A monthly business tracker, compiled by Lloyds, found that 13 of 14 sectors said they had suffered from falling new orders last month, citing high inflation and climbing borrowing costs as the reason for weaker output. “In the face of higher interest rates and still relatively rapid price rises, businesses and consumers are being more careful about how they spend their money,” Nikesh Sawjani, senior UK economist at Lloyds Bank, said.

“This suggests that interest rates are having their intended effect. Output in the private sector is only marginally expanding, and it’s clear that many businesses are downgrading their expectations for future output growth as they settle in for what they believe will be a period of price pressures that are stronger than hoped and may last for longer than previously anticipated.”

Lloyds’ tracker found that software services was the only sector of the economy that did not suffer from falling new orders, with the likes of chemicals manufacturing and car production and transport suffering some of the biggest monthly drops. Ten out of 14 sectors said overall production contracted last month.

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