Norfolk's manufacturing and service sectors experienced sharp falls in the third quarter reflecting what might be the 'first alarm bell' for the economy, a leading business group has said.

Figures compiled by the British Chambers of Commerce (BCC) suggested that while the UK was still growing, expansion slowed during the period – a picture mirrored locally across the county.

In Norfolk, expansion of manufacturing domestic sales were down to +30pc compared to +40pc in the second quarter, while domestic orders also fell from +42pc to +34pc over the same period, according to the chamber's quarterly economic survey.

The county's services sector witnessed a steep fall in domestic sales to +37pc, down from +55pc in Q2, as domestic orders also fell to +36pc from +48pc.

Caroline Williams, chief executive of Norfolk Chamber, said: 'Due to both sectors in Norfolk and the East of England reporting reduced order books for UK and overseas sales, this has resulted in a slight dip in confidence since the previous quarter's strong results.

'Despite this note of caution, investment in plant and machinery and training remains constant and more manufacturers are reporting that they are operating at full capacity. Recruitment remains an issue, with many organisations reporting difficulty in sourcing skilled staff.

'As skill shortages put pressure on existing wages, this may result in pay settlements becoming of greater concern. Both sectors are reporting that they anticipate a slow down in recruitment over the next three months.

'Inflation and interest rates have also been indicated as areas of concern for businesses in our region. Whilst the results are not as positive as the previous quarter, the Norfolk and East of England business communities will continue to strive towards economic growth and prosperity.'

John Longworth, the BCC director-general, said: 'As we predicted in our economic forecast, the strong upsurge in UK manufacturing at the start of the year appears to have run its course.

'We may be hearing the first alarm bell for the UK economy, but this need not be the case.

'The disappointing decline in exports highlights that we must do something radically different.

'Britain faces a major challenge in improving its trade performance, so we must waste no time in supporting trade opportunities to overseas markets which offer sustained growth.'

Latest data from the Office for National Statistics showed the economy had recovered all the ground lost in the 2008/09 recession and by the middle of this year was 2.7pc ahead of its pre-recession peak.

Gross domestic product grew by 0.7pc in the first quarter and 0.9pc in the second quarter.

The International Monetary Fund's latest forecast suggests the UK remains on course to outpace the world's major economies with growth of 3.2pc this year.

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