Businesses in the North East are seeing an easing of price pressures but are being hit by subdued sales, an influential business survey says.
The quarterly economic survey from the North East Chamber of Commerce highlights an easing in fuel and other overhead costs, while inflationary pressures are also becoming less of a burden. Businesses who took part in the survey said that workforce capacity improved significantly this quarter though there was less positive news as future hiring intentions fell slightly.
The survey also highlighted how both º£½ÇÊÓƵ sales and export activity declined in the last three months. That resulted in a weakening of business investment in both equipment and training, and though profitability expectations edged up 1%, they remain 12.9% lower than last year.
Rhiannon Bearne, deputy chief executive of the Chamber, said, “Since the last quarter’s report, we know businesses have felt the effects of the planned increase to National Insurance contributions. At the same time, there have been several policy announcements in trade, infrastructure, transport, and the launch of the government’s Modern Industrial Strategy.
“As the landscape of national investment and intervention becomes clearer, we are working with our members and stakeholders to make sure these interventions move from policy to delivery.â€
Chamber president Deborah Walton added: “Domestic and export sales remain under pressure, and investment in training and plant has weakened. These trends underscore the importance of creating the right conditions for businesses to grow, especially when optimism is still tentative and confidence has yet to fully return.â€
The survey has been published as new figures show that the º£½ÇÊÓƵ economy contracted unexpectedly in May, marking the second month in a row of falling output. The Office for National Statistics (ONS) said gross domestic product (GDP) contracted by 0.1% in May, following a 0.3% drop in April
The economy could now be heading for a contraction overall in the second quarter of the year, which would be a blow to Chancellor Rachel Reeves and the Government’s key priority to drive economic growth.
But there was better news as the overall value of exports from the º£½ÇÊÓƵ increased by 2.2% in May, at £600m, with increases both to EU and non-EU countries. º£½ÇÊÓƵ exports to the US returned to growth in May after the two countries agreed a trade deal that softened the blow of President Donald Trump’s tariff hikes.
Earlier this month a monthly survey of private sector firms by NatWest suggested that the regional economy had returned to growth in June but that worries remained over the health of the economy.
