Output from private sector firms has shrunk for the 11th consecutive month, with the West Midlands among the hardest hit.

However, researchers at the Royal Bank of Scotland (RBS) said the worst of the recession may be over as the pace at which activity fell in March was the slowest since last September.

RBS economist Julien Seetharamdoo said: “Steep contractions in private sector output and new orders resulted in the West Midlands being the second worst performing UK region in March.

“The pace of contraction eased a little from February. However, the need to reduce costs and excess capacity led to another substantial round of job cuts.”

All regions covered by the survey were hit by rising unemployment, although the West Midlands saw private sector jobs cut at the sharpest pace.