WE KNOW THE ECONOMY ECONOMIC BULLETIN Issue 15 October 2015 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
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 3 rd quarter of 2015 saw a 10.7 percentage points (pp) increase in the number of businesses being started up in the West of England compared to the previous quarter. Headline Data Direction of Change 2,424 Employment Rate - The employment rate amongst the working age population stood at 77.4% in the year to June 2015, an increase on the same period the previous year by 4.2 (pp). 77.4 Unemployment Rate In the year to June 2015 the unemployment rate for the working age population stood at 4.4%, a reduction on the same period the previous year by 2.3 pp Jobseeker s Allowance Claimant Rate - As of September 2015 the claimant rate in the West of England stood at 1.2%. This is a decrease of 0.4 pp on the same month the previous year. Advertised Jobs During Q3 2015 there were approximately 51,859 online advertisements for jobs in the West of England area. This is a increase of 14.3% on the same period in 2014. 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. 4.4 1.2% 51,859 213,023 Inward Investment New Jobs - 470 new jobs have been committed since April 2015 from 17 successful projects. 470 new jobs committed 1
1. BUSINESS CONDITIONS International 1 In October 2015 the IMF revised the global growth figure down to 3.1 percent. This is 0.3 percentage points (p.p) lower than in 2014, and 0.2 p.p below the forecasts in the July 2015 World Economic Outlook Update. Compared to last year, the recovery in advanced economies is expected to improve slightly, while activity in emerging market is projected to slow for the fifth consecutive year. Country-specific shocks and developments play a role in causing this moderate global growth; medium-term and long-term common forces are also important. Including low productivity growth and crisis legacies in some advanced economies and ongoing adjustment in many emerging markets following the post-crisis credit and investment. China plays a very important role in the story effecting emerging and developing economies; primarily because it is so large, accounting for 30% of the combined economic activity. China s own slow down acts as a drag on the collective group. National During the third quarter of 2015 the growth of the UK s economy slowed. GDP grew by 0.5% between July and September, down from 0.7% during the second quarter. In part the slowdown has been down to a decline in manufacturing output by 0.3%, and the biggest fall in construction output in three years, dropping by 2.2%. However, output in the service sector, the biggest part of the UK economy, grew by 0.7%. Recent official figures show that Government borrowing fell in the first six months of the financial year. Public sector borrowing (excluding public sector banks) was down 7.5bn (13.9%) from a year earlier, to 46.3bn. Despite this decline the government is still spending more than its income, and the cut in borrowing is someway off in meeting the 23% target cut for the whole year. Evidence suggests that the decrease in borrowing hasn t been the result of spending cuts, with department spending 0.8% more than last year. It is suggested that the decline has come about as a result of higher tax receipts, with income tax, national insurance and VAT receipts growing at least 4% and corporation tax receipts rising by 7.9%. Local The international and national context all impacts on the local economy. Business West s quarterly economic survey for Q3 2015 in the West of England clearly reflects seasonal fluctuations and the global economic slowdown, as there has been a decline in all major indicators both on the quarter and against 2014 levels. However, despite this business confidence locally remains high at 64%. The results of Business Wests business survey can be seen here http://tinyurl.com/o2264pa The employment rate for the WE continues to rise, currently standing at 77.4%, 4.3 p.p. higher than the same period the previous year. The claimant count in the WE also continues to fall to 1.2% in September 2015. This is higher than the SW average of 1.0% but well below the English average of 1.7%. Within the WE, the range was from 0.8% in Bath and NE Somerset, 0.9% in South Gloucestershire, 0.7% in North Somerset and 1.8% in Bristol City. However despite this 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. 1 Source: https://www.imf.org/external/pubs/ft/weo/2015/02/pdf/text.pdf 2
BUSINESS START UPS Indicator 3 rd Quarter 2015 % Change on 3 rd Quarter 2014 % Change on 2 nd Quarter 2015 Direction of Change on 3 rd Quarter 2014 Business Start-ups in the West of England 2,424 24.2 10.7 Business Start-up rate (per 10,000 working age population) 33.1 N/A N/A Source: BankSearch The 3 rd quarter of 2015 saw an increase in the number of businesses being started up in the West of England, +234 businesses on the previous quarter, resulting in a 10.7 percentage point (p.p) increase. There was also an increase on the number of business start-ups compared to the same quarter in 2014, with a 24.2 p.p increase. Comparing the 3 rd 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; wholesale and retail; and accommodation and food. Business start-up data fluctuate 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 3
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 August 2015, the volume of retail sales is estimated to have increased by 3.7% compared with August 2014. The quantity bought increased marginally on the previous month, increasing by 0.2% on July 2015. The underlying pattern in the data, as suggested by the 3 month on 3 month movement in the quantity bought, showed growth for the 30th consecutive month, increasing by 0.4%. This is the longest period of sustained growth since consistent records began in June 1996. (source: Retail Sales September 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 October 2015 there was a retail vacancy rate of 6.7%. 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 2014. 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 September 2015 the retail vacancy rate had remained at 5%. The trend continues in South Gloucestershire of smaller high streets and town centers seeing longer-term unoccupied premises. 4
b) Tourism Indicator 2 nd Quarter 2015 % Change on 2 nd Quarter 2014 Direction of Change on 2 nd Quarter 2014 Visitors to attractions in the West of England* 909,067-7.2 Total Room Sales (Bristol) 427,787 3.9 Source: Destination Bristol Notes: *Number of visitors to attraction in the West of England equals the sum of visitors to attractions in Bath and Bristol. Past additions of the Quarterly Bulletin have also included data for rural Somerset, Wiltshire and Gloucestershire; however the most current data wasn t available at the time of publishing. In order for the data to be comparable past data from for rural Somerset, Wiltshire and Gloucestershire have been omitted from this bulletin. In Q2 of 2015 the number of visitors to attractions in the WE decreased on the same quarter for 2014, decreasing by -7.2%. However, room sales were up on the same period for 2014 by 3.9%. 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 1,600,000 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 - 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 2009 2010 2011 2012 2013 2014 2015 Source: Destination Bristol 5
Graph 3: Room Sales by Quarter in Bristol Based Hotels and Guest Houses 500,000 450,000 400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 - 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 2009 2010 2011 2012 2013 2014 2015 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 2 of 2015 saw 6
approximately 1,894,100 passengers go through Bristol Airport; this is 6.6% higher than the 2 nd quarter of 2014. 3. EMPLOYMENT /LABOUR MARKET England Indicator July 2014- June 2015 WE WE July 2014- July 2013- June 2015 June 2014 Employment Rate 73.3 77.4 73.2 Direction of Change Unemployment Rate 5.7 4.4 6.7 Source: Annual Population Survey, NOMIS The West of England employment rate in the year to June 2015 stood at 77.4 % (approx. 541,200 people). This is an increase on the same period the previous year by 4.2 percentage points (p.p). Fluctuations in employment rate experienced in the West of England are common in city-regions during times of economic downturn and recovery. 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 also 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 June 2015 stood at 4.4% (approx. 24,700 people), a reduction on the same period the previous year by 2.3 p.p. The unemployment rate for the West of England consistently remains below the average for England. However in the year to September 2014 they had converged and both stood at 6.6% although this could be the result of high confidence limits for the West of England. Graph 5: Employment Rate (16-64) Source: Annual Population Survey, NOMIS 7
Graph 6: Unemployment Rate (16-64) Source: Annual Population Survey, NOMIS Indicator West of England September 2015 West of England September 2014 Direction of Change comparison with this month last yr Jobseeker s Allowance Claimant Count 8,451 11,279 Jobseeker s Allowance Claimant Rate 1.2 1.6 Source: NOMIS, ONS As of September 2015 the claimant rate in the West of England stood at 1.2%. This is a decrease of 0.4 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 0.5 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
Graph 7: Claimant Rate Monthly Time Series Source: NOMIS, ONS Indicator WE Job Vacancies Advertised Q3 2015 WE Job Vacancies Advertised Q3 2014 Direction of Change Job Vacancies Advertised 51,859 45,348 During Q3 2015 there were approximately 51,859 online advertisements for jobs in the West of England area. This is an increase of 14.36% on the same period in 2014. 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
Graph 8: Jobs Advertised in the West of England Quarterly Time Series Source: Labour/ Insight Burning Glass Vacancies by Occupation Sought June 2015 Occupation Advertised Sought Vacancies Occupation Ratio Occupation unknown 140 470 3.4 Managers and Senior Officials 1,621 625 0.4 Professional Occupations 5,369 105 0.0 Associate Professional and Technical Occupations 3,669 165 0.0 Administrative and Secretarial Occupations 1,718 700 0.4 Skilled Trades Occupations 963 230 0.2 Personal Service Occupations 633 190 0.3 Sales and Customer Service Occupations 1,117 4,620 4.1 Process, Plant and Machine Operatives 835 190 0.2 Elementary Occupations 856 1,160 1.4 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
Top 10 Occupations Advertised during Q3 of 2015 Occupation Number of Job Advertisements Programmers and software development professionals 3,078 Other administrative occupations n.e.c. 2,009 Nurses 1,486 Business sales executives 1,293 Sales accounts and business development managers 1,198 IT business analysts, architects and systems designers 1,103 Managers and proprietors in other services n.e.c. 1,046 Human resources and industrial relations officers 1,039 Customer service occupations n.e.c. 1,016 Management consultants and business analysts 828 Source: Labour/ Insight Burning Glass (1 st July 2015 30 th September 2015) During Q3 of 2015 the skill with the greatest demand was Sales with a total of 2,546 advertisements citing it as a requirement. This was followed by business management (2,252 ads), Business Development (2,104 ads) and JavaScript (1,898 ads). Top 10 Skills Advertised during Q2 of 2015 Skills Job Postings Sales 2,546 Business Management 2,252 Business Development 2,104 JavaScript 1,898 SQL 1,648 C++ 1,287 Repair 1,268 Accountancy 1,231 Microsoft C# 1,213 Sales Management 1,192 Source: Labour/ Insight Burning Glass (1 st July 2015 30 th September 2015) 11
4. PROPERTY AND PLANNING a) House Prices Indicator West of England in June 2015 Comparison with this month last year House Prices 213,023 House Sales 1,574 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 115 on the previous month of May 2015. This was a significant increase on the same month during the previous year increasing by 14,749. 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 26,717.60 245,999 9.2 Bristol 26,452.40 188,867 7.1 North Somerset 29,099.20 184,823 6.4 South Gloucestershire 28,490.80 193,802 6.8 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
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Graph 9: Average House Prices Annual Time Series 250,000 200,000 150,000 100,000 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
Since April 2015, Invest Bristol & Bath (IBB) have generated 84 new inward investment leads, including 38 new projects and 25 qualified leads, and have successfully located 17 projects. IBB is well positioned to meet all 2015-16 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. 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. Graph 11: Total new jobs April Sept 2015 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 We are increasing our jobs related outputs year on year and focusing on a growing number of large strategic projects. 470 new jobs have been committed to date by 17 successful projects. One recent major success is the consolidation of Civica Group Limited, a high tech software and services company, which will create a hub of expertise in the region with 60 new jobs committed over the next three years. Another strategic investment by Sword APAK, an innovative global software solutions company, will create 36 new jobs in South Gloucestershire. 14
Graph 12: Priority sector activity Projects Handled from Apr Sept 2015 Source: Invest in Bristol and Bath, Agilebase database Graph 13: Priority sector activity Successes from Apr Sept 2015 Source: Invest in Bristol and Bath, Agilebase database During April-September 2015, IBB handled 84 new leads and projects across all five of the West of England priority growth sectors. Not surprisingly, there has been a lot of activity in the Aerospace and Advanced Engineering sector which is one of the key clusters in the West of England area and a lot of activity has resulted from IBB s campaign work on this priority sector during 2014/15. 15
Graph 14: Current Pipeline Pipeline Projects Pipeline Jobs 100 5000 80 4000 60 40 20 0 Active Leads Active Active Projects Qualified Leads 3000 2000 1000 0 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 a potential 4,500 new jobs for the region of which IBB are confident that 481 will land in the next year. c) Commercial Data Office Take-up Indicator Q2 2015 (sq ft) Q3 2015 (sq ft) Direction of Change Bristol City Centre Take-up 159,839 131,162 Bristol Out of Town Take-up 65,716 64,641 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 Q3 2015 Q2 2015 Q2 2015 Bristol City Centre Rents a,b 28.50 28.50 24.94 24.94 Bristol Out of Town Rents a,b 21.50 - - Bath Rents b 21.00 21.00 - - 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 131,162sq.ft in Q3 2015. This is a decrease on Q2 2015. Out of town take-up was also marginally down. Office rents across the West of England continue to remain static on the previous quarter. 16
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. http://www.westofenglandlep.co.uk/about-us/economic-intelligence/reports-and-surveys Queries: For any queries on this bulletin please contact: Charlotte Hopley, Senior Economic Intelligence Officer, West of England LEP Email: Charlotte.Hopley@westofengland.org Tel: 0117 9036816 17