Studies show region still on rocky road to economic recovery

Hull and Humber saw a gain in export sales but remains behind the rest of Yorkshire while confidence at Bradford businesses improved despite rising costs in manufacturing and services.

The economic surveys, published today, come as the UK economy expanded further in the second quarter but with "serious" concerns posing a threat to a sustained recovery, the British Chambers of Commerce warned.

The BCC predicted growth of between 0.6 per cent and 0.7 per cent in the three months to the end of June as its latest quarterly survey suggested the recovery gained traction.

However, it cautioned over sluggish growth in the services sector and the pressure to hike prices as manufacturers battle against rising input costs.

Confidence improved in the service sector in Bradford, after a "wobble" three months ago, but manufacturing dipped after four quarters of improving profit expectations.

The chamber said sales and orders in domestic markets have been stable since April, but there was a divergent picture in exports, with services dipping and manufacturing consolidated its strength for the third successive quarter.

Businesses in the service sector have worries over the level of inflation tax while facing rising overheads and finance costs.

Manufacturers have also been troubled by higher costs, such as finance, wages and other overheads. Both sectors, however, said they were looking at investing more in equipment and personnel.

Harold Robinson, president of the chamber, said: "The Budget measures, though welcomed, cannot be held up as a collective tonic to pick up the economy and balance out the spending cuts."

In Hull and Humber the recovery continues but is lacking momentum.

Nearly a third (32 per cent) of companies reported an increase in domestic sales in the last quarter, up 2 per cent on the first three months of the year, but 28 per cent reported a decrease, putting it in a worse position than the average for the rest of Yorkshire.

East Yorkshire saw a rise in export sales, however, with 32 per cent reporting an increase, up 8 per cent on the first quarter and 21 per cent reporting a decrease.

Again, though, this was below the average for the region.

Richard Kendall, policy executive at Hull and Humber chamber, said: "The gains we are seeing here so far are smaller than those being experienced elsewhere.

"The biggest positive in the results is the employment indicators, which show businesses are slowly starting to take on more staff. "

The survey showed that 47 per cent of Humber companies tried to recruit staff in the last quarter, slightly better than the region-wide average. A fifth of firms increased the size of their workforce and 12 per cent shrank it, the best figures for two years. Only 28 per cent of companies are operating at full capacity.

The BCC warned unemployment could reach 2.65 million and said "underlying weaknesses in the economy remain, which can't be ignored if we are to avoid a relapse into recession".

Its survey showed firms enjoyed the biggest rise in manufacturing home sales since the second quarter of 2007 during the three months to June 30, while the result for export sales was the best since the third quarter of 2006.