North East businesses stabilise as price pressures ease, but sales soften
Date published:
Economic survey results released today (11 July) by the North East Chamber of Commerce show businesses in the region are stabilising, with easing price and recruitment pressures, but ongoing caution over sales and investment.
The latest Quarterly Economic Survey (QES) highlights how businesses are adapting to shifting economic pressures, even as domestic and export sales remain subdued.
- Workforce capacity improved (+17.4%), though hiring intentions dipped slightly (-1.8%).
- Price pressures eased, with fuel costs down (-2.8%) and overheads down (-1.5%).
- Recruitment difficulties fell, particularly for manual (-13.7%) and clerical roles (-10.2%).
- UK sales and export activity declined (-3.4% and -3.8%, respectively), while business investment also weakened.
- Energy remains a concern for over half of firms, though most businesses (73.8%) are taking action to cut usage.
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.”
Price pressures
In general, price pressures eased this quarter, with notable falls in fuel (-2.8%) and overheads (-1.5%). Finance costs rose by 4.6%, the only category to increase.
Year-on-year, inflationary pressures have continued to ease across most categories, though labour costs remain high, rising 3.2% annually and cited by 90% of manufacturers and 73% of service providers to be the most significant pressure.
Workforce and recruitment
In this quarter, workforce capacity rose significantly this quarter (+17.4%), suggesting firms are closer to full strength. However, future hiring intentions fell slightly (-1.8%).
Recruitment challenges eased, with fewer firms reporting difficulties in hiring skilled manual and technical staff (-13.7%) and clerical staff (-10.2%). Businesses also reported reduced concern over staff costs and shortages.
Sales, exports and investment
Sales activity weakened this quarter, with UK sales down 3.4% and businesses exporting goods or services down 3.8%, continuing a year-on-year decline (-4% and -4.2%, respectively). UK orders showed a slight quarterly improvement (+0.6%) but remain 10.9% lower than last year, while export sales increased 2.3% on the quarter and 8.9% year-on-year.
Business investment indicators fell, with plant investment down 6.1% (-14.6% annually) and training investment down 3.2% this quarter (-12.2% annually). Profitability expectations edged up 1% but remain 12.9% lower than last year.
Deborah Walton, Chamber president, said, “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.”
Energy usage
Energy remains a key concern this quarter, with over half of businesses identifying it as an issue. To reduce costs, 73.8% have introduced measures, with switching off equipment (85%) being the most common, along with encouraging staff behaviour change (78%) and investing in energy-efficient equipment (45%).
Chamber advocacy
The Chamber remains committed to representing and supporting businesses across the region. These survey findings are shared with policymakers and national bodies to ensure regional priorities are heard.
Deborah added, “As always, the Chamber stands ready to advocate on your behalf. These survey results are more than just data; they are your lived experience. Thank you for your continued engagement, which helps us champion the needs of North East businesses across every sector.”
Download a copy of the Economic Survey Q2 2025 report