WE KNOW THE ECONOMY ECONOMIC BULLETIN. Issue 11. October 2014

Transcription

1 WE KNOW THE ECONOMY ECONOMIC BULLETIN Issue 11 October 214 WE ARE A PRIVATE/PUBLIC PARTNERSHIP THAT IS GROWING THE ECONOMY OF THE BRISTOL & BATH CITY REGION. SKILLS MANAGING FUNDS INWARD INVESTMENT PLACE & INFRASTRUCTURE MARKETING

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 During the 3 rd quarter of 214 there was a decrease of 9.7% in the number of start-ups compared to the same quarter the previous year. Headline Data Direction of Change 1,951 Employment Rate The employment rate amongst the working age population remained static at 73.2 in the year to June 213 on the same period the previous year. Unemployment Rate In the year to June 214 the unemployment rate for the working age population showed a decrease of.7 percentage points on the previous year. Jobseeker s Allowance (JSA) Claimant Rate As of September 214 the claimant rate stood at 1.6. This is a decrease of.9 percentage points on the same month in Advertised Jobs - between the 1 st July 214 and the 3 th September 214 there were 3,896 jobs in the West of England advertised online. 3,896 New data set House Prices As of June 214 average house prices in the West of England stood at 198,274. This is an increase on June 213 by 8.1%. 198,274 Inward Investment Enquiries In the year to date (Apr- Sept) IBB have generated 91 new leads and handled 79 active projects, generating 17 new successes creating 46 jobs. 46 new jobs 1

3 1. BUSINESS CONDITIONS Revisions to the ONS historical series now suggest the UK economy reached a new peak of output about a year ago and the recovery has maintained reasonable momentum since then. Matching the average of the first three quarters of the year, forecasters expect the economy to grow by at least 3%, in real terms, in 214 as a whole. Contributions to growth remain dominated by adding employment rather than raising productivity. Because labour is relatively cheap and flexible, and the global outlook is uncertain, businesses still often choose to add staff to meet increases in demand rather than investing in new productive capacity. In the year to June-August 214, the UK economy added 736, more jobs and the unemployment rate dropped to 6%. The equivalent SW figures were 58, and 4.6% respectively. The former is proportionate to the national total whereas the latter is significantly lower. The ONS has just released statistics on output per hour in 213 that show the UK s productivity slipping, compared with the G7 average, to a negative differential lower than any seen since In the second quarter of 214, UK productivity was still below where it was before the 28 recession. With the Eurozone economies again flirting with recession, slower growth in the Far East, uncertainty ahead of the 215 UK election and the threat of a 217 EU referendum, the risk is that business will withhold from the desirable rebalancing towards investment and exports. Regional and Local Trends Three recent surveys report further local growth in the third quarter of 214, albeit at a slower rate of expansion. In September, the SW Purchasing Managers described a positive level of growth but one lower than in eleven of the twelve other regions and devolved administrations. In the third quarter, the Chambers of Commerce suggested the slowdown was largely led by weaker external market conditions, although orders, investment and employment balances were still good. The July-September ICAEW business confidence monitor also talked of greater realism about future prospects, with business confidence dipping for the first time in two years. Whilst the recovery continues in aggregate, experience varies widely by sector and business. Prospects for those dependent on domestic consumers remain constrained by weak household incomes. Those relying on public spending remain mired in austerity. Investment intentions have improved but actual expenditure is not yet enough to substitute for the weakness of household expenditure. Finally, export markets, particularly in the Far East and in Europe, are now slowing. Whilst the recovery may persist, the West of England economy is likely to experience slower demand growth in the months ahead. For local sectors, this puts even more emphasis on boosting business competitiveness across the market spectrum. For the LEP and its partners, the drive to increase local competitiveness can only intensify. 2

4 BUSINESS START UPS Indicator 3 rd Quarter 214 % Change on 3 rd Quarter 213 % Change on 2 nd Quarter 214 Direction of Change on previous Quarter Business Start-ups in the West of England 1, Business Start-up rate (per 1, working age population) 26.6 N/A N/A Source: BankSearch The 3 rd quarter of 214 saw a decrease in the number of businesses being started up in the West of England, -21 businesses on the previous quarter, resulting in a 9.7 percentage point decrease on the previous quarter. There was also a decrease on the number of business start-ups compared to the same quarter in 213, with a 4.9 percentage point decrease. Comparing the 3 rd quarter of 214 with the same quarter of 213 there has been a decrease in the number of start-ups across the majority of industrial groups, with the largest decrease being seen in financial intermediation. However, there was a positive increase in some industrial groups including construction; transport, storage & communication; and human health & social work. Overall there has been a decline in the number of business start-ups over the 6 reported quarters, however this coincides with a strengthening national and local economy. Business start ups are an indication of entrepreneurialism and innovation and it is within these business start-ups that the jobs of the future will be created. However, rising start-ups can also signal times of economic distress, survival and positive churn within these start-ups are what matters. Graph 1: Business Start-ups in the West of England Source: BankSearch 3

5 2. SECTORS (SELECTIVE INDICATORS) 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. a) Retail The health of the high street continues to show signs of improvement. Nationally in August 214, the quantity bought in the retail industry increased by 3.9% compared with August 213. The quantity bought also was an increase on the previous month, increasing by.4% on July 214. This year-on-year increase is now the 17th month of consecutive year-on-year growth and when this is coupled with the 18 months of consecutive rolling 3 months on 3 months growth it would be true to say that the underlying picture is one of growth. (source: Retail Sales August 214, ONS). B&NES Retail vacancy rates in Bath City Centre have remained well below national average figures throughout 213 reflecting the strength of the city s retail offer and continuing occupier interest. On-going monitoring of Council owned shops in the city centre has shown that the average vacancy rate has fallen each quarter from 4% in Q1 to 3.1% in Q2, 2.2% in Q3 and 1.5% in Q4. Bristol As of October 214 there was a retail vacancy rate of 7.5%. Over the last 6 months the retail vacancy rate for Bristol hasn t changed significantly. North Somerset As of April 214 there was a retail vacancy of 13.3% in Weston super Mare this is a 1.8% decrease on the reported figure for October 213. It should be noted that a significant proportion of the vacancies are within the wider town centre area, the primary frontage is performing better, with a 9% vacancy rate recorded in April. South Gloucestershire As of September 214 the retail vacancy rate had increased to 5.5% increasing from 4% in June. The trend continues in South Gloucestershire of smaller high streets and town centres seeing longer-term unoccupied premises. b) Tourism Indicator 1 st Quarter 214 % Change on 1 st Quarter 213 Direction of Change on 1 st Quarter 213 Visitors to attractions in the West of England* 849,15.4 Total Room Sales (Bristol) 373, 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. 4

6 In the 1 st quarter of 214 the number of visitors to attractions in the West of England was slightly up on the same quarter for 213 by.4%. Room sales were also up on the same period for 213 by 7.5. 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. Graph 2: Visitors to attractions in the West of England 2,, 1,8, 1,6, 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 Q4 Q1 Source: Destination Bristol Graph 3: Room Sales by Quarter in Bristol Based Hotels and Guest Houses 5, 45, 4, 35, 3, 25, 2, 15, 1, 5, Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q Source: Destination Bristol 5

7 Graph 4: Room Occupancy in Bath (%) Q1 Q2 Q3 Q Source: Bath Tourism Plus Graph 5: Visitors to Attractions in Bath 1,, 9, 8, 7, 6, 5, 4, 3, 2, 1, Q1 Q2 Q3 Q Source: Bath Tourism Plus Note: Q4 212 & Q1 213 was taken from a lower sample than in previous years. 6

8 Graph 6: Total Passenger Numbers at Bristol Airport 2,5, 2,, 1,5, 1,, 5, - Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Source: Civil Aviation Authority Like the rest of the visitor economy passenger numbers are prone to seasonal fluctuations, with a higher number of passengers during the summer months. Quarter 2 of 214 saw approximately 1,777,1 passengers go through Bristol Airport; this is 3.9% higher than the 2 nd quarter of EMPLOYMENT /LABOUR MARKET Indicator England Jul 213-Jun 214 WofE Jul 213-Jun 214 WofE Jul 212- Jun 213 Direction of Change Employment Level 24,468,1 549,4 544,2 Employment Rate Unemployment Level 1,823,6 39,5 43,2 Unemployment Rate Source: Annual Population Survey, NOMIS The West of England employment rate in the year to June 214 stood at 73.2 broadly remaining static on the same period during the previous year. The fluctuations in employment rate experienced in the West of England are common in city-regions during times of economic downturn and recovery. Despite lagging behind the average employment 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. It is also worth noting that the West of England seemingly experiences greater fluctuations, making the data appear jerky, this is because smaller areas are more susceptible to survey based confidence limits. 7

9 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 Jan 212-Dec 212 Apr 212-Mar 213 Jul 212-Jun 213 Oct 212-Sep 213 Jan 213-Dec 213 Apr 213-Mar 214 Jul 213-Jun 214 The West of England unemployment rate for the working age population (16-64) in the year to June 214 stood at 6.7; this is a decrease of.7 percentage points on the same period for the previous year. Graph 7: Employment Rate (16-64) Core City LEPs Southern LEPs West of England England Source: Annual Population Survey, NOMIS Graph 8: Unemployment Rate (16-64) Source: Annual Population Survey, NOMIS 8

10 Indicator West of England Sept 214 West of England Sept 213 Direction of Change comparison with this month last yr Jobseeker s Allowance Claimant Count 11,279 17,388 Jobseeker s Allowance Claimant Rate Source: NOMIS, ONS As of September 214 the claimant rate in the West of England stood at 1.6. This is a decrease of.9 percentage points on the same month the previous year. The West of England is continuing to broadly follow the national trends; with the claimant rate for the West of England being.5 percentage points lower than it is for England. Since February 213 there has been generally a steady decline in the number of claimants within the West of England. However, pockets of long-term unemployment in the West of England remain. Graph 9: Claimant Rate Monthly Time Series Source: NOMIS, ONS Jobs Advertised in the West of England by Sector Priority Sector No. Jobs Advertised in the WE Q3 214 Advanced Engineering and Aerospace 96 Creative and Digital 99 High Tech 88 Low Carbon 214 Professional Services 1,459 All Sectors 3,896 Source: Labour/ Insight Burning Glass (1 st July th September 214) 9

11 Q1 212 Q2 212 Q3 212 Q4 212 Q1 213 Q2 213 Q3 213 Q4 213 Q1 214 Q2 214 Q3 214 In the year to the 3 th September 214 there had been approximately 85,8 jobs advertised online for jobs in the West of England area. 36% of those were advertised during the period between 1 st July 214 and the 3 th September 214 (Q3 of 214). During quarter 3 there were 1,956 jobs advertised in the priority sectors (based on 27 SIC codes), the majority of these were in professional services Please note that the data is only representative of those jobs advertised online and may not capture job placements advertised through more traditional methods such as an advert in a shop window or through word of mouth. This more traditional form of job advertisement tends to effect particular sectors such as the construction industry and independent retailers. In addition, data for the priority sectors is reliant on industrial information being linked to an advertisement, meaning that the data could be an under representation of what s happening on the ground. It is widely recognized that the high tech, creative and low carbon sectors are under represented by the current SIC code definitions as they are new and emerging sectors. Often companies within these sectors classify themselves under SIC codes associated with professional services / consultancy due to an insufficient match with the existing codes. Graph 1: Jobs Advertised in the West of England Quarterly Time Series 5, 45, 4, 35, 3, 25, 2, 15, 1, 5, Source: Labour/ Insight Burning Glass Note: Definitions based on West of England definitions of the priority sectors using 27 SIC codes During Q3 of 214 the top occupation being advertised was for programmers and software development professionals with a total of 1,47 job advertisements posted between the 1 st July and 3 th September. This was followed by IT business analysts, architects and systems designers with 1,192 job advertisements and nurses with 97 advertisements. The top 2 occupations advertised are both commonly associated with careers in the high tech and creative sector. However the number of occupations being advertised does not correlate with the number advertised by sector. This is because they are occupations which straddle multiple sectors, and are a result of companies increasingly bringing their IT requirements in-house. 1

12 Top 1 Occupations Advertised during Q3 of 214 Occupation Number of Job Advertisements Programmers and software development professionals 1,47 IT business analysts, architects and systems designers 1,192 Nurses 97 Human resources and industrial relations officers 61 Other administrative occupations n.e.c. 576 Business and financial project management professionals 516 Business sales executives 513 Chartered and certified accountants 478 Solicitors 443 Web design and development professionals 439 Source: Labour/ Insight Burning Glass (1 st July th September 214) During Q3 of 214 the skill with the greatest demand was for sales with a total of 1,414 advertisements citing it as a requirement. This was followed by accounting (1,175 ads), contract management (1,2 ads) and JavaScript (911 ads). Top 1 Skills Advertised during Q3 of 214 Skills Number of Job Advertisements Sales 1,414 Accounting 1,175 Contract Management 1,2 JavaScript 911 Business Development 898 SQL 876 Telecommunications 831 Rehabilitation 763 Repair 763 Microsoft C# 61 Source: Labour/ Insight Burning Glass (1 st July th September 214) 4. PROPERTY AND PLANNING a) House Prices (Monthly Trend ; Annual Trend ) Indicator West of England in June 214 Comparison with this month last year House Prices 198,274 (8.1%) House Sales 1,68 (1.9%) Source: West of England figure calculated by the West of England Office using Land Registry Data. In June the average house prices across the West of England increased by about 1,712 on the previous month of May 214, this is also a significant increase on the same month last year (by 14,855). 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. 11

13 ( ) 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-bound commuting from more affordable areas within and outside the partnership area; this in turn has a knock on effect for the success of businesses operating in the area. Graph 11: Average House Prices Annual Time Series 2, 18, 16, 14, 12, 1, 8, 6, 4, 2, WofE England & Wales Source: West of England figure calculated by the West of England Office using Land Registry Data. b) Invest Bristol & Bath Inward Investment Projects Graph 12: Cumulative Activity Apr-Sept Leads Generated Projects Handled Successes Total Activity April-Sept 213 Total Activity April-Sept 214 Annual Target 214/15 Source: Invest in Bristol and Bath, Evolutive database 12

14 In the year to date (Apr-Sept 214) Invest Bristol & Bath (IBB) have generated 91 new leads and handled 79 active projects, generating 17 new successes creating 46 new jobs. This is an increase on the same period in 213 when IBB generated 69 leads and handled 47 active projects, generating 7 successes and 129 new jobs. There has been a significant increase in the amount of leads generated and projects handled in 214 compared to the previous year. Most of the activity has come through referrals and improved relationships with partners. A series of targeted campaigns are also starting to generate more leads and IBB are well positioned to meet all their targets for Graph 13: Total new and safeguarded jobs from April to September Total New Jobs Total Safeguarded Jobs Total April-Sept 213 Total April-Sept 214 Annual Target 214/15 NB; job numbers are provided as an estimate of job creation over a three year period as indicated by the investing company and independently verified. Source: Invest in Bristol and Bath, Evolutive database During April-Sept 214, IBB have successfully located 17 new projects in the West of England, creating 46 new jobs over the next three years and safeguard 124 jobs. One recent major success is the location of HAB Housing, one of the UK s most progressive alternative housing developers, who have opened a new studio in the Bristol Temple Quarter Enterprise Zone. Another successful project is the establishment of Huawei s new 125m R&D centre in Bristol with the creation of 3 high-calibre R&D jobs; Huawei is the world s largest telecommunications equipment maker and the new centre will focus on researching ICT chips, software, and analogue chip technology. 13

15 Graph 14: Priority sector activity Projects Handled from April 214 to September AAE Creative Professional Services High Tech Low Carbon Other Source: Invest in Bristol and Bath, Evolutive database Graph 15: Priority sector activity Successes from April to September AAE Creative Professional Services High Tech Low Carbon Other Source: Invest in Bristol and Bath, Evolutive database In the year to date, there have been 79 projects handled across all five of the West of England priority growth sectors, with 17 successes. Invest Bristol & Bath continues to work on a series of sector specific campaigns that are starting to generate a significant impact on figures in each of these sectors. 14

16 Graph 16: Current Pipeline Pipeline Projects Pipeline Jobs Active Leads Active Projects Potential New Jobs Probable New Jobs Source: Invest in Bristol and Bath, Evolutive database NB; job numbers are provided as an estimate of job creation over a three year period as indicated by the investing company and independently verified. IBB continues to work on a strong pipeline of active leads and projects with the potential to deliver nearly 4, new jobs of which IBB are confident that 1,358 will land in the next 12 months. c) Commercial Data Office Take-up Indicator Q2 214 (sq ft) Q3 214 (sq ft) Direction of Change Bristol City Centre Take-up 179,628 14,273 Bristol Out of Town Take-up 111, ,75 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 Indicator Rents Net effective ( psf) rent Q2 214 Q1 214 Q2 214 Q1 214 Direction of Change Bristol City Centre Rents a,b Bristol Out of Town Rents a,b Bath Rents b Source: a The Big Nine Regional Office Market Report, GVA b Market Monitor South West of England & South Wales 214, Alder King Commercial take up in Bristol City Centre is down on the previous quarter; however it is up in out of town areas. The decline in demand in the centre could just be the result of seasonal fluctuations. Although the view of property agents in the area suggests 15

17 that a current lack of Grade A office space coupled with congestion in the centre is causing a surge in demand for out of town office space. Both issues are being addressed with a number of high profile office developments coming forward in the Temple Quarter Enterprise Zone as well as measures to ease congestion in the centre such as metrobus. Office rents across the West of England continue to remain relatively static. Although there has been a slight increase in net effective rents for offices in Bristol City Centre, but a decrease in overall rents from 27.5 to 27 per sq ft. Property Availability Office Property (Units) Locality Availability as at Oct 214 B&NES 111 Bristol 441 North Somerset 136 South Glos 144 Source: Invest in Bristol and Bath, Evolutive database Industrial Property (Units) Locality Availability as at Oct 214 B&NES 38 Bristol 235 North Somerset 8 South Glos 66 Source: Invest in Bristol and Bath, Evolutive databa 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. 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. 16