Inflation and recruitment woes driving down Yorkshire's economic recovery

Rising inflation and difficulties with recruitment are slowing the economic recover in both West and North Yorkshire, with confidence among business leaders in the region having dipped in recent weeks.

The latest economic report from Chambers of Commerce in West & North Yorkshire showed that, whilst firms are continuing to report domestic sales growth, there are strong signs that the pace of growth is being slowed by increasing cost pressure and access to skills and talent.

And, with the fieldwork conducted before the surge in the Omicron variant, the full impact of these pressures may still not yet be realised.

For the three-month period to the end of 2021, manufacturers saw domestic sales in the region rise by 37 per cent up from 17 per cent in the previous quarter.

Confidence in West Yorkshire is falling among business leaders.

Export sales and capital investment also both rose while training investment and confidence remained static.

In the service sector, sales also rose both domestically and internationally. However, capital investment declined and overall confidence dripped below 50 per cent.

Amanda Beresford, chair of West & North Yorkshire Chamber of Commerce, said of the results: “The crisis has placed extreme pressures on the cash reserves of many regional firms with supply chains still facing the twin challenges of Covid and Brexit and now with intense labour shortages leading to spiralling pay increases as companies try to recruit and retain workers.”

Meanwhile, new data from KPMG showed further increases in both permanent placements and temporary billings across the region at the end of 2021.

Services has seen the biggest drop off

Demand for both permanent and temporary workers rose sharply, although recruiters continued to report tight labour supply conditions.