.0 signal no change on the previous month. Readings above 50.0 signal an increase or improvement and readings below 50.0 signal a decline or deterioration.
Andy Youngman, area director for Lloyds TSB Commercial in Birmingham, said: "The West Midlands economy slipped into contraction in October, reflecting a fall in new work orders.
"The manufacturing sector fared considerably worse than their service sector counterparts, with backlogs of work decreasing at the fastest rate for over three years, and weakness in output looking set to continue unless inflows of new work pick up quickly."
Employment in the region continued to increase in October in line with the trend seen since December 2011, although the rate of staff hiring was only slight and the weakest in 11 months, the report said.
Although marginal, the increase contrasted with a slight reduction in staffing levels across the UK.
Survey respondents in the West Midlands commented that a lack of incoming new work had freed up resources to be dedicated to the clearance of backlogs.
The rate of input price inflation in the region accelerated in October, reaching a five-month high. However, the increase in costs was weaker than the UK overall.
Output prices decreased for a fifth successive month, although the latest reduction was only slight. Competitive pressures were generally reported by panellists to have weighed on pricing power.