GROWTH in manufacturing might have stalled over the past quarter, but there has been a resurgence in the service industry, the latest local economic survey by St Helens Chamber shows.

The difficulties in manufacturing follow a “very positive” second quarter of the year and point to further economic uncertainty.

The trend, identified following the questioning of 31 local manufacturing companies, working in fields such as construction and double glazing, is being blamed on the costs of raw materials and fuel, which are continuing to cause concern and impact on business confidence.

The chamber’s report adds that the findings underline the challenges faced by the UK economy, which it says have proved to be more difficult than anticipated at the beginning of the year.

They are set against a backdrop of uncertainty and falling confidence, with many hard-pressed families struggling with inflation, which is driving up food bills.

It adds that St Helens “has been far from immune”, but despite the tough trading conditions, there are “signs local businesses have become more resilient”.

The positive news is in the service sector – which includes restaurants, bars, and hotels – where seven of the 10 major indicators showed improvement on quarter two.

However, the sector is still described as “very weak”, although a third of businesses surveyed have attempted to recruit staff and have a “positive outlook for jobs”.

Sara Williams, director of enterprise development at St Helens Chamber, said: “In the short term, growth will be slow and inflation will remain high.

“However, there is no need for doom and gloom, as we expect the situation to improve over the medium-term and believe our businesses have the potential to recover and thrive.

“If we concentrate less on the financial industry and more on the wider economy, we can see there is a different picture emerging.

“For businesses to thrive, we must provide the right framework and environment. Economic growth arises from business confidence.

“An even playing field, stability and words backed up with actions are crucial to boosting this.

“The chamber will continue to exert influence, where it can to remove the barriers that stifle business growth.

“We look forward to the Government’s ‘autumn statement’ on November 29 and are lobbying very strongly for a package of measures that will strengthen business confidence, allowing them to grow, invest, export and create jobs.

“Government can and must do more to support, not hinder business growth and work to generate stability and talk up the future of the UK.”

The quarterly economic survey for quarter three of 2011 was conducted between August 29 and September 19.

St Helens Chamber said 175 of its members, who employ more than 4,500 people, responded.