A TALE of two sectors has emerged in the latest quarterly economy survey conducted by St Helens Chamber of Commerce.

Second quarter figures reveal that the local manufacturing sector remains robust, while service sector industries continue to report worrying trends.

After a dip in the first quarter, the most recent survey results show that confidence is on the rise among manufacturers, with orders both home and abroad up on the previous quarter.

Investment plans and employment levels are also both looking positive with almost half of all local manufacturers attempting to recruit.

However, the picture is looking less positive in the service sector, as a decline in sales and orders has undermined confidence.

Domestic markets are slowing as public sector cuts and higher VAT rates dampen demand.

A number of service sector businesses are also reporting difficulties caused by the number of working days lost in April through public holidays.

Employment growth in the sector improved slightly with a quarter of respondents attempting to recruit. But the outlook on job creation into the next quarter looks less positive.

A worrying trend reported by both sectors, which the chamber said it is working hard with businesses to try and overcome, is an increase in skills shortages. This has led to a noticeable increase in recruitment difficulties for both sectors.

Service sector firms found recruiting professional managerial staff a problem, while the number of manufacturing companies facing difficulties in recruiting skilled technical staff has doubled since last quarter.

Chamber director of enterprise, Sara Williams, said: “As we enter the second half of 2011, the UK economy still faces some significant challenges, and St Helens is no exception.

“Despite this, many local companies are doing well and continue to create jobs for local people. Manufacturing companies have performed particularly well this quarter, but we are concerned about the lack of any sustained growth in the service sector.” She added: “With UK inflation more than double its 2% target and likely to increase further in the next few months, the chamber network is calling on the MPC (monetary policy committee) to hold its nerve on interest rates, for the next few months at least.

“The Government must implement policies to support growth and empower businesses to invest, export and create jobs.”

The latest quarterly economic survey was compiled from responses from 168 members between May 23 and June 13, including 37 from manufacturing companies, and 131 from firms operating in the service sector.