THE return to growth is welcome news for the North East where a buoyant service sector is helping to pull the UK out of recession, business leaders have said.
The UK has avoided a triple-dip recession after the economy grew by 0.3% at the start of the year, official figures from the Office for National Statistics (ONS) show.
According to the ONS, the powerhouse services sector grew by 0.6% in the first quarter, spurred by 1.1% growth in the wholesale and retail distribution, hotels and restaurant trades sector.
There was a strong boost from the transport, storage and communications sector, which saw growth of 1.4% and demand for electricity and gas saw output from the energy supply sector rise 0.5%.
Sales in the retail sector fell in January and March but a strong February helped it notch up growth of 0.3% overall in the quarter.
Despite growth fears over the strength of the recovery, with the key sector of construction plunging by 2.5% in the first quarter.
Production and manufacturing inched up 0.2% higher during the first quarter, but it remains down on the 2008 peak by 13.4%.
In the North East a brighter picture is starting to appear in the manufacturing and construction sectors.
North East Chamber of Commerce (NECC) director of policy, Ross Smith, said: ?The service sector has grown reasonably strongly and construction has gone in the wrong direction and that?s broadly reflected in what we have seen here in the North East, but from what our members are saying manufacturing has done better than the ONS has estimated for the UK as a whole.
Smith continued: ?On construction, it?s the sector probably having the biggest challenges over the last two to three years, so that?s not a great surprise to see it?s the weak end of the economy.
?But we have members in construction that are beginning to turn the corner, particularly in gaining work outside the North East, but they are still having to fight hard.
?In the service sector, broadly speaking, in the two years previous to this a lot of companies were either standing still or cutting back.
?We have seen plenty of businesses who have just started to dip their toe into recruitment and are beginning to see things turn around.
?Locally we have Phusion who have shown they are able to successfully export their software products, and if you look at Utilitywise in South Tyneside, they have grown rapidly by tapping into what is a big issue for businesses.?
Sarah Green, director of CBI North East, said: ?These figures are to be welcomed and confirm our view that 2013 will see real growth. The general sentiment among our members in the North East remains upbeat, despite the challenging economic environment and disappointing recent unemployment figures.
?What the UK economy now needs to see in the coming months is a recovery in manufacturing output, helped by a brighter global outlook, and the North East has a critical role to play in that recovery.
?The Government must build on these emerging signs of confidence by getting behind our region?s entrepreneurs and exporters.?
The Government can build on today?s GDP figures by putting focus on the UK construction industry, according to bosses at one of the North of England?s leading housebuilders.
Paul Moore, managing director of Southdale, which has offices in Halifax, Darlington and Warrington, added: ?Even if construction had flat-lined over the course of the last 12 months, it would have pushed overall GDP up considerably.
?The positive effects of a successful construction industry are far reaching, particularly because the vast majority of the supply chain is domestic, meaning that each level puts taxes into the Treasury and creates and sustains UK jobs.?
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