North East business growth has slowed considerably since the record figures of last year, according to new data from the North East Chamber of Commerce.
The latest NECC Quarterly Economic Survey, representing the final stretch of 2014, shows a number of positive trends, but also highlights emerging concerns, backed up by a number of other studies showing a recent dip in UK business confidence.
During the period, a quarter of NECC members (26.5%) said they were suffering price pressures due to pay settlements. This was up from the previous quarter (21.2%) and notably higher than the same period last year (18.4%).
Following extremely positive results at the end of 2013 and the first two quarters of 2014, businesses have likewise reported a dip in trade with domestic and foreign markets, although domestic sales remain much stronger than this time last year.
Some members were also concerned about raw material and finance costs.
The survey, measured across 11 separate indicators, is designed to show the health and direction of the North East economy.
On the more positive side, a third of members said their businesses were operating at full capacity, a quarter were attempting to recruit staff in part-time positions and three fifths were recruiting full-time staff.
Similarly, over half were planning to take on employees in permanent positions - a figure in line with the previous quarter and one of the few measures bettered in the 2014 Q4 QES compared to last year’s record-breaking results during the comparable period.
NECC policy and research manager Mark Stephenson said: “In the course of a textbook economic recovery – if there is such a thing – businesses will often unleash pent up demand early in the economic cycle as they seek to rebound from a period of limited opportunity and move ahead of rivals in a newly expanding market.
“Following on from retrenchment, with profits being saved to weather the downturn, businesses begin firing investment from all barrels.”
Members, he added, had had to “fight tooth and nail” to get where they are today.
“Looking ahead we must focus on consolidating growth, which of course will not be easy,” he said. “Yet in an economy that has more variety and more strength in depth than ever before, we have a fighting chance.
“Recent announcements will improve connectivity to our region and in the past 18 months we estimate that just under £1bn of transport infrastructure announcements have been made that will help link your businesses to markets in the UK and abroad.”
The new figures come after the annual EEF/Aldermore Executive Survey showed manufacturers’ bullish expectations were showing signs of easing back.
The latest Business in Britain report from Lloyds Bank, which gathers the views of more than 1,500 UK businesses, painted a similar picture, its key confidence index dropping by 29 points to 26% since July.
And a survey of chief financial officers by business advisor Deloitte has highlighted the forthcoming General Election, potential deflation and weakness in the Eurozone as risks facing their firms in 2015.