Economy in North East growing says survey
Businesses across the North East are continuing to battle their way back to full health, with a new survey showing positive growth in most areas of the region’s economy.
The North East Chamber of Commerce’s (NECC) quarterly survey, produced in partnership with Barclays, shows that eight out of its 11 indicators showed growth during the first three months 2011, including a defiant sense of business confidence.
Both UK sales and orders reported an increase into positive territory, with uncertainty over the Government’s spending plans having less of an impact on firms than expected.
Export sales – heralded as one of the biggest instruments of economic recovery – also remained in positive territory, despite a slight dip in activity compared with the previous quarter.
Inevitably, the number of companies looking to invest in their plants took a hit, with most companies still reluctant to spend at a time of such economic uncertainty, driving the indicator deeper into negative territory. This was also true of investment in training, which also remained in negative territory.
Such a frugal approach may in part be a result of increased materials prices, which saw the biggest increases in the survey, and follows January’s VAT rise and record oil prices.
However, this was not enough to dent business confidence, with the balance of firms expecting a rise in profits and turnover remaining hugely positive.
The survey also showed that companies remained positive about job creation, despite the UK’s unemployment figure rising to its highest level since 1994 by the end of January.
Martyn Pellew, NECC president, said: “Growth at the end of 2010 was driven almost entirely by manufacturers, while we are seeing the service sector begin to rally in 2011.
“More businesses are looking to recruit than over the previous year and a greater number of companies are operating at full capacity which is a positive sign. Overall, this is an extremely pleasing picture. We cannot avoid the fact that there is still underlying caution among businesses and this will undoubtedly take time to dissipate.
“However, we broadly saw a positive Budget statement in March with a number of initiatives that reflected NECC’s calls for more policies focused on inspiring business growth.”
David Brind of Barclays Corporate, North East, said: “Although a degree of caution in the market remains, we are starting to see some movement as companies look to invest to maintain a competitive edge.”
This sense of cautious optimism was also apparent in the latest Journal North East Business Barometer, which showed that 54% expect growth in turnover in the next 12 months while 20% expect falls.