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The attitudes of North East business leaders have become more positive despite the looming challenge of US tariffs, a new survey has found.

There has been renewed investment in plant and machinery, a boost in º£½ÇÊÓƵ sales and more exporting across the first quarter of 2025, following a rough end to 2024, the North East Chamber of Commerce's quarterly economic survey has shown. Firms from across the region gave their views at a time of tumult for the world economy caused by the imposition of tariffs by US President Donald Trump.

Researchers found º£½ÇÊÓƵ sales have increased 9.9% this quarter after a 13.8% annual drop, and export activity saw a 21.3% increase though annual levels were low. º£½ÇÊÓƵ orders were said to be under pressure, down 1.9% quarterly and nearly 16% annually.

Investment in plant was up 16.8%, though 1% below last year. And spending on training was up 10.5% after Q4 declines. However, the profitability outlook fell 0.8% on last quarter and 10.5% over the year.

Overall there was a 13.3% fall in workforce levels, and a 5.2% drop in hiring intentions. Meanwhile annual workforce expectations are down 27.1% with fewer firms hiring part time (-10.5%) and permanent staff (-6.5%), however full-time hiring was up 7.6%. Firms reported that skilled manual and technical roles were particularly hard to recruit.

Labour costs were among a raft of price pressures, with 85.7% of manufacturers and 76.4% of service providers citing them as the dominant challenge. Across the quarter, price pressures rose in fuel (5.7%), raw materials (4.2%) and finance costs (4.8%). Over the past year, fuel (-7.7%) and finance costs (-6.5%) have declined, suggesting some easing of inflation.

Just more than half of firms reported energy has a concern, with 73.3% using energy-saving measures including changes to staff behaviour, reduced equipment use and investment in more efficient kit, to bring down costs. The survey identified fewer firms were altering work patterns to cut energy use, with a 5% quarterly decline.

Rhiannon Bearne, executive director for policy and representation and deputy CEO, said: “This quarter’s results show encouraging signs of recovery, with positive movement in sales and investment after a challenging end to 2024. However, this must be balanced against global uncertainty, as new US tariffs add pressure for businesses in our region.

"In a separate snap poll by the British Chambers of Commerce, 55% of businesses across the North of England said they expect the tariffs to negatively affect them, while 17% said it’s too early to tell. We remain in regular contact with national colleagues and government to make sure North East businesses are supported. We are here to help our members navigate these developments."

The North East findings were published as it was revealed the wide º£½ÇÊÓƵ economy grew more than expected in February. The Office for National Statistics said the economy had grown 0.5% during the month, driven by a boost in manufacturing and production. Economists had expected only 0.1% growth.