There was another moderate fall in new orders placed with private sector firms in the West Midlands, according to newly published research.
The NatWest Regional Growth Tracker also showed further reductions in output and jobs.
Firms have reported that increased global economic uncertainty, particularly related to US tariff announcements, is significantly impacting demand across various regions.
This is reflected in observations of reduced client activity and overall caution towards spending.
The West Midlands Business Activity Index - a seasonally adjusted index that measures the month-on-month change in the combined output of the region’s manufacturing and service sectors - fell from 49.6 in March to 47.5 in April.
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The research said this indicated a moderate rate of contraction that was nevertheless the quickest since January and faster than the º£½ÇÊÓƵ average.
When explaining the latest reduction in business activity, survey participants remarked on lower sales, adverse demand developments, subdued client confidence and US tariffs, NatWest said.
The survey was conducted after US tariff announcements on April 2, which at the time, saw minimum tariff rates of ten per cent applied to imports into the US, as well higher so-called ‘reciprocal’ tariff rates on a number of countries.
A subsequent announcement on 9 April saw a 90-day pause on most, higher-tariff rates.
Although the latest results showed a continuation of the downward trend in new sales seen since last November, the pace of contraction was moderate overall. The reduction was also softer than that recorded at the º£½ÇÊÓƵ level.
According to West Midlands companies, market uncertainty and US trade policy restricted client demand and overall order intakes. Local firms remained confident of a rise in output over the course of the coming 12 months.
The level of positive sentiment slipped to a four-month low but was the highest of the 12 monitored º£½ÇÊÓƵ regions and nations.
NatWest’s chief economist Sebastian Burnside said: "The tracker this month reflects the challenges that economic uncertainty can create for º£½ÇÊÓƵ businesses of all scales.
"Firms across the º£½ÇÊÓƵ reported a challenging start to the second quarter, with demand for goods and services falling in all areas amid a backdrop of economic uncertainty and rising prices. The South West was alone in recording growth in business activity.
"It's encouraging that some firms in the West Midlands are still looking to the future with some optimism although growth expectations are lower than they have typically been in the past.
"Rising labour costs have added pressure on businesses, following April's increases in National Insurance contributions and minimum wages.
"As firms look to mitigate rising costs, we've seen average prices charged for goods and services increase at faster rates as well as a greater focus on workforces.
"Labour markets in all areas of the º£½ÇÊÓƵ have felt the impact to some degree in recent months, with only Scotland avoiding a fall in employment in April.
"We cannot ignore the backdrop during which this survey was carried out but regardless, as we’ve seen in the past and as the South West and Scotland illustrate, º£½ÇÊÓƵ business is resilient and can always offer reasons for optimism throughout."
