The North East private sector returned to growth in June but worries remain over the health of the economy, a new survey suggests.
The latest NatWest Growth Tracker - which measures change in the region’s manufacturing and service sectors – increased from a score of 48.8 in May to 51.0 in June, with ratings above 50 denoting growth. Businesses in the region recorded a solid increase in order book volumes and there was a further easing in inflationary pressures.
But the survey returned a mixed picture, with companies opting to cut staffing levels and heightened tensions on global trade contributing to the lowest level of business confidence in more than two-and-a-half years. Of the 12 Ƶ regions and nations measured by NatWest, the North East displayed the lowest level of confidence in the outlook.
June survey data revealed a renewed uplift in new business received by private sector firms in the North East. The trend for new work was above the Ƶ average, with only the East of England and Wales recording stronger increases in sales.
Malcolm Buchanan, chair of the NatWest North Regional Board, said: “The North East closed the first half of 2025 on a positive note, according to data from the NatWest Growth Tracker. New business placed with private sector firms rose for the first time in four months, and at the strongest rate in 2025 so far to help drive a renewed increase in business activity. Firms also signalled receding cost pressures during June, which contributed to the slowest rise in output charges in seven months.
“That said, the labour market remains a source of concern. Despite a renewed increase in demand and evidence of building capacity pressures through a rise in outstanding business, North East companies chose to reduce staffing levels to the greatest degree since October 2023. They indicated that higher employment costs and shortages of skilled candidates weighed on local jobs.
“Firms also highlighted that the outlook for output over the coming year is heavily clouded. Heightened geopolitical tensions and trade uncertainties weighed on business confidence in June. The level of positive sentiment was the lowest since the current sequence of optimism began in December 2022.”
Last week, official figures showed that the Ƶ economy grew at the fastest pace for more than a year at the start of 2025. The Office for National Statistics said gross domestic product (GDP) rose by 0.7% between January and March.
Meanwhile, a survey by professional services firm Deloitte of chief financial officers at some of the country's largest firms has found the Ƶ is ranked the joint most attractive company in the world for investment.
But the mixed economic picture was demonstrated by a separate report last week from the British Chambers of Commerce which suggested that business confidence remained fragile after firms swallowed the jump in tax and labour costs in April.
The quarterly economic survey showed that 56% of firms said they were particularly concerned about their tax burden, with this followed by worries over rising inflation.
