HOME and export markets for manufacturing in the York area are down. Services are up.

That is the conclusion of the latest quarterly economic survey by the York and North Yorkshire Chamber of Commerce.

The survey findings demonstrate "mixed results for the area and an overall picture of a divergent economy."

While previous surveys have shown the manufacturing and service sectors often rising and falling in unison, this quarter's returns for sales and orders in the two sectors have shown differing fortunes with traditional industry in both home and export markets taking a downward turn.

Services, however, have shown a rise in balance figures with the trend in home sales for services up by five points and orders ahead by 12 points,. while manufacturing fell 20 points in both home and export sales and in orders.

The volatility of the economy, according to the survey, is also reflected by the fact that turnover and profit margins in both sectors have shown a downward trend. Increasing material costs and the strength of the pound is also testing many local employers.

John Yeomans, president of the York Chamber, which has 600 members and another 600 associate members, said: "The local economy continues to be dogged by external factors such as exchange rates and raw material costs that are holding back overall growth and development.

"We have seen investment levels in both sectors take a knock and turnover and profit margins are consequently being squeezed."

Roland Harris, the chamber's chief executive, added: "The possibility of a diverging economy is not exclusive to York and North Yorkshire, nor even to the region, but with sales and orders evidently falling, the area becomes more reliant on services and tourism."