Following an analysis of the top companies in the sector, industry analyst Plimsoll Publishing calculates that over one-third of companies are already reporting declining sales - one of the first signs of recessionary behaviour.
Two thirds of companies have seen their margins fall. And of most concern, over a third of these are currently running at a loss.
The pressure on sales has also forced an immediate squeeze on profitability. These companies are struggling against rising costs and declining sales, the researchers say.
Almost a third have seen an increase in their need for short term finance, a sign that costs are running ahead of cash flow.
This is doubly dangerous at a time when banks and financiers are looking hard at their loan books and therefore places these companies in an even more vulnerable position.
Plimsoll reports that certain areas, particularly the small companies, with their concentration on local and domestic markets, are less exposed to the market slowdown.
