WE KNOW THE ECONOMY ECONOMIC BULLETIN Issue 9 April 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
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 1 st quarter of 214 there was a decrease of 19.2% in the number of business start-ups compared to the same quarter the previous year. Employment Rate The employment rate amongst the working age population increased by.3 percentage points in the year to December 213 on the same period the previous year. Unemployment Rate The West of England unemployment rate (amongst the working age population) in the year to December 213 stood at 6.2; this is a decrease of 1. percentage points on the same period for the previous year. Jobseeker s Allowance (JSA) Claimant Rate As of March 214 the claimant rate in the West of England stood at 2.2%. This is a decrease of.8 percentage points on the same month during the previous year. House Prices As of December 213 average house prices in the West of England were 185,231 this is an increase on December 212 by 3.2%. Headline Data Direction of Change 1,913 73.6 6.2 2.2 185,231 Inward Investment Enquiries - In the year to date, IBB h have generated 127 new investment leads and converted 65 of those into detailed projects, generating 29 successes with the potential to create 533 new jobs and safeguard 27. Unable to compare. New measure. - 1
1. BUSINESS CONDITIONS Recent Evidence The UK economy performed well in the first few months of 214. Industrial production was 2.7% higher than a year ago in both January and February whilst manufacturing and services saw annual growth of well over 3%. The former is still 8% off the 28 peak but the gap created by the downturn is slowly closing. Meanwhile, retail sales volumes grew by 3.8% in the first three months of 214 compared with the same period a year earlier. In the last quarter, forward momentum remains quite robust. Structural weaknesses persist, however: the huge trade deficit and public sector debts, and the relatively low productivity. A recent ONS study finds that investment contributes only 15% of UK nominal GDP, a lower ratio than in any G7 or BRIC peers. The cyclical recovery is welcome but the UK economy still needs economic rebalancing away from a high dependence on current domestic consumption. Regional and Local Trends At the same time, unemployment continues to moderate: the UK rate averaged 6.9% and the SW regional rate plunged to 4.9% in the three months to February. A positive differential for the region is normal but this 2% gap is significantly above the long run average (1.5%). In the WoE, the claimant count rate was 2.2% in March the highest in the SW region (average 1.9%) but well below the English average (2.8%). Within the WoE total, the range was from 1.5% in Bath and NE Somerset and in South Gloucestershire, through 1.9% in North Somerset, to 3% in Bristol City. Effectively, whilst recognising individual and local area disparities, the WoE does not have an unemployment problem. Instead, the issue is the effective use of labour, reflecting structural weaknesses in the productivity drivers of investment, skills and competitiveness. Recent activity surveys confirm that the SW economy is performing better than most. The PMI series for March points to some tail off in momentum from the record levels of January but it still records high readings for output, orders and employment. In the last three months, the SW measures ranked second amongst the nine English regions and three Devolved Administrations. Business West s Q1 survey shows improved balances for output, orders and exports. Business confidence held steady, with more local firms expecting higher turnover (77%) and profits (68%) in the year ahead. The main barriers to growth were seen as low cost competition against a background of high UK fixed costs. Current Outlook There would probably have to be a major negative shock for the WoE s recovery to stall this summer. It remains constrained by weak household real incomes and modest business investment intentions. Development risks, such as the various political uncertainties (Ukraine crisis, Chinese finances, Scottish referendum, UK General Election), could restrain spending decisions. Overall, however, the outlook seems good for, at least, the next few months. 2
BUSINESS START UPS Indicator 1 st Quarter 214 % Change on 1 st Quarter 213 % Change on 4 th Quarter 213 Direction of Change on previous Quarter Business Start-ups in the West of England 1,913-19.2 -.3 Business Start-up rate (per 1, working age population) 26.1 N.A N.A Source: BankSearch The 1 st quarter of 214 saw a marginal decrease in the number of businesses being started up across the West of England (-5 business on the previous quarter). Resulting in a.3 percentage point decrease on the previous quarter. This was also a decrease on the number of business start-ups on the same quarter for 213. Comparing the 1 st 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 manufacturing. However, there was a positive increase in some industrial groups including accommodation and food, public admin and education. Overall there has been a decline in the number of business start-ups over the 5 reported quarters, however this co-insides 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 startups 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 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 Q1 Q2 Q3 Q4 Q1 Source: BankSearch 28 29 21 211 212 213 214 3
1. 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 March 214, the quantity bought in the retail industry increased by 4.2% compared with March 213 and by.1% compared with February 214. The quantity bought also increased in Q1 214 compared with Q1 213, by 3.8%. This continues a pattern of year-on-year growth since early 213 (Source: 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 January 214 there was a retail vacancy rate of 7. %. This is down by.5% on the reported figure for October 213 and may reflect recent works in rejuvenating the Galleries and Broadmead shopping centres. North Somerset As of October 213 there was a retail vacancy of 15.1% 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 March 214 the retail vacancy rate had decreased to 6% decreasing from 7% at the time of previous reporting. However, smaller high streets and town centers continue to see longer-term unoccupied premises. b) Tourism Indicator Visitors to attractions in the West of England* 4 th Quarter 213 886,12 % Change on 4 th Quarter 212 Direction of Change on 4 th Quarter 212 3.7 Total Room Sales (Bristol) 385,518 4.8% 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
In the 4 th quarter of 213 the number of visitors to attractions in the West of England was up on the same quarter for 212 by 3.7%. Room sales were also up on the same period for 212 by 4.8. 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 Source: Destination Bristol 29 21 211 212 213 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 29 21 211 212 213 Source: Destination Bristol 5
Graph 4: Room Occupancy in Bath (%) 9 8 7 6 5 4 3 2 1 Q1 Q2 Q3 Q4 211 212 213 Source: Bath Tourism Plus Graph 5: Visitors to Attractions in Bath 1,, 9, 8, 7, 6, 5, 4, 3, 2, 1, Q1 Q2 Q3 Q4 211 212 213 Source: Bath Tourism Plus Note: Q4 212 & Q1 213 was taken from a lower sample than in previous years. 6
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 Source: Civil Aviation Authority 211 212 213 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 4 of 213 saw approximately 1,291,992 passengers go through Bristol Airport; this is 4.5% higher than the 4 th quarter of 212, 8.9% higher than the 3 rd quarter if 211. 2. EMPLOYMENT /LABOUR MARKET Indicator England Jan 213- Dec 213 WofE Jan 213- Dec 213 WofE Jan 212- Dec 212 Direction of Change Employment Level 24,226,9 55,5 543,9 Employment Rate 71.7 73.6 73.3 Unemployment Level 1,997,9 36,7 41,9 Unemployment Rate 7.6 6.2 7.2 Source: Annual Population Survey, NOMIS The West of England employment rate in the year to December 213 stood at 73.3%. This is an increase 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. 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
The West of England unemployment rate for the working age population (16-64) in the year to December 213 stood at 6.2; this is a decrease of 1. percentage points on the same period for the previous year. Graph 7: Employment Rate (16-64) Source: Annual Population Survey, NOMIS Graph 8: Unemployment Rate (16-64) Source: Annual Population Survey, NOMIS 8
Indicator Jobseeker s Allowance Claimant Count West of England March 214 West of England March 213 Direction of Change comparison with this month last yr 15,492 21,128 Jobseeker s Allowance Claimant Rate 2.2 3. Source: NOMIS, ONS The West of England is continuing to broadly follow the national trends; with the claimant rate for the West of England being.8 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 9
1995 1996 1997 1998 1999 2 21 22 23 24 25 26 27 28 29 21 211 212 ( ) 3. PROPERTY AND PLANNING a) House Prices (Monthly Trend ; Annual Trend ) Indicator West of England in December 213 Comparison with this month last year House Prices 188,231 (+3.2%) House Sales 1,799 (+46.%) Source: West of England figure calculated by the West of England Office using Land Registry Data. In September the average house prices across the West of England decreased by about 335 on the previous month of November 213, however increases on the same month last year (by 6,2). 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 1: 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. 1
b) Commercial Property Enquiries c) Invest Bristol & Bath Inward Investment Projects Note: Due to changes in the way Invest Bristol & Bath monitor information, there have been a number of changes made to the following section. Indicators are now taken through job growth and retention potential rather than indicators provided by property uptake. As a result it is not possible to compare to data shared in previous years. Graph 11: Cumulative total activity from April 213 to March 214 14 12 1 8 6 4 2 Total Leads Generated Total Projects Handled Total Successes Actual Target Source: Invest in Bristol and Bath, Evolutive database In the year to date, Invest in Bristol and Bath have generated 127 new leads and converted 65 of those into detailed inward investment projects. Most of this activity has come through improved relationships with partners like UKTI and more visible presence at relevant networking opportunities. Invest in Bristol and Bath anticipates a significant rise in leads in the next financial year as we implement a series of targeted campaigns. The team has achieved all its major targets and successfully landed 29 new projects with the potential to create up to 533 new jobs and safeguard 27 in the next three years. 11
Graph 12: Total new and safeguarded jobs from April 213 to March 214 6 5 4 3 2 Actual Target 1 Total new jobs Total safeguarded jobs 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 Graph 13: Priority sector activity Projects Handled from April 213 to March 214 16 14 12 1 8 6 4 2 AAE Creative Finance, Professional Services High Tech Low Carbon Other Source: Invest in Bristol and Bath, Evolutive database Projects Handled 12
Graph 14: Priority sector activity Successes from April 213 to March 214 8 7 6 5 4 3 2 1 AAE Creative Finance, Professional Services High Tech Low Carbon Other Successes Source: Invest in Bristol and Bath, Evolutive database In the year to date, there have been 65 projects handled across all five of the West of England priority growth sectors, with 29 successes. At the time of writing, Invest Bristol & Bath are instigating a series of sector specific campaign. We anticipate that, over time, this will generate a significant impact on figures in each of these sectors. Graph 15: Current Pipeline 6 Pipeline Projects 5 4 3 2 1 Active Leads Active Projects Pipeline 13
3 Pipeline Jobs 25 2 15 1 5 Potential new jobs from leads Probable new jobs from projects Potential new jobs Source: Invest in Bristol and Bath, Evolutive database The team continues to work on a strong pipeline of active leads and projects with the potential to deliver over 4, new jobs. d) Commercial Data Office Take-up Indicator Q4 213 (sq ft) Q1 214 (sq ft) Direction of Change Bristol City Centre Take-up 76,545 115,722 Bristol Out of Town Take-up 47,823 18,241 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 Q4 213 Q3213 Q4 213 Q3 213 Direction of Change Bristol City Centre Rents a,b 27.5 27.5 19.94 19.94 - Bristol Out of Town Rents a,b 21.5 21.5 - - - Bath Rents b 21. 21. - - - Source: a The Big Nine Regional Office Market Report Q1 213 & Q4 212, GVA b Market Monitor South West of England & South Wales 214, Alder King 14
Commercial take up in both Bristol City Centre and out of town areas is up in the first quarter of 214 compared to the previous quarter. Office rents across the West of England continue to remain static. c) Property Availability Office Property (Units) Locality Availability as at April 214 B&NES 113 Bristol 468 North Somerset 153 South Glos 127 Source: Invest in Bristol and Bath, Evolutive database Industrial Property (Units) Locality Availability as at April 214 B&NES 37 Bristol 336 North Somerset 91 South Glos 71 Source: Invest in Bristol and Bath, Evolutive database 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: http://www.westofenglandlep.co.uk/about-us/economic-intelligence/reportsand-surveys Queries: For any queries on this bulletin please contact: Charlotte Hopley, Planning and Economic Research Officer, West of England Office Email: Charlotte.Hopley@westofengland.org Tel: 117 936816 Many thanks to Nigel Jump for providing the section on Business Conditions and to all other contributors. 15