THE region's manufacturers are expecting a challenging 2012 but are more confident about their own performance in the next 12 months.

Manufacturing employers group the EEF says the crisis in the eurozone is set to have a major impact on conditions this year and increasing numbers are now looking towards emerging markets to grow their business.

The survey comes as the influential Item Club report warned that the UK may have already returned to recession with contracting GDP in the last quarter of 2011 and further shrinkage in the current three months.

The balance of those questioned for the EEF’s Executive Survey said that they expected economic conditions to deteriorate this year.

More than a third – 36% – predicted that the economy will be worse, while 26% believed it would improve, and 39% forecast that industry will be worse, with just 26% expecting to see improvements.

However, despite the grim outlook, North East manufacturers are more confident about their own performance, with more than 90% expecting sales to stay the same or increase this year. Six out of 10 said they had changed their business plans to cope with the worsening economic conditions. Now, almost half – 45% – plan to increase their number of permanent employees, while the same proportion aim to increase export sales and 39% will focus on growing their domestic sales.

Regional EEF spokesman Tony Sarginson said: “North East manufacturing has posted solid growth in the past few years but the environment has clearly become a lot more challenging. The road ahead for North East manufacturers is uncertain but there still some grounds for optimism.

“North East manufacturing has proved to be agile and resilient through a bumpy recovery and companies are continuously looking for new sources of growth.”