Official figures published yesterday portrayed a deepening recession in Scotland and provided further evidence that manufacturer and construction firms are bearing the brunt of the downturn.

The Scottish economy shrank 2.4% in the first quarter of the year, according to figures from the Scottish Government following a 1.7% drop in gross domestic product in the last three months of 2008 and a 0.8% drop in the three months to the end of September.

This is broadly in line with the wider UK economy which shrank 2.5% in the first three months of the year.

Scottish GDP is now 5.2% lower than its peak level in the middle of 2008. This is the largest contraction since records began in 1963, outstripping even the 3.2% drop experienced between 1979 and 1981, according to analysis by the Centre for Public Policy and the Regions.

An economy is deemed to be in recession when it suffers two consecutive quarters of contraction.

The figures published yesterday show that while output from the dominant service sector fell by 1.5% in the first quarter after shrinking 0.8% in the last three months of 2008, output from production continued to fare even worse falling 5.1% after a 4.6% decline in the previous three months.

This included a 6.3% fall in output from manufacturing while mining and quarrying, hit by a moribund property sector, was down 9.8%.

The construction sector fell by 6.6% prompting the Scottish Building Federation to call for more government support.

In the service sector, output from financial services was down 4.4% over the quarter and is now 14.4% below its peak at the beginning of 2007. However, within this banking, which has been at the heart of the credit crunch, has fallen by less than 6%, suggesting output from other financials is down 25%, a trend not seen in the UK as a whole.

Liz Coleman, chief executive of the Scottish Chambers of Commerce, said: "We would expect that the fall in GDP may become less steep in the second and third quarters of this year. Our hope is that these first quarter GDP figures represent a low point, and that future figures will show signs of progress."

Figures also published yesterday by the CBI show that the contraction in manufacturing output UK-wide is easing but it could be some time before it returns to growth.

Just 12% of firms responding to the organisation's survey said their output had risen in the three months to July compared to 43% who said it had fallen. This was a slower rate of decline than in the previous quarter.

Export demand remained lacklustre despite the relative weakness of the pound which makes British goods cheaper for foreign customers.

Most firms are still reporting a fall in orders despite an increase in the numbers cutting prices.

Some 47% of firms cut jobs over the three months and just 6% added posts.

Ian McCafferty, chief economic adviser at the CBI, said: "These figures reinforce our view that the road out of recession will be long and slow. The further decline in export orders is of particular concern as we are not seeing much of a boost from the relative weakness of sterling."

New orders are at their lowest levels since 1992 Jonathan Loynes, chief European economist at Capital Economics, said: "The improvement in sentiment appears so far largely to reflect firms' hopes rather than any firm signs of an improvement in actual demand for their products."

One sign of optimism came from the National Institute of Economic and Social Research which said the economy will return to growth in the last quarter of this year. The think tank expects the economy to grow by 1% next year and 1.8% in 2011, as the weak sterling finally boosts exporters. But it cautioned there will not be strong growth until 2013.