Member Article

North East business remain positive, says NECC

Businesses in the North East are optimistic about the future despite reports of tough conditions, says the North East Chamber of Commerce.

The NECC said firms in the region were investing more than any other time since the recession began, according to a survey of its members.

Compiled with Barclays, the Chamber’s Quarterly Economic Survey is measured across 11 separate indicators, with any score over zero indicating an improvement in the economy’s health.

Staff levels were up throughout 2012, which NECC said reflected the downward trend in unemployment statistics, while domestic and export sales experienced slightly wider margins.

Despite these findings, the Chamber reported that optimism slowed in the second half of the year, following the largest increase in business positivity since 2008 in the first six months of 2012.

Results from the fourth quarter in 2012 show a reasonable about of growth in the service sector, which demonstrates a trend contrary to news on Friday that activity has fallen in this sector.

Meanwhile, manufacturers in the North East were pipped to the post by the service industry for the second quarter in a row.

NECC director of policy, Ross Smith, said: “There is a marked increase in results for investment plans.Despite sales and orders looking a little weaker, businesses are reporting investment plans growing more quickly than at any point since before the recession began

“We shouldn’t read too much into one quarter’s figures after such a prolonged period of weak investment.

But we know a number of businesses have decided they cannot put off investment in vital equipment and machinery any longer, and perhaps the launch of the Funding for Lending scheme is also helping.

“If businesses are starting 2013 with greater confidence to invest, and greater confidence they will secure the funding to do so, that must bode well for the year ahead.”

“The pattern of manufacturing growing much more strongly than services we saw in 2010 and 2011 has evened out,”

“Service sector firms have begun to grow much more quickly, while manufacturing has found it tougher to keep up the strong gains of 2010 and 2011.

“Cashflow across the board continues to be very weak and energy costs remain a major concern for members, as previous fears over fiercely fluctuating exchange rates appear to have calmed.

“Overall the survey shows that pre-recession growth remains out of reach for the economy, though some individual firms are seeing significant success.

“But the continuing positivity on workforce numbers seen throughout 2012 and the recent upturn in investment plans shows that confidence is creeping back and augers well for a successful 2013.”

Brian Thorpe, head of North East and Cumbria corporate banking for Barclays, added: “The survey has reported sales growth throughout 2012 and it is pleasing to see this continuing.

“However, it is weak and order books appear to be slowing. Manufacturing remains the most buoyant area of the economy with steady trading.

“The workforce indicator is once again very positive, reflecting the trends in official employment data during the year.

“The survey demonstrates that market conditions remain tough for many businesses as we reach the end of another difficult year.”

This was posted in Bdaily's Members' News section by Miranda Dobson .