ST Helens Chamber say the second quarter of 2011 told a tale of two sectors - with local manufacturing remaining robust but service sector industries continuing to report worrying trends.
Following a dip in the first quarter, recent survey results reveal that confidence is on the rise amongst manufacturers, with orders both home and abroad up on the previous quarter.
Investment plans and employment levels are also both looking positive with almost half of all local manufacturers attempting to recruit.
The picture is looking less positive in the service sector, however, as a decline in sales and orders has undermined confidence.
Domestic markets are slowing as public sector cuts and higher VAT rates dampen demand.
A number of service sector businesses are also reporting difficulties caused by the number of working days lost in April through public holidays.
A worrying trend reported by both sectors, which the Chamber is working hard with businesses to try and overcome, is an increase in skills shortages.
This has led to a noticeable increase in recruitment difficulties for both sectors.
Service sector firms found recruiting professional managerial staff a problem, whilst the number of manufacturing companies facing difficulties in recruiting skilled technical staff has doubled since last quarter.
Sara Williams, the Chamber’s director of enterprise development, said: “As we enter the second half of 2011, the UK economy still faces some significant challenges and St Helens is no exception.
“Despite this, many local companies are doing well and continue to create jobs for local people. Manufacturing companies have performed particularly well this quarter, but we are concerned about the lack of any sustained growth in the service sector.
“With UK inflation more than double its two per cent target and likely to increase further in the next few months, the Government must implement policies to support growth and empower businesses to invest, export and create jobs.”