BUSINESSES are taking a cautious approach to growth in the second quarter of 2012, Leeds, York and North Yorkshire Chamber of Commerce latest quarterly economic survey has shown.

In quarter two of 2012, both the manufacturing and service sectors reported a slowdown in domestic sales and orders and although both are still in positive territory. The survey, carried out by Leeds University Business School, said the results were reflective of the sluggishness of the UK economy.

Mark Goldstone, head of policy and representation at the Chamber, said: “The economic outlook remains hard to call across our region. Generally businesses are still reporting sluggish growth and caution. Recent developments in resolving the Eurozone crisis may go some way to bring confidence but far and away the highest priority is to get the UK economy functioning again. Falling inflation should help improve consumers’ disposable income and the Chamber will continue to encourage businesses to look at faster growing markets outside of Europe, but business must be made to feel confident that investments they make in new equipment, new employees and new markets will receive positive returns.”

The report said the slow down in export sales in the region, which contradicts the national trend reported by the British Chambers of Commerce, was a concern, and blamed the Eurozone troubles, with six of the top ten export markets from the region being within the single currency.

Businesses anticipated a slowdown in employment and further caution in recruitment/replacement activities, although more companies than not, out of the 600 surveyed, reported that they intended to recruit. Professional services reported the most job creation activity followed closely by manufacturing and software/ICT sectors.

Just under half of the service sector and a third of manufacturers in the region reported improved turnover expectations over the next 12 months, with 40 per cent of all businesses reporting turnover was currently higher or significantly higher than the start of the recession in 2008.