North East firms are facing a complex landscape in which a variety of headwinds are prompting cause for concern, and some signs of resilience, a new study suggests.
The North East Chamber of Commerce's latest Quarterly Economic Survey shows rising concerns about costs and workforce challenges which the business group says has offset more positive developments. Exporting among the region's businesses dropped 4.1% from the previous quarter and 2.% year-on-year while º£½ÇÊÓƵ sales and orders fell by 13.2% and 5.3% respectively during the quarter and 25.3% and 5.3% year-on-year.
The measures were pointed to as signs of fragility in current trading conditions, the Chamber said. They came as labour costs emerged as the number one pressure across sectors, with a 7.4% quarterly increase, despite a 2.3% year-on-year decline. Manufacturers (87%) and service providers (71.9%) were found to be the most affected while other cost pressures were identified including rises in raw materials prices. Over the past year there has also been declines in finance costs (-10.6%) and fuel (-11%).
Staffing was also identified as a challenge with 76.9% of businesses citing labour costs as a major concern - a 27.8% increase on the prior quarter. Firms are increasingly looking for part-time (+5.9%) and temporary workers (+1.7%) and fewer full-time staff, which levels declining 5.1%. The most difficult areas to recruit included skilled manual and technical positions and professional roles.
The business group said concerns about energy persisted with 52% of respondents identifying it as an issue and 76.3% having implemented energy-saving measures including staff behaviour changes, reduced equipment use and investment in energy-efficient kit. There was a 9% decline in local energy generation, which includes measures such as solar panels.
Rhiannon Bearne, executive director of policy and representation and deputy CEO at the North East Chamber of Commerce, said: "For our members and stakeholders in the North East, this quarter’s findings arrive during a new year in which they are being presented with a number of economic pressures, including increases to national insurance contributions. While some businesses report positive momentum in areas such as recruitment, concerns around staff costs, taxation and energy prices are increasingly prominent."
Natasha McDonough, chamber vice president, said: "This quarter’s survey comes at a critical juncture for the North East business community, with the results indicating both resilience and concern. While businesses are taking proactive steps to address energy efficiency and staff recruitment, the October Budget has added a layer of complexity for businesses, showing concerns around taxation and operational costs.
"These policy changes are set against a backdrop of continued inflationary pressures and challenging trading conditions, as evidenced by the Q4 data."
The Chamber's Quarterly Economic Survey is carried out in partnership with the British Chambers of Commerce. This snapshot includes survey responses from between mid-November and December 9.
