WE KNOW THE ECONOMY ECONOMIC BULLETIN. Issue 16. January 2016

Transcription

1 WE KNOW THE ECONOMY ECONOMIC BULLETIN Issue 16 January 2016 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: 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 - The 4 th quarter of 2015 saw a 9.9 percentage points (pp) increase in the number of businesses being started up in the West of England compared to Q4 the previous quarter. Headline Data Direction of Change 2,145 Employment Rate - The employment rate amongst the working age population stood at 77.9% in the year to September 2015, an increase on the same period the previous year by 4.3 (pp) Unemployment Rate In the year to September 2015 the unemployment rate for the working age population stood at 4.0%, a reduction on the same period the previous year by 6.6 pp Jobseeker s Allowance Claimant Rate - As of December 2015 the claimant rate in the West of England stood at 1.1%. This is a decrease of 0.3 pp on the same month the previous year. Advertised Jobs During Q there were approximately 45,210 online advertisements for jobs in the West of England area. An increase of 73% on the same period in House Prices In June the average house prices across the West of England continued to increase. House prices are becoming increasingly unaffordable. Median annual earnings are being vastly outstripped by house prices - varying from 6.4 times average earnings in North Somerset and 9.2 times in B&NES % 45, ,023 Inward Investment New Jobs new jobs have been committed since April 2015 from 29 successful projects. 712 new jobs committed 1

3 1. BUSINESS CONDITIONS International 1 The start of 2016 has been turbulent for financial markets, leading to continued concern around global economic growth. The underlying forecasts that caused the IMF to revise their global growth forecast down in 2015 remain and to a certain degree have intensified. As a result the IMF now project global growth of 3.4% for 2016, this is 0.2 percentage points lower than projected in October In addition the World Bank has revised its forecast for the 2016 global economy to 2.9, down from 3.3%; and the OECD has also expressed doubt about potential future growth. There are three forces that are fundamental to the current global outlook: slower growth in China and rising financial risks amid a backdrop of economic rebalancing away from traditional industry and construction towards the service industry. Falling commodity prices most notably oil; and asynchronous trends in monetary policy mainly in advanced economies. Whilst all these factors are not necessarily negative they do present big adjustment challenges for many countries. National Data from ONS has shown that the UK economy grew by 0.5% in the three months to the end of December, making the annual rate of growth for 2015 to 2.2%. This is down on 2014 s growth rate of 2.9%. Whilst the pace of annual growth is its slowest for three years, the UK economy is among the fastest growing among developed nations 2. Despite the positive tone of the Autumn Statement, in the context of a turbulent global economy Chancellor George Osborne has warned that one of the biggest risks to the national economy is complacency and that 2016 is going to be a difficult year for the economy. In mid-january the Monetary Policy Committee (MPC) voted to keep interest rates the same at a record low of 0.5%, this has remained unchanged since March One of the factors influencing the sustained interest rate is due to slow wage growth. Despite UK unemployment being at a 10-year low, average weekly earnings (including bonuses) were up only 2%; this is the slowest increase since February If bonuses were to be excluded, average weekly earnings growth slowed to 1.9% in the three months to October. This is below the growth forecast of 2.1%. The MPC have cited that they would like to see earnings growth at above 3% a year before interest rates are increased. Local The international and national context all impacts on the local economy. To mirror the Chancellor s sentiment the WE should not become complacent, one of the main issues for growth in the WE is the effective use of labour and the need to address structural weaknesses in the productivity drivers of investment, skills and competitiveness. The employment rate for the WE continues to rise, currently standing at 77.9%, 4.3 p.p. higher than the same period the previous year. The claimant count in the WE also continues to fall to 1.1% in December This is higher than the SW average of 0.9% but below the English average of 1.4%. Within the WE, the range was from 0.5% in Bath and NE Somerset, 0.7% in North Somerset, 0.8% in South Gloucestershire and 1.5% in Bristol City. 1 Source:

4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 No. Business Starts BUSINESS START UPS Indicator 4 th Quarter 2015 % Change on 4 th Quarter 2014 % Change on 3 rd Quarter 2015 Direction of Change on 4 th Quarter 2014 Business Start-ups in the West of England 2, Business Start-up rate (per 10,000 working age population) 29.2 N/A N/A Source: BankSearch The 4 th quarter of 2015 saw an increase on the number of business start-ups compared to the same quarter in 2014, with a 9 p.p increase. However this was a decrease in the number of businesses being started up, -279 businesses on the previous quarter, resulting in a 11.5 percentage point (p.p) decrease. A decrease in the number of startups in Q4 seems to be the normal trend. Comparing the 4 th quarter of 2015 with the same quarter of 2014 there has been an increase in the number of start-ups across most industrial groups. The largest increases in start-ups were in real estate, professional services & support activities; manufacturing; and accommodation and food. Business start-up data fluctuates quarter to quarter. 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

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 growth. Nationally in December 2015, the volume of retail sales is estimated to have increased by 2.6% compared with December The quantity bought decreased marginally on the previous month, decreasing by 1% on November The underlying pattern in the data, as suggested by the 3 month on 3 month movement in the quantity bought, showed growth for the 24th consecutive month, increasing by 1.1 %(source: Retail Sales January 2015, ONS). B&NES 2015 has seen a number of key occupiers repositioning their Bath premises to larger more appropriate locations as the City Centre s retail offer evolve following the full occupation of SouthGate. Linked to this the expansion of the City Centre leisure and hospitality offer is helping to enhance the city s visitor experience. Occupier interest remains high and vacancy rates well below national averages leading to upward pressure on rent levels in some locations. Bristol As of December 2015 there was a retail vacancy rate of 6.5%. Over the last 12 months the retail vacancy rate for Bristol hasn t changed significantly. North Somerset As of January 2015 there was a retail vacancy of 13% in Weston-super-Mare town centre. This is a 0.3% decrease on the reported figure for April It should be noted that a significant proportion of the vacancies are within the wider town centre area, the primary frontage is performing better. South Gloucestershire As of December 2015 the retail vacancy rate was 4.7%. The trend continues in South Gloucestershire of smaller high streets and town centers seeing longer-term unoccupied premises. 4

6 b) Tourism Indicator 3 rd Quarter 2015 % Change on 2 nd Quarter 2014 Direction of Change on 2 nd Quarter 2014 Visitors to attractions in the West of England* 1,797, Total Room Sales (Bristol) 452, 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. The totals are for a regular sample of attractions to allow trends to be identified and the figures do not represent the total number of visitors to all attractions In Q3 of 2015 the number of visitors to attractions in the WE increased on the same quarter for 2014, increasing by 15%. Room sales were up on the same period for 2014 by 0.6%. 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 Source: Destination Bristol 5

7 Graph 3: Room Sales by Quarter in Bristol Based Hotels and Guest Houses Source: Destination Bristol Graph 4: Total Passenger Numbers at Bristol Airport 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 3 of 2015 saw approximately 2,236,345 passengers go through Bristol Airport; this is 7% higher than the 3 rd quarter of

8 3. EMPLOYMENT /LABOUR MARKET England Indicator Oct Sept 2015 WE WE Oct Oct Sept 2015 Sept 2014 Employment Rate Direction of Change Unemployment Rate Source: Annual Population Survey, NOMIS The West of England employment rate in the year to Sept 2015 stood at 77.9 % (approx. 544,000 people). This is an increase on the same period the previous year by 4.3 percentage points (p.p). The West of England has a higher economic rate than that of England as a whole and the Core City LEP areas. Since the beginning of 2014 employment in the region has substantially increased and is now close to the levels of Southern LEPs. It is worth noting that smaller areas are more susceptible to survey based confidence limits consequently the West of England seemingly experiences greater fluctuations, making the data appear erratic. Unemployment rates within the West of England for the working age population (16-64) in the year to September 2015 stood at 4.0% (approx. 22,400 people), a reduction on the same period the previous year by 2.6 p.p. The unemployment rate for the West of England consistently remains below the average for England and currently stands below that the average unemployment rate for the Southern LEP comparators. Graph 5: Employment Rate (16-64) Source: Annual Population Survey, NOMIS 7

9 Graph 6: Unemployment Rate (16-64) Source: Annual Population Survey, NOMIS Indicator West of England December 2015 West of England December 2014 Direction of Change comparison with this month last yr Jobseeker s Allowance Claimant Count 7,504 9,890 Jobseeker s Allowance Claimant Rate Source: NOMIS, ONS As of December 2015 the claimant rate in the West of England stood at 1.1%. This is a decrease of 0.3 p.p 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 0.3 p.p lower than it is for England. Graph 7 identifies that since February 2013 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. 8

10 Graph 7: Claimant Rate Monthly Time Series Source: NOMIS, ONS Indicator WE Job Vacancies Advertised Q WE Job Vacancies Advertised Q Direction of Change Job Vacancies Advertised 45,210 26,080 During Q there were approximately 45,210 online advertisements for jobs in the West of England area. This is an increase of 73% on the same period in Please note that the data is only representative of those jobs advertised online and may not capture job placements advertised internally within an organisation or 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. 9

11 Graph 8: Jobs Advertised in the West of England Quarterly Time Series Source: Labour/ Insight Burning Glass Vacancies by Occupation Sought December 2015 Occupation Advertised Sought Vacancies Occupation Ratio Occupation unknown Managers and Senior Officials 1, Professional Occupations Associate Professional and Technical Occupations Administrative and Secretarial Occupations Skilled Trades Occupations Personal Service Occupations Sales and Customer Service Occupations 762 4, Process, Plant and Machine Operatives Elementary Occupations 562 1, Source: Labour/ Insight Burning Glass / Claimant Count, ONS As demonstrated by the table above there is a clear mismatch between advertised vacancies and occupation sought. The bulk of advertised jobs are within professional occupations and associate professional and technical occupations, which generally require higher and rather specific skills/qualifications; however there are a significantly lower number of people currently claiming JSA seeking these types of occupations. Conversely there are a high number of people seeking lower skilled occupations, such as sales and customer service occupations. 10

12 Top 10 Occupations Advertised during Q4 of 2015 Occupation Number of Job Advertisements Programmers and software development professionals 2,918 Other administrative occupations 1,750 Nurses 1,334 IT business analysts, architects and systems designers 1,283 Business sales executives 1,194 Web design and development professionals 1,022 Managers and proprietors in other services 1,007 Customer service occupations n.e.c. 950 Sales accounts and business development managers 897 Human resources and industrial relations officers 766 Source: Labour/ Insight Burning Glass (1 st October st December 2015) During Q4 of 2015 the skill with the greatest demand was JavaScript with a total of 2,269 advertisements citing it as a requirement. This was followed by sales (2,246 ads), Business Management (1,880 ads) and Business Development (1,677 ads). Top 10 Skills Advertised during Q4 of 2015 Skills Job Postings JavaScript 2,269 Sales 2,246 Business Management 1,880 Business Development 1,677 SQL 1,609 Microsoft C# 1,391 Mathematics 1,309 C++ 1,272.NET Programming 1,175 Repair 1,133 Source: Labour/ Insight Burning Glass (1st October st December 2015) 11

13 4. PROPERTY AND PLANNING a) House Prices Indicator West of England in September 2015 Comparison with this month last year House Prices 216,651 House Sales 1,704 Source: West of England figure calculated by the West of England Office using Land Registry Data. In September 2015 the average house prices across the West of England increased by about 2,535 on the previous month of August This was a significant increase on the same month during the previous year increasing by 13,846. The average house prices in the West of England remain higher than that of England and Wales, although following a similar trend pattern. 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. Affordability Median Annual Earnings 2014 Average House Prices 2014 Ratio B&NES 26, , Bristol 26, , North Somerset 29, , South Gloucestershire 28, , Source: Land Registry; Annual Survey of Hours and Earnings, Office for National Statistics. Direction of Change In 2014 average house prices vastly outstripped median annual earnings varying from 6.4 times average earnings in North Somerset and 9.2 times in B&NES. 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. 12

14 Graph 9: Average House Prices Annual Time Series 250, , , ,000 50,000 - West of England 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 10: Cumulative Activity Apr 2015 Mar 2016 Source: Invest in Bristol and Bath, Agilebase database 13

15 Since April 2015, Invest Bristol & Bath (IBB) have generated 133 new inward investment leads, including 51 new projects and 28 qualified leads, and have successfully located 29 projects. IBB is well positioned to meet all targets. The number of new leads generated has slightly decreased from previous year, with more emphasis on generating quality than quantity. IBB have adopted new categories since April that now classify early stages leads as prospects in particular when there has been no direct engagement yet with the potential investor. Prospects are not counted against IBB s new activity targets; this new approach will improve the quality of leads generated by IBB but has resulted in a decrease in numbers from previous year when similar opportunities would be counted against the target. Graph 11: Total new jobs April 15 January 16 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, Agilebase database The number of successes in 2015 is comparable to the same period in 2014, but success to job creation ratio has increased significantly from IBBs greater focus on securing high value success. 712 new jobs have been committed to date by 29 successful projects. One recent major success is ForgeRock and the expansion of its R&D centre in Bristol with 50 new jobs committed over the next three years. Another strategic investment by ALD Automotive, a leading provider of company car contract hire and vehicle leasing, will create 50 new jobs in Emersons Green Enterprise Area. 14

16 Graph 12: Priority sector activity New Activity Apr 15/Jan 16 Source: Invest in Bristol and Bath, Agilebase database Graph 13: Priority sector activity New Jobs Committed 2015/2016 Source: Invest in Bristol and Bath, Agilebase database Since April 2015, IBB handled 133 new leads and projects across all five of the West of England priority growth sectors. 15

17 Graph 14: Current Pipeline Pipeline Projects Pipeline Jobs Active Leads Active Qualified Leads Active Projects Potential New Jobs Probable New Jobs Source: Invest in Bristol and Bath, Agilebase 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. The IBB pipeline of active projects indicates there are 7,695 potential new jobs for the region of which IBB are confident that 818 new jobs will be committed in the next 6 months. c) Commercial Data Office Take-up Indicator Q (sq ft) Q (sq ft) Direction of Change Bristol City Centre Take-up 131,162 93,604 Bristol Out of Town Take-up 64,641 94,708 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 ( psf) Net effective rent Q Q Q 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 2015, Alder King Direction of Change Commercial take up in Bristol City Centre totaled 93,604sq.ft in Q This is a decrease on Q However, out of town take-up was up on the previous quarter, totaling 94,708sq.ft. Office rents across the West of England continue to remain static on the previous quarter. 16

18 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, Senior Economic Intelligence Officer, West of England LEP Charlotte.Hopley@westofengland.org Tel: