Inflation continues to put pressure on North East businesses, research by the region's largest business group has shown.
The North East England Chamber of Commerce's latest Quarterly Economic Survey - which closed before the Government's recent mini budget - found that while overall business conditions had improved slightly on quarter two, firms reported utilities, labour and fuel costs overtaking recruitment difficulties as their biggest challenges. Cashflow remained depressed at -17.4% and while that was positively driving prices, it was hampering future profitability for services and manufacturing businesses.
Amid a continued picture of headwinds, inflation was singled out as a major worry for 89.3% of respondents, while energy prices followed at 88.2% and rising staff outlay at 73%. Despite the challenges there was evidence to suggest positive change, including UK sales, export sales and export orders for manufacturers all moving into positive territory.
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Service sector operators expressed more concern about future profitability and exporting, though UK sales and orders expectations recovered. The survey, which includes the thoughts of 180 business and is carried out in partnership with Durham University, showed a decline in most recruitment indicators across the quarter - an indication, the Chamber said, of a loosening local labour market.
Andrew Haigh, chamber president and chief executive of Newcastle Building Society, said: "The survey was conducted during a period of significant policy change, closing after the Government announced its Energy Relief scheme for businesses and non-domestic users, a policy members welcomed with caution as it only provided an initial six months of support. The Chamber will use the responses to the new questions on energy usage to inform our lobbying of the Government.
"The survey did close before the Chancellor’s Mini-Budget, so reflects views on energy, inflation and staff pressures before the most recent policy announcements, so it will be more important than ever in quarter four that we gather even more intelligence and insight – so that we can work together on solutions as we navigate a difficult winter ahead."
Chamber director policy and representation Rhiannon Bearne said: "Quarter three results really demonstrate a complex picture, with some small glimmers of hope, but some major causes for concern.
"There is evidence of stability, and even signs of positivity compared to previous quarters, but not enough to allay the real concerns we have about the continued negative trend across so many measures of business health over the last 12 months."
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