The national newspapers are dominated by headlines about a housing and banking crisis, and soaring fuel costs, and yet surveys are showing a very mixed picture. Recent consumer spending figures showed high street sales strongly upwards.

To get a better feel for the situation I spent two days last week with the CBI’s deputy director general visiting a range of companies in a variety of sectors in the region to try to get a picture of what it is really like on the ground.

There is no doubt that the experience of companies so far is highly dependent on the sector of the economy and the markets they are serving. Anyone closely related to the housing sector or niche financial services is having a tough time, and the more reliant your business is on activity, rather than house values, the harder it is. Probably the two worst businesses to be in currently are estate agency and house removals.

Retail is mixed and the further into big-ticket, discretionary-spend items you go, the harder companies are having to work to get people to part with cash. There is evidence of trading down, casual dining in pubs seems to be faring better than restaurant trade, with restaurants aimed at the business diner doing a little better than those aimed at families.

CBI forecasts show that real consumer income growth will be negative in the second half of this year. People may be feeling less well off than they were a year or so ago now – but they will actually be poorer in the run-up to Christmas, indicating a tougher time ahead for retailers.

Away from retail into the broader manufacturing and service economy, companies are reporting trading conditions much more benign than you would believe reading especially from the London-based press.

Business-to-business services are stronger than consumer services and manufacturing companies are reporting generally strong trading conditions. Companies exposed to a range of global markets are especially well placed, with Asian markets still strong and the sterling/euro exchange rate helping companies selling into Europe. If the manufacturing sector is sounding a note of caution it is around input and raw material costs rising.

There are some eye-watering increases in energy and commodities, and the key to margin preservation is the ability to pass these through the supply chain and on to the end customer. Market dynamics are critical with basic economics kicking into action.

Companies in sectors where there is over-supply are bearing all the pain, while those in industries where there is a better balance between supply and demand are showing a greater ability to pass through energy and raw material price increases than I have seen for quite some time.

One consistent note of optimism centres around pay settlements. Companies are telling me that pay claims, and awards, are not reflecting the increasing inflation rate, with the great majority coming in at about three per cent.