Orders in the manufacturing industry have fallen for the first time in 15 months, according to the Confederation of British Industry (CBI).
The employers' organisation claimed that 31% of firms saw orders drop during the final three months of last year, while just 27% experienced a rise.
The balance of minus 4% marked the first fall in orders since October 2003.
Export orders also decreased with 29% experiencing a drop compared to 21% who saw them rise.
Furthermore, employment levels also nose dived at the fastest rate for 15 months.
Unsurprisingly, manufacturers were not very positive about future prospects.
The trend of improved optimism recorded during the first half of 2004 was reversed with 22% more firms expressing pessimism about the future than those that were positive.
Today's bleak outlook adds to official data released on Wednesday which claimed the UK's beleaguered manufacturing sector was back in recession.
Ian McCafferty, CBI chief economic adviser, said: "This data poses a challenge for the Monetary Policy Committee.
"They must continue to ensure that inflationary pressures remain under control, but need to be increasingly vigilant to the downside risks in activity. The Bank of England should hold rates steady until the situation becomes clearer."