Positives for North East firms though cost pressures still loom

The North East Chamber of Commerce has published the findings of its latest quarterly economic survey

There are encouraging signs for North East businesses with rising sales and hiring intentions, research from a top regional group suggests.

Firms were questioned as part of the established North East Chamber of Commerce's quarterly economic survey (QES), which pointed to improvements in sales, recruitment and investment in workers. But despite the confidence markers, the Q2 research also showed firms were wary of increased energy costs, wider inflation and weaker profit forecasts.

Business activity was shown to have broadly strengthened with increases in UK sales, UK orders and exporting, while the proportion of firms operating at full capacity also increased. Training investment plans rose strong, up 13.2%, but plant investment declined by 7.6% Profitability expectations were also weakened.

The survey conducted between May 11 and June 8 found future workforce expectations rose sharply, with recruitment across all types of roles. However recruitment challenges increased across all categories but particularly semi and unskilled and clerical roles. Workforce levels also improved slightly on the previous quarter, but remained below Q2 2025 levels.

Deborah Walton, president at the North East Chamber of Commerce, said: "This quarter’s results highlight growing confidence among North East businesses, with significant improvements in sales activity, recruitment intentions and investment in workforce development. Businesses are clearly looking ahead, with future workforce plans reaching their highest level for some time and training investment increasing strongly compared with both last quarter and a year ago."

Less favourable were concerns about price pressures, which increased across most indicators but most notably fuel, up 23.4%, raw materials, up 18.5%, and utilities, up 9.9%. Researchers said that despite the growth, most cost pressures remained lower than a year ago as labour, finance and other overheads showed annual declines.

Concern about energy prices rose significantly over the quarter, with 58.1% of businesses saying it was an issue. More than half of firms reported taking action to reduce energy costs through efficiency measures and reduced energy usage.

Meanwhile worries around business rates, crime and taxation eased, while concerns about energy prices, inflation and exchange rates all increased.

Rhiannon Bearne, deputy CEO at North East Chamber of Commerce, said: "As businesses and communities face further change on the national political stage, stable policy, investment in infrastructure and support for competitiveness will be critical to sustaining this cautious momentum. The North East Chamber of Commerce will continue to champion the needs of North East businesses and ensure their experiences help shape policy not just regionally but, through our strong partnership with the British Chambers of Commerce, nationally as well."