Survey reveals growing confidence despite costs

A new survey suggests North East businesses are showing greater confidence in sales and recruitment despite continuing to grapple with rising costs, inflation and pressure on profitability.

The North East Chamber of Commerce's latest Quarterly Economic Survey (Q2 2026) paints a cautiously optimistic picture of the regional economy, with stronger domestic demand and increased workforce ambitions offset by mounting concerns over energy prices and operating costs.

UK sales increased by 18.6 per cent during the quarter, while UK orders rose by 17.5 per cent, signalling improved domestic trading conditions. 

Recruitment intentions also strengthened, with future workforce plans up 23 per cent and businesses increasing hiring across both full and part-time roles.

Training investment also rose significantly, suggesting many firms are continuing to invest in developing their people despite ongoing economic uncertainty.

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.”

However, the survey found businesses remain under pressure from rising costs. 

Fuel prices recorded the sharpest increase during the quarter, rising by 23.4 per cent, while raw material costs climbed 18.5 per cent and utility costs increased by 9.9 per cent.

These pressures appear to be affecting longer-term confidence. 

Profitability expectations fell by 9.1 per cent compared with the previous quarter, while energy prices emerged as the biggest concern facing businesses, overtaking issues such as business rates and taxation.

Although export sales and orders weakened during the period, overall business activity improved, with more companies reporting they were operating at full capacity.

The survey also highlighted continued challenges in the labour market. 

While recruitment activity increased across all job categories, employers reported growing difficulties filling vacancies, with the greatest shortages affecting semi-skilled, unskilled and clerical roles. 

Investment intentions also presented a mixed picture. 

Businesses signalled a stronger commitment to workforce development, with training investment rising significantly, but plans to invest in plant and machinery weakened, reflecting continued caution over longer-term capital expenditure.

More than half of respondents said they had also already taken steps to reduce energy costs through greater efficiency and lower consumption, highlighting the continued focus on managing overheads amid rising fuel and utility prices.

Overall, the survey suggests North East businesses remain resilient. 

Stronger domestic sales, growing recruitment intentions and increased investment in skills point to improving confidence, but persistent cost pressures, weaker profitability expectations and ongoing recruitment challenges indicate that many firms are continuing to navigate a difficult trading environment.

Rhiannon Bearne, deputy chief executive at North East Chamber of Commerce, added: “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.”

Read the full report here.

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