'Private sector output up - but confidence subdued'

North East private sector output grew last month – but companies remain weighed down by subdued confidence and investment intentions, according to a new report.

NatWest’s latest Growth Tracker says output across the region’s manufacturing and service sectors increased from 51 in June to 51.4 in July.

A reading above 50 signals growth.

However, the report adds the numbers “mask mixed trends”, with higher activity led by the completion of existing orders and challenging market conditions impacting recruitment and spending plans.

Malcolm Buchanan, chair of the NatWest North regional board, said: “The North East private sector economy entered the second half of 2025 on a seemingly positive note, as overall business activity rose at a modest pace that was the strongest in four months.

“Growth was dampened by a muted demand environment, with sales falling for the fourth time in the past five months, albeit only marginally.

“Market conditions remained challenging, as companies continued to signal elevated cost burdens in July, which discouraged hiring and investment decisions.

“In fact, employment levels have now fallen consistently for eight months running.”

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