Findings published in the latest West & North Yorkshire Chamber of Commerce quarterly economic survey highlighted strong employment across the region but indicated a slowing in investment intentions.
The uncertainty over Brexit and the rising cost of inputs was attributed to the picture.
Chamber chairman, Gerald Jennings said that “Our results suggest that major decision making has been paused awaiting the outcome of Brexit negotiations.
“Whilst underlying factors such as sales and employment remain strong companies are holding making big investment decisions.
“Rising input costs also seem to be having an impact too, in part down to the double edged sword of currency volatility; we expect a greater number of companies will seek to pass on these additional costs in the next quarter.”
Roger Marsh OBE, chair of the Leeds City Region LEP, said: “Businesses are taking a pragmatic approach to planning for the potential impact of Brexit with many organisations starting to discuss tactics at a strategic level.
“The impact that the lack of clarity over leaving the European Union has had on businesses continues to be an issue.
“Going forward we will continue to make the case to Government to ensure the concerns of local businesses are being heard and that there are plans in place to for the continuation of economic growth post-Brexit.
The robustness of our services sector has meant the region has outperformed the national picture, with businesses ending the year on a three year domestic sales high.
“In our region the services sector represents 80 per cent of businesses, so it is especially encouraging that domestic sales in the sector are reporting an upward trend.
“Looking ahead to 2019, a year that will bring challenges, I remain confident that businesses in the region will continue to deliver economic growth and prosperity in spite of a potentially turbulent economic environment.”
The survey was completed by companies collectively employing more than 1 million people.