WE KNOW THE ECONOMY ECONOMIC BULLETIN Issue 7 October 213 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 3 rd quarter of 213 there was a decrease of 9.4% 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.6 percentage points in the year to June 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 June 213 stood at 7.4; this is an increase of.5 percentage points on the same period for the previous year. Jobseeker s Allowance (JSA) Claimant Rate As of September 213 the claimant rate in the West of England stood at 2.5%. This is a decrease of.6 percentage points on the same month during the previous year House Prices As of August 213 average house prices in the West of England were 185,19 this is an increase on August 212 by 1.9%. Inward Investment Enquiries - The Inward Investment Service, Invest in Bristol + Bath, received 172 new property enquiries in the 3 rd quarter of 213. This is a decrease on the 3 rd quarter of 212 by 18.4%. Headline Data Direction of Change 2,51 73.3 7.4 2.5 185,17 172 1
1. BUSINESS CONDITIONS Most forecasts of the UK economy have been revised upwards. Recent indicators of business output and investment suggest a corner has been turned. Replacement demand is picking up and liquidity is being activated. With real GDP rising, unemployment falling and inflation moderating, we can be more optimistic about the future, even though the downturn persists - in the third quarter, national output was still 2.5% below its previous peak. The improved outlook is tempered by some continuing concerns: UK productivity remains very low in absolute terms (output per hour is still below its previous peak) and has slipped in relative terms (16% below the G7 average in 212). Incomes are falling (average real weekly earnings down by about 2% in the three months to August). Effective rebalancing in manufacturing, finance and markets has yet to occur and governments and households still carry excess debt. Without improvement in all these areas, the economy s recovery will be constrained and difficult to sustain. The new Bank of England Governor emphasised the modest recovery when announcing forward guidance. The West of England (WoE) economy has benefited from the better economic conditions observed in the middle of 213. Unemployment has fallen slightly: the claimant count rate of 2.5% in September ranged from 1.7% in BaNES and South Gloucestershire through 2% in North Somerset to 3.4% in Bristol. As reflected in recent orders for civil aerospace, some local exporters report better activity levels. The housing market and replacement demand for some consumable durables (especially motors) seem to have improved. Survey balance measures of net regional output, orders and employment are high by historical standards. Respondents to the latest WoE Barriers to Growth Report (Q3 213) confirmed an improvement, particularly compared with a year ago, in UK and export sales and orders. Barriers remain, especially lack of demand (mentioned by 18% of firms), management time (12%), and financial access (11%). Also, broadband connectivity is a rising issue (9%) and difficulties in hiring skilled staff persist, though fewer businesses plan to hire staff in the current quarter. Overall, more WoE businesses seem to be talking up their prospects but the need for structural change remains. BUSINESS START UPS Indicator 3 rd Quarter 213 % Change on 3 rd Quarter 212 % Change on 2 nd Quarter 213 Direction of Change on previous Quarter Business Start-ups in the West of England 2,51-9.4-1.5 Business Start-up rate (per 1, working age population) 28. - - Source: BankSearch 2
The 3 rd quarter of 213 saw a decrease in the number of businesses being started up across the West of England (-24 business on the previous quarter). Resulting in a 1.5 percentage point decrease on the previous quarter. This was also a decrease on the number of business start-ups on the same quarter for 212. 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 28 29 21 211 212 213 Source: BankSearch 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 is beginning to show signs of improvement. National retail sales, for June show continued growth in the quantity bought (or sales volumes) and an underlying pattern of moderate growth. Comparing quarter 2 with quarter 1 in 213, the quantity bought increased by.9% (Source, ONS). B&NES Retail vacancy rates in Bath City Centre have remained well below the national average 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 3
average vacancy rate has fallen from 4% in Q1 to 3.1% in Q2 and currently stands at 2.2%, with a number of new lettings in the lead into the Christmas trading period. Bristol As of October 213 there was a retail vacancy rate of 7.5% in Bristol. This is down on the previous quarter 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 September 213 there was a retail vacancy rate of 7% this is a slight increase on the vacancy rate for July 213, which stood at 6.6%. Smaller high streets and town centres continue to see longer-term unoccupied premises. b) Tourism Note: At the time of publishing data from Destination Bristol for the 3 rd quarter of 213 was not available. Indicator Visitors to attractions in the West of England* Total Room Sales (Bristol) 2 nd Quarter 213 1,34,69 % Change on 2 nd Quarter 212 Direction of Change on 2 nd Quarter 212 25% 41,35 5.8% 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. In the 2 nd quarter of 213 the number of visitors to attractions in the West of England was up on the same quarter for 212 by 25%. Room occupancy was also up on the same period for 212. 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. 4
Graph 2: Visitors to attractions in the West of England 16 14 12 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 Q2 28 29 21 211 212 213 Source: Destination Bristol Graph 3: Room Sales by Quarter in Bristol Based Hotels and Guest Houses 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 Q1 Q2 Source: Destination Bristol 28 29 21 211 212 213 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
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 Jan 212-Dec 212 Apr 212-Mar 213 Jul 212-Jun 213 2. EMPLOYMENT /LABOUR MARKET Indicator England July 212 June 213 WofE July 212 June 213 WofE July 211 June 212 Direction of Change Employment Level 24,88,6 544,2 538,4 Employment Rate 71.3 73.3 72.7 Unemployment Level 2,85,7 43,2 39,7 Unemployment Rate 8. 7.4 6.9 Source: Annual Population Survey, NOMIS The West of England employment rate in the year to June 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 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. The West of England unemployment rate for the working age population (16-64) in the year to June 213 stood at 7.4; this is an increase of.5% on the same period for the previous year. The increase in the employment is within confidence limits, which means in reality the increase may not exist. This goes someway to explaining the seemingly perverse increase in both the employment and unemployment. Graph 6: Employment Rate 8. 78. 76. 74. 72. 7. 68. 66. 64. 62. 6. Core City LEPs Southern LEPs West of England England Source: Annual Population Survey, NOMIS 7
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 Jan 212-Dec 212 Apr 212-Mar 213 Jul 212-Jun 213 Graph 7: Unemployment Rate 12. 1. 8. 6. 4. 2.. Source: Annual Population Survey, NOMIS Core City LEPs Southern LEPs West of England England Indicator Jobseeker s Allowance Claimant Count Jobseeker s Allowance Claimant Rate Source: NOMIS, ONS West of England Sept 213 West of England Sept 212 Direction of Change comparison with this month last yr 17,388 21,578 2.5 3.1 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. Since February 213 there has been a steady decline in the number of claimants within the West of England. However, pockets of long-term unemployment in the West of England remains and continues to be a particular issue amongst those aged 16-24. If left unaddressed further polarisation is likely to occur amongst communities and those long term unemployed will find it increasingly difficult to re-enter employment (source: West of England Labour Market Report http://www.westofenglandlep.co.uk/about-us/economicintelligence/employment-skills-labour-market-repor) 8
Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 The diverging trend between unemployment and JSA Claimant rates could be the result of increasing numbers of unemployed people outside the welfare system; however the causes for this, be it due to sanctions, rooting out the grey economy or alienation from the system remains unclear. Graph 8: Claimant Rate Monthly Time Series 4 3.8 3.6 3.4 3.2 3 2.8 2.6 2.4 2.2 2 West of England England Source: NOMIS, ONS 3. PROPERTY AND PLANNING a) House Prices (Monthly Trend ; Annual Trend ) Indicator West of England in August 213 Comparison with this month last year House Prices 185,17 (+1.9%) House Sales 1,418 (+2.9%) Source: West of England figure calculated by the West of England Office using Land Registry Data. In August the average house prices across the West of England increased by about 69 on the previous month of July 213, this is also an increase on the same month last year (by 1,321). 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 9
1995 1996 1997 1998 1999 2 21 22 23 24 25 26 27 28 29 21 211 212 ( ) 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. b) Commercial Property Enquiries Note: Due to changes in the way Invest in Bristol and Bath monitor information there have been a number of changes made to the following section. This includes data on the number of major projects being handled by the service and the number of new jobs generated and safeguarded. Indicator West of England Q3 213 Comparison with this month last year Total new property enquiries 172 (+6) Source: Invest in Bristol and Bath, Evolutive database 1
Invest in Bristol & Bath Major Projects Graph 1: Total activity from April to September 213 14 12 1 8 6 Actual Target 4 2 Total Leads Generated Total Projects Handled Total Anticipated Success Source: Invest in Bristol and Bath, Evolutive database There were a total of 71 major leads generated between April and September 213, resulting in 49 projects handled. It is anticipated that these leads will result in 1 successes. Graph 11: Total activity from April to September 213 6 5 4 3 Actual Target 2 1 Total new jobs created Total safeguarded jobs Source: Invest in Bristol and Bath, Evolutive database 11
Inward Investment activity throughout the current financial year has resulted to date in the creation of 141 new jobs and safeguarded 2. Graph 12: Priority sector activity from April to September 213 14 12 1 8 6 4 2 Advanced Engineering and Aerospace Creative Finance, Insurance and Professional Services High Tech Low Carbon Projects Handled Successes Source: Invest in Bristol and Bath, Evolutive database Between April and September there have been 48 projects handled across all five of the West of England priority growth sectors. During this time this has resulted in 9 successes, a third of these successes has been within the Creative sector. c) Commercial Data Take-up Indicator Q2 213 (sq ft) Q3 213 (sq ft) Direction of Change Bristol City Centre Take-up 143,931 138,187 Bristol Out of Town Take-up 47,55 49,99 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. 12
Office Rents Indicator Rents Net effective ( psf) rent Q3 213 Q2 213 Q2 213 Q1 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 213, Alder King Commercial take up in Bristol City Centre is down in the third quarter of 213 compared to the previous quarter. Conversely take up in Bristol out of town areas has shown an increase. Office rents across the West of England continue to remain static. d) Property Availability Office Property (Units) Locality Availability as at 29th Oct 213 B&NES 14 Bristol 393 North Somerset 141 South Glos 154 Source: Invest in Bristol and Bath, Evolutive database Industrial Property (Units) Locality Availability as at 29th Oct 213 B&NES 63 Bristol 299 North Somerset 15 South Glos 87 Source: Invest in Bristol and Bath, Evolutive database 45 4 35 3 25 2 15 1 5 BCC SG NS BANES Industrial Office Source: Invest in Bristol and Bath, Evolutive database 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: 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. 14