FIFTEEN months of rising employment in Darlington came to an end last month, with a fall in the number of workers in the town.

But business confidence has risen, which reflects figures released by the British Chambers of Commerce, and the North-East Chamber of Commerce, which showed that 90 per cent of the key indicators in its quarterly economic survey are above average in the North-East.

Clive Owen, senior partner at Clive Owen & Co, chartered accountants and business advisors, which compiles the business index, said: "This applies most specifically to manufacturing businesses, as export sales from the region have been among the strongest in the country.

"Despite having lost a lot of manufacturing capacity in Darlington, there are still more businesses in the industry in our region than any other region in the UK."

He said the fall in employment levels in the town reflected recent news concerning job losses at lycra manufacturer DuPont. But the company's Darlington site, which employs 100 staff, has escaped redundancies.

He said: "Leading economists are saying this recovery in manufacturing and the service industry, which is also benefiting from improved conditions, may mean the Bank of England has to raise interest rates.

"Any sharp increases could be damaging for regional manufacturers, although the continuous strength of the housing market in the North, compared with the South, demonstrates a need for some calming measure.

"Recent news from the Halifax emphasises the severity of the gap between house price inflation in the North and the South.

"It said that house prices in our region are rising faster than any other region in the UK, with Hartlepool, Stockton and Darlington as the main hotspots.

"Despite our Northern optimism, the future is increasingly difficult to predict. Major terrorist threats do affect trade patterns, and events in the past few days have moved Europe on to centre stage."

The business index assesses business activity filed by a selection of companies in the Darlington area over the course of the last month. The figures compare current business performance with previous months.