THE North-East economy is again showing a marked difference in performance between manufacturing and service companies.

Business Survey North-East, a quarterly review of companies in the region, has produced its report for the third quarter of 2000. The survey was conducted during September on behalf of the North-East Chamber of Commerce and regional development agency One NorthEast. More than 350 businesses responded.

Service businesses are continuing to perform better in terms of UK sales than those in the manufacturing sector, although both showed growth in the last quarter. The service sector posted growth of 27 per cent this quarter, compared to 29 per cent in the last quarter.

Growth in the manufacturing sector stood at eight per cent, up two per cent on the previous quarter.

At sector level, growth in employment amongst manufacturers accelerated from one per cent in the previous quarter, to 17 per cent. The rate of employment in the service sector accelerated from 21 per cent to 25 per cent between the second and third quarter.

In the area of exports, however, the situation is turned on its head, with both sectors still performing poorly, although manufacturing is showing greater growth.

Mike Collier, chief executive One NorthEast, said the report reflects the uncertainty surrounding currency exchange rates in the region and the country as a whole. "We would like to see a continuing improvement in competitiveness and a genuine upturn in the regional economy, " he added.

Nigel Sherlock, president of the North-East Chamber of Commerce, said that because manufacturers make up a larger proportion of businesses in the North-East than in the rest of the UK, their continuing problems are a cause for concern.

"They draw attention yet again to the strength of sterling, particularly in relation to the euro, which has squeezed so many overseas markets."