West of England LEP Quarterly Economic Bulletin Issue 4

Transcription

1 West of England LEP Quarterly Economic Bulletin Issue 4

2 Introduction This quarterly economic bulletin is intended to provide an overview of the economic health of the West of England looking at a variety of indicators. This bulletin is divided into four sections these are: 1. Business Conditions 2. Sectors (selected) 3. Employment / Labour Market 4. Property and Planning Comparator LEPs Where comparable statistics are available, the West of England LEP is benchmarked against other Core City LEP areas. The comparator LEP Core City areas are Greater Birmingham and Solihull, Leeds City Region, Liverpool City Region, Greater Manchester, North Eastern (Newcastle upon Tyne), Derby, Derbyshire, Nottingham and Nottinghamshire, and Sheffield City Region. The West of England is also compared to a number of southern LEP areas. These LEP areas are Gloucestershire, Greater Cambridge and Greater Peterborough, Oxford City Region, Swindon and Wiltshire, and Thames Valley Berkshire. Summary Table (Positive, Neutral, Negative, increase, decrease, no change) Data Sets Business start ups in the WofE In the 4 th quarter of 212 there was a decrease in the number of business start ups compared to the previous quarter. Employment Rate The West of England employment rate in the year to September 212 stood at 72.3%. This is a decrease on the same period during the previous year. However the rate has now stabilised following a period of decline. Unemployment Rate The West of England unemployment rate in the year to September 212 stood at 7.2% this is an increase on the same period during the previous year. Jobseeker s Allowance (JSA) Claimant Rate As of December 212 the Claimant Rate in the West of England stood at 3.1%. This is a decrease on the same month during the previous year. Direction of Change 2, House Prices As of September 212 average house prices in the West of England were 183,484 this is an increase on September ,484 Inward Investment Enquiries The Inward Investment Service for the West of England received 25 new property enquiries in the 4th quarter of 212. This is an increase on quarter 4 of

3 1. Business Conditions The wider environment The UK economy made no progress in 212. Real GDP growth was completely flat, whilst inflation and unemployment were stuck at high rates, averaging about 3% and 8% respectively. There was some adjustment from public sector to private sector employment, but this was more rebadging than rebalancing. In year on year terms, UK industrial production fell every month, whilst the fiscal deficit grew larger (net debt now over 7% of GDP) and the trade deficit remained huge: again, little or no evidence of rebalancing towards a more productive, growing economy. Meanwhile, the US fiscal cliff and debt ceiling debates, the Euro zone s deep malaise, slower growth in the Far East, and continuing balance sheet adjustment in international banking, all show that global debt reduction though necessary for the long term continues to depress current growth. One hopeful sign is that stock markets are making progress, reflecting positive corporate liquidity and profitability as well as uncertainty over alternative investments. Funds are available for corporate growth if confidence can be restored and uncertainty removed. Breaking these barriers is key to growth in 213 and beyond. Current demand conditions Against this macro background, lack of demand is the most immediate brake on the West of England (WoE) economy. Since the downturn began, average real household incomes per head have been flat and savings ratios have increased. Although still high, liability/income ratios have come down. Again, this household adjustment is good for the long run, but it means low domestic consumption right now. The closures of Comet, Jessops, HMV and Blockbuster all reflect the downward pressure on discretionary spending. At the same time, whilst many companies (large and small) are cash rich and could invest more, they are held back by a high level of policy uncertainty (e.g. towards the UK s EU membership) and a lack of confidence about future returns (reflecting extremely low interest rates and weak demand prospects). On the supply side, whilst labour flexibility has helped to maintain high employment, productivity remains poor: UK output per hour was still 3.5% below pre downturn highs in the third quarter of 212. This stark feature of the economy will have to improve before an investment led recovery can get underway. West of England outlook The WoE economy cannot buck these overall macro trends entirely. Regional and local surveys of output and hiring and investment intentions have fluctuated but, essentially, they moved sideways through 212. This makes the decrease in unemployment over the last year amazing. For example, the WoE claimant count level fell by 581 to 2,755 between December 211 and December 212, with the rate down.1% to 2.8% compared with a UK average of 3.7%. Within the WoE area, the latest rates range from 1.9% in Bath and NE Somerset through 2.% in S Gloucestershire and 2.5% in N Somerset, to 3.8% in Bristol. The WoE economy is still making jobs but it is not building productivity, reducing the incentives to invest. The WoE economy has some strong sectors and companies that are focused on development and growth through technical, product and process innovation and skills. The WoE Local Enterprise Partnership aims to support and grow such local, private sector enterprise, providing the space, information and opportunity for competitive ideas and plans to flourish. In a persistently difficult macro economic climate, it is these micro decisions encouraging firms to co operate to compete that will make the real difference for local jobs and output. 2

4 Business Start ups Business Start ups in the West of England Business Start up rate (per 1, working age population) Source: BankSearch 4 th Quarter 212 % Change on 4 th Quarter 211 % Change on 3rd Quarter 212 Direction of Change on previous Quarter 2, N/A N/A The 4 th quarter of 212 saw yet another decline in the number of businesses being started up across the West of England, however trend data suggests that business start ups are always at the lowest during the 4 th quarter. The number of business start ups for this quarter is 2.8 percentage points down on the same quarter for 211 and 5.3 percentage points down on the previous quarter in 212. If this trend continues for a sustained period of time it may be necessary to further examine the causes of this decline. The double dip recession reported in the 1 st quarter of 212 and the contraction of the economy in the 4 th quarter could be effecting business confidence and preventing people from starting up new businesses. Business start ups are an indication of entrepreneurialism and innovation and it is within these business startups that the jobs of the future will be created. Graph 1: Business Start ups in the West of England Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q Source: BankSearch 2. Sectors (Selective s) This section primarily covers indicators for retail and tourism, which provide a dynamic picture of the health of the local economy. Both retail and tourism are influenced by disposable income, in times of economic downturn, when people are more cautious on what they spend. a) Retail The health of the high street is continuing to struggle, as the global and national economy remains weak. Over the last couple of months a number of well known retailers have entered into administration, namely Comet in December 212 and HMV and Blockbuster in. Although the loss of these big brand retailers is a blow to the high street it could be argued that the loss of these stores is more an indication of the changes in consumer behaviour following the rise of digital media and Internet shopping. This shift in the behaviour of 3

5 consumers suggests retailers need to quickly adapt to survive. This may mean that the face of the traditional high street is changing, shifting to more independent stores and the night time economy. B&NES Over the summer month s vacancy rates in Bath City Centre remained below the national average. A more detailed analysis showed that of 84 vacant units, 8% were A1 shops and 9% were between 5 sq m. Recent monitoring of Council owned shops in the city centre has shown a falling vacancy rate, from 6.25% to 4.3%, which is potentially due to seasonal factors, with longer term trends become clearer in Q Bristol As of there was a retail vacancy rate of 8.2% in Bristol. This is a slight decrease on the vacancy rate for October 212 which stood at 8.6%. North Somerset As of October 212 there was a retail vacancy of 16% in Weston super Mare. It should be noted that the vacancy rates for the primary retail frontage areas vary widely across the major settlements in North Somerset. Over the last year there have been high vacancy rates primarily in Weston super Mare and Nailsea this follows many national chains going into administration and also local retailers struggling to survive the economic conditions. The council is working closely with Weston Town Centre Partnership to try and address the issue of vacant units in the town centre. South Gloucestershire As of there was a retail vacancy rate of 6.5% this is a decrease on the vacancy rate for October 212, which stood at 7.2%. Despite this decline smaller high streets and town centres continue to see longerterm unoccupied premises. b) Tourism 4 th Quarter 212 % Change on 4 th Quarter 211 % Change on 3 rd Quarter 212 Direction of Change on 4 th Quarter 211 Visitors to attractions in the West of England* 924, % 16.5 Total Room Sales (Bristol) 368,15 4% 1.1% Source: Destination Bristol Notes: *Number of visitors to attraction in the West of England equals the sum of visitors to attractions in Bath, Bristol and rural Somerset, Wiltshire and Gloucestershire. In the 4 th quarter of 212 the number of visitors to attractions in the West of England were down on the 4 th quarter of 211; and significantly down on the previous quarter. Despite a decline in visitors to attractions room sales/occupancy in Bristol was up, this suggests that those coming to the area were here on business. The West of England is in a strong position to target both the domestic and foreign holiday market due to its diverse offer, from the historical World Heritage City of Bath, the cultural vibrancy of Bristol, traditional seaside of Weston super Mare and beautiful surrounding English countryside. However, 212 was one of the wettest years on record having a negative impact on domestic tourism, highlighting the vulnerability of the sector within the UK. 4

6 Graph 2: Visitors to attractions in the West of England 1,4, 1,2, 1,, 8, 6, 4, 2, Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q Source: Destination Bristol Graph 3: Room Sales by Quarter in Bristol Based Hotels and Guest Houses 5, 4, 3, 2, 1, Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q Source: Destination Bristol Graph 4: Room Occupancy in Bath % Q1 Q2 Q Source: Bath Tourism Plus. 5

7 Graph 5: Visitors to Attractions in Bath 1,, 8, No. of Visitors 6, 4, 2, Q1 Q2 Q Source: Bath Tourism Plus. 3. Employment / Labour Market England Oct 211 Sept 212 Oct 211 Sept 212 Oct 21 Sept 211 Direction of Change Employment Level 23,852,5 538,8 542, Employment Rate Unemployment Level 2,94,3 41,7 41, Unemployment Rate Source: Annual Population Survey, NOMIS The West of England employment rate in the year to September 212 stood at 72.3%. This is a decrease on the same period during the previous year. However the rate has now stabilised following a period of decline. The fluctuations in employment rate experienced in the West of England are common in city regions during times of economic downturn. Despite lagging behind the average economic rate of its Southern comparators, the West of England has a higher economic rate than that of England as a whole and the Core City LEP areas. Unsurprisingly the fall in employment rate has been mirrored by a rise in the unemployment rate. Graph 6: Employment Rate (16 64) Apr 27 Mar 28 Jul 27 Jun 28 Oct 27 Sep 28 Jan 28 Dec 28 Apr 28 Mar 29 Jul 28 Jun 29 Oct 28 Sep 29 Jan 29 Dec 29 Apr 29 Mar 21 Jul 29 Jun 21 Oct 29 Sep 21 Jan 21 Dec 21 Apr 21 Mar 211 Jul 21 Jun 211 Oct 21 Sep 211 Jan 211 Dec 211 Apr 211 Mar 212 Jul 211 Jun 212 Oct 211 Sep 212 Core City LEPs Southern LEPs West of England England Source: Annual Population Survey, NOMIS 6

8 Graph 7: Unemployment Rate (16 64) Apr 27 Mar 28 Jul 27 Jun 28 Oct 27 Sep 28 Jan 28 Dec 28 Apr 28 Mar 29 Jul 28 Jun 29 Oct 28 Sep 29 Jan 29 Dec 29 Apr 29 Mar 21 Jul 29 Jun 21 Oct 29 Sep 21 Jan 21 Dec 21 Apr 21 Mar 211 Jul 21 Jun 211 Oct 21 Sep 211 Jan 211 Dec 211 Apr 211 Mar 212 Jul 211 Jun 212 Oct 211 Sep 212 Core City LEPs Southern LEPs West of England England Source: Annual Population Survey, NOMIS West of England December 212 West of England December 211 Direction of Change comparison with this month last yr Jobseeker s Allowance Claimant Count 2,755 21,336 Jobseeker s Allowance Claimant Rate Vacancies Advertised by No longer available No longer available No longer available Jobcentre Plus Claimants per Vacancy No longer available No longer available No longer available Source: NOMIS, ONS Graph 8: Claimant Rate Monthly Time Series Aug 11 Sep 11 Oct 11 Nov 11 Dec 11 Jan 12 Feb 12 Mar 12 Apr 12 May 12 Jun 12 Jul 12 Aug 12 Sep 12 Oct 12 Nov 12 Dec 12 West of England England Source: NOMIS, ONS 7

9 The West of England is continuing to broadly follow the national trends; with the claimant rate for the West of England being.6% lower than it is for England. Changes to the way vacancy data is recorded means that we are no longer able to monitor the number of claimants per Jobcentre Plus advertised vacancy. Despite a gradual decline in the number of claimants since March, the level of claimants remains high and an area of concern. Pockets of long term unemployment in the West of England remains at an unprecedented level and continues to be a particular issue amongst those aged If left unaddressed further polarisation is likely to occur amongst communities and those long term unemployed will find it increasingly difficult to reenter employment (source: West of England Labour Market Report) 4. Property and Planning West of England in Comparison with this month September 212 last year House Prices 183,484 (+2.3) House Sales 1,19 ( 12.6%) Source: West of England figure calculated by the West of England Office using Land Registry Data. a) House Prices (Monthly Trend ; Annual Trend ) In September the average housed prices across the West of England decreased by about 129 on the previous month of August 212. Although following a similar trend pattern to that of England and Wales the average house prices in the West of England remain higher. It should be noted that there are marked variations between the UAs within the West of England, with average house prices in B&NES being significantly higher than the other authorities. There are also marked variations within individual authorities. House prices could present an issue in the West of England as economic growth could be seriously limited across the partnership area if workers cannot afford to live in the area, it could also worsen the unsustainable pattern of in commuting from more affordable areas within and outside the partnership area, this in turn has a knock on effect to the success of businesses operating in the area. Graph 9: Average House Prices Annual Time Series ( ) 19, 17, 15, 13, 11, 9, 7, 5, WofE England & Wales Source: West of England figure calculated by the West of England Office using Land Registry Data. 8

10 b) Commercial Property Enquiries West of England Q4 212 Comparison with this month last year Total new property enquiries 25 (+96) Source: West of England Inward Investment Service/Evolutive database Graph 1: West of England Total New Property Enquiries Received Oct Nov Dec Source: West of England Inward Investment Service/Evolutive database The number of new property enquiries received by the West of England Inward Investment Service during the forth quarter of 212 was significantly up on the same quarter of 211. This could suggest that confidence in the market is improving. Graph 11: New Property Enquiries Received by Sector Advanced Engineering Business/Professional Services Construction Industry Creative Industries Distribution Education Low Carbon Financial Services Health/Social Work ICT/Telecommunications Leisure & Tourism Manufacturing Industry Personal Services Public Sector R&D Retail Transport Unspecified Source: West of England Inward Investment Service/Evolutive database Q4 211 Q4 212 In the 4 th quarter of 212 there has been an increase in the number of property enquires in nearly all sectors compared to the same time last year. Leisure and tourism premises received the largest number of enquiries, followed by the retail sector, the latter is unsurprising leading up to the festive period. 9

11 Graph 12: Demand Q1 212 Unit/Size Requirements Up to 5 Up to 2 Up to 5 Up to 1 Up to 5 Up to 2 Over 2 Industrial Office Source: West of England Inward Investment Service/Evolutive database Notes: Unit/size figures are derived in most cases from enquirers online registration on the Invest West Property Search c) Commercial Data Take up Q3 212 (sq ft) Q4 212 (sq ft) Direction of Change Bristol City Centre Take up 113,64 18,53 Bristol Out of Town Take up 46,538 53,736 Source: Bristol Property Agents Association Notes: Bristol out of town take up data includes South Gloucestershire and parts of North Somerset. Take up data from agents is currently unavailable for B&NES and is not comprehensive for NS although we continue to work on this and we welcome any support. Office Rents Rents Net effective rent ( psf) Q4 212 Q3 212 Q4 212 Q3 212 Bristol City Centre Rents a,b Bristol Out of Town Rents a,b Direction of Change Bath Rents b 21. Source: a The Big Nine Regional Office Market Report Q3 212 & Q4 212, GVA b Market Monitor South West of England & South Wales June 212, Alder King The number of property enquiries has remained relatively static, commercial take up in Bristol City Centre is down in the forth quarter of 212 compared to the previous quarter. Whereas, Bristol out of town take up is up compared to the previous quarter. This is the reverse of what was reported in the October quarterly bulletin. 1

12 d) Property Availability Office Locality Property (Units) Availability as at 25 th Jan 213 B&NES 87 Bristol 328 North Somerset 141 South Gloucestershire 124 Source: West of England Inward Investment Service / Evolutive database Industrial Locality Property (Units) Availability as at 25 h Jan 213 B&NES 33 Bristol 263 North Somerset 148 South Gloucestershire 5 Source: West of England Inward Investment Service / Evolutive database Graph 13: Property Availability as at 25 th BCC SG NS BANES Industrial Office Source: West of England Inward Investment Service / Evolutive database Notes: Office data doesn t include available serviced/managed workspace The Invest West property database relies on commercial agents to update property availability; the database only includes properties actively marketed by local commercial agents or owners. We are currently re launching the property database and working on a major update. In the future, we will be able to provide more reliable data including properties on/off the market. 11

13 This report has been produced using a variety of national and locally sourced data sets that provide an overview of the health of the West of England economy. Business West have also produced a Barriers to Growth Survey this can be downloaded using the following link: us/economic intelligence/reports and surveys Queries: For any queries on this bulletin please contact: Charlotte Hopley, Planning and Economic Research Officer, West of England Office Charlotte.Hopley@westofengland.org Tel: Many thanks to Nigel Jump for providing the section on Business Conditions and to all other contributors. 12