OPTIMISM levels among manufacturing businesses in Bradford and across Yorkshire have sunk to levels not seen since the height of the Covid-19 lockdowns, new research from West and North Yorkshire Chamber of Commerce has shown.

The Chamber’s latest Quarterly Economic Survey for the first quarter of 2025 shows the region’s producers reporting worsening sales performances both at home and internationally, with many firms in the sector resorting to job cuts and recruitment freezes. 

Conversely, the region’s service sector reported an improved performance from the preceding quarter, with domestic sales, appetite for investment and confidence over future profitability all heading in the right direction and, in many cases, outperforming the rest of the country – sometimes by a significant margin.

Elsewhere, taxation remains the number one cost pressure facing Yorkshire businesses, with the cost of labour also frequently cited as a challenge.

The research was carried out as businesses prepared to brace themselves for an increase in National Insurance Contributions and for a hike in the Minimum Wage, but before America threatened to impose punitive tariffs on many of its trading partners.

Amanda Beresford, chair of the West and North Yorkshire Chamber, said: “Our latest Quarterly Economic Survey is very much a mixed bag for economy.

“Our service sector is very much back in form, with sales, investment plans, employment and confidence on revenue and profits back where they belong and, in many cases, leading the UK.

“However, our beloved manufacturing sector continues to struggle with sluggish sales and diminished confidence over profitability.

“The thing that unites both sectors is tax, with both service sector firms and manufacturers citing it as the number one cost pressure.

“Given the increase in Employer National Insurance costs and the already eye-watering levels of business taxation, it was inevitable that this would be front and centre.”

The level of service firms who witnessed growth in their sales rose by three per cent, the third consecutive quarter of growth for the sector.  

Capping off a gloomy start to 2025 for manufacturers, the number of firms growing their sales declined by seven per cent, the lowest level seen since the height of the Covid-19 lockdowns five years ago.

Given the sizeable uplifts the Chancellor announced at the autumn Budget to both the levels of minimum wage and Employer National Insurance Contributions, the Chamber said the chief pressures facing employers are going to be taxation and wage bills.  

One business the Chamber spoke to said “the changes in National Insurance are killing SMEs” while another remarked “I paid more tax than I paid myself in 2024”.