Bristol Economic Briefing September 2012 Summary UK double dip recession continues. Long term unemployment continues to grow but the growth rate has slowed. Employment in Bristol unchanged - still higher rate than the other Core Cities and UK. The number of youth JSA claimants in Bristol remains over the twice the number in, pre-recession, July 2007. Bristol s labour market continues to shows more weakness in lower skilled occupations. New business starts in Bristol still look healthy overall but construction continues to shows weakness. Bristol continues to attract investment.
1 Bristol Economic Briefing September 2012 1 Overview Revised estimates 1 from ONS 2 indicate that in the second quarter of 2012 the UK economy contracted by 0.5%. This figure is 0.2 percentage points higher than the initial estimate 3 but still means that the UK is in recession. In contrast, in June inflation fell to its lowest level (2.4%) since late 2009 and the number of unemployed people fell by 65,000. It is clear however that, for whatever reasons, the state of the UK economy has worsened over the last nine months and forecasts of future growth have been downgraded. In particular, at the beginning of August the Bank of England revised its growth prediction for 2012 down from the May figure of 1.25% to zero. The contrast between the fall in unemployment and the continuing recession has provoked quite a debate with some commentators questioning the validity of the ONS data for GDP. However the consensus, which is supported by recent labour market surveys 4, is that private sector businesses have opted to retain staff rather than risk losing key skills. If this is the case, then employment remains high but productivity falls, which even in the medium term is probably unsustainable. Thus unless the economy (demand) picks up, employers will likely be forced to make staff reductions that will result in increased unemployment and therefore a realignment of the behaviour of unemployment and GDP. At the regional level the Lloyds Regional PMI for the SW fell to an eleven month low and business activity fell in all but two of the other England regions. Thus business activity in most of the England regions, including the SW, mirrors that for England and the UK, indicating continued negative growth. It is now 39 months on from the initial peak (11,508) in the JSA count for Bristol, caused by the recession and the JSA claimant count for July (12,539) is still 9% higher than at that time. However the JSA claimant count for Bristol increased by 1.1% between June and July, the smallest increase in four years. Further, whilst new business starts in construction continue to fall, those in high skills sectors have continued to increase year on year. On balance, given the national situation, it looks like the economy of Bristol is doing as well as could be expected. Bristol businesses in sectors as diverse as Creative Industries, Food & Drink and ICT are still looking to grow. Foreign businesses are still investing in Bristol because, in the case of ForgeRock 5 anyway, the city already has possibly the best concentration of IT companies and research organisations in the UK across software, hardware, robotics, microprocessor design and digital media. 1 http://www.ons.gov.uk/ons/rel/naa2/second-estimate-of-gdp/q2-2012/stb-second-estimate-of-gdp--q2-2012.html 2 Office of National Statistics 3 http://www.ons.gov.uk/ons/rel/gva/gross-domestic-product--preliminary-estimate/q2-2012/stb-gdp-prelim-ests-q2-2012.html 4 e.g. http://www.cipd.co.uk/hr-resources/survey-reports/labour-market-outlook-summer-2012.aspx 5 See page 8
2 Labour Market [Top] 2 (i) Employment Rates The employment rate 6 in Bristol fell significantly in the four quarters to March 2012. It remains the highest of the English Core Cities and but was lower than the England average for the first time since March 2008. However areas like Milton Keynes, Maidstone, Guildford and St Albans Table 4 Employment Rates for England and the English Core Cities, March 2012 Location Bristol Birmingham Leeds Liverpool Manchester Newcastle Nottingham Sheffield England Employment 70.0 57.0 67.5 59.5 58.8 62.9 59.5 63.9 70.3 Rate Source: Annual Population Survey, 2012, Nomis, O.N.S., Crown Copyright The 95% confidence limits for this Core Cities data vary from 2.4% to 3.0%. had employment rates significantly higher (at least 6 percentage points) than that for Bristol. (ii) Selected Job Gains and Losses Gains Software company ForgeRock The California based software company ForgeRock is to open its UK headquarters in Bristol later this week and create 20 new jobs. Premier Homecare Homecare business Premier Homecare has opened its new office in Bristol and is set to create about 100 new jobs. Losses Honister Capital: jobs at risk Bristol-based financial services firm Honister Capital has gone into administration putting around 130 jobs at risk. Budget Cuts Will Cost Jobs Cuts to the budget of Avon & Somerset Police will cost the force 400 officers according to a report published in early July. Driver and Vehicle Licensing Agency The Driver and Vehicle Licensing Agency s Bristol office in Stoke Gifford is to close with the loss of 29 jobs. 6 The percentage of all people aged 16 to 64 (working age population) who are in employment.
(iii) Unemployment 3 [Top] In June the JSA claimant rate 7 for Bristol (4.0%) was down 0.1 percentage points on the April figure but still 0.2 percentage points above that for England (3.8%). Bristol still has the lowest claimant rate of all the English core cities 8, however it has been consistently higher than that for areas such as Guildford (1.7%); Cambridge and St Albans (1.8%); Oxford (2.2%); Canterbury (2.4%) and Maidstone (2.5%). Fig 1: Jobseeker Allowance Claimants in Bristol June 2007 to June 2012 JSA Claimants in Bristol for the period June 2007 to June 2012 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Jul-07 Oct-07 Jan-08 Number of Claimants Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 The number of Bristol residents claiming JSA increased by 1.1% between June and July, from 12,408 to 12,539, which is somewhat higher than the normal seasonal increase 9 of 0.51%. On the other hand, in three of the last four years 10 there have been increases of 5.1% (2008), 2.0% (2009) and 4.0% (2011). Thus although the situation in respect of JSA claimants is not good (the July JSA claimant count was still over twice that (5,662) of, pre recession, July 2007 and higher than it has been, in July, since 1998) there was and still is potential for the situation to be quite a lot worse. JSA Claimants by Gender While there are still more than twice as many men (8,523) as women (4,016) claiming JSA in Bristol, over recent years the balance has been shifting as women appear to have suffered noticeably worse in the recession. In the year to Jul-08 the proportion of claimants that were female ranged from 25.1% to 28.2% whilst in the year to July 2012 the equivalent numbers were 30.7% and 32.7% respectively. JSA Claimants by Duration The number of long-term 11 JSA claimants in Bristol has been increasing steadily, at an average of 186 per month, since December 2010. Thus in July 2012 the number of Bristol residents that were classed as long term JSA claimants stood at 6,140, double the level (3,050) of December 2010 and over three times the, pre recession, level (1,890) of July 2007. On the positive side, in recent months, the growth has slowed and between April and July 2012 was 44 people per month, less than a quarter of the average rate for the period since December 2010. 7 Proportion of Working Age Population (WAP). 8 A more detailed comparison, that hasn t changed significantly, with the core cities can be found in the Jun-12 economic briefing 9 Average increase between June and July for the years 1997 to 2007. 10 There was a decrease of 0.8% in 2010 11 Claiming for over 6 months
JSA Claimants by Sought Occupation 4 [Top] In July 2012 the numbers of JSA claimants for seven of the nine major occupational groups were below the maxima 12 that were seen between March 2009 and March 2010. However, with one exception (Managers & Senior Officials), the numbers of people looking for work in these occupational groups are still at least twice the levels of the pre-recession minima 13 that occurred in the period between June 2007 and June 2008. Figure 2 JSA claimants by sought occupation 4500 JSA Claimants by Sought Occupation for Bristol in July 2012 and at Various Dates Since May 2007 Number of Claimants 4000 3500 3000 2500 2000 1500 Pre-Recession Minimum 6/07 to 6/08 Recession Maximum 4/09 to 4/10 Jul-12 1000 500 0 Managers & Senior Officials Professional Associate Professional & Technical Administrative & Secretarial Skilled Trades Personal Service Sales & Customer Service Process, Plant & Machine Operatives Elementary The two occupational groups for which number of claimants have not fallen below the maxima that occurred between March 2009 and March 2010 are Personal Service and Sales & Customer Service. The chart above shows clearly that, by far, the worst affected group 14 of claimants are those looking for work in Sales and Customer Services occupations. A closer inspection of the Sales & Customer Services group reveals that 89% of the claimants in this group are in the subset seeking work as Sales & Retail Assistants and that this subset accounts for over 95% of the increase of claimants in the Sales & Customer Services group. Since July 2010 the number of JSA claimants seeking work as Sales & Retail Assistants has been increasing (with a few small excursions) at an average of about 103 people per month and as of July 2012 stood at 3,650. In the year to July 2012 the monthly average number of JSA claimants per JCP notified vacancy for Sales & Retail Assistants (29.3) was over 4 times the 2007 pre-recession average of 7.0. The monthly average for the quarter to July 2012 was 48.8, the highest quarterly average on record. JSA by Ward for Bristol Year on year, the JSA claimant count for Bristol increased by 10.2% between July 2011 and July 2012. The increase has not been spread evenly amongst the wards in Bristol. Of the 35 wards eight had a decrease in claimant counts. Six of these, including the three best performing wards, had claimant rates lower than Bristol the national average. Of the wards that had increased JSA claimant rates, nine had increases of at least 0.5 percentage points. These included Lawrence Hill, the worst performing ward with an increase of 1% (the largest of all wards), and Ashley the second worst performing ward with an increase of 0.6%. 12 Maxima occur when counts increase from one month to the next and then decrease the month after. 13 Minima are inverted Maxima. 14 Although the Personal Services group has about 4 times the pre-recession claimants it is still only about 5.2% of the total.
Figure 3 JSA claimants by Ward for April 2011 and April 2012 5 [Top] 10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 JSA Claimants as a Proportion of Working Age Population (WAP) for Bristol by Ward in Jul-11 and Jul-12 Stoke Bishop Henleaze Clifton Westbury-on-Trym Clifton East Cotham Redland Bishopston Cabot Bedminster Brislington West St George East Hengrove Stockwood Frome Vale Knowle Southville Windmill Hill Horfield Brislington East England Hillfields Bristol Avonmouth Bishopsworth Henbury Kingsweston Lockleaze St George West Claimant Rate (% of WAP) Eastville Hartcliffe Whitchurch Park Southmead Filwood Easton Ashley Lawrence Hill Jul-11 Jul-12 Of the five worst performing wards only one, Filwood, had a decrease (0.1%) in the claimant rate. The result of the increases is that, as of July 2012, there were eleven wards in Bristol that had JSA claimant rates of over 5% up from seven in July 2011. (v) Notified Vacancies In the 3 months to July 2012 the average number of vacancies notified to Jobcentre Plus in Bristol was 4,058 that is about 5% higher than for the same (pre-recession) period in 2008. The additional vacancies were not spread evenly throughout the occupational groups. For example the number of vacancies (1,367) in the Professional and Associate Professional & Technical occupations was over 50% higher than pre-recession levels (663). On the other hand the numbers of vacancies in the Administrative & Secretarial and Sales & Customer Service occupations were well below the pre-recession levels. In the 3 months to July 2012 these occupations had 5 and 2 times fewer notified vacancies respectively, than the levels of 2008. (vi)youth Unemployment The total number of youth 15 JSA claimants resident in Bristol increased by 4.2% from 3,230 in June to 3,365 in July 2012. This is a much smaller increase than would be expected (7.4%) from normal seasonal variations and the youth JSA claimant count remains lower than the peak level (3,745) of February 2012. The number of youth JSA claimants in Bristol does however, remain over the twice that (1,520) of, pre-recession, July 2007. The number of long-term youth JSA claimants in Bristol has been increasing steadily, at an average of 63 per month, since December 2010. Thus in July 2012 the number of long term youth JSA claimants in Bristol stood at 1,370, just over four times the level (330) of December 2010 and over five times the, pre recession, level (270) of July 2007. In July 2012 40.7% of youth claimants were long term up from 17.8% in July 2007. On the positive side, in recent months, the growth of long-term youth JSA claimants has slowed and between April and July 2012 was less than 10 people per month, about an eighth of the average rate for the period since December 2010. 15 People aged 18yrs to 24yrs
6 3 Retail and Commercial Property [Top] Overview Nationally, as is evidenced by the Savills Commercial Development report for August, activity in public sector development has decreased for two consecutive months (June and July) and private sector development having decreased slightly in June increased slightly in July. Overall the developers are relatively pessimistic about the prospects for the rest of 2012. Retail In Jul-12 the Bristol's citywide retail property vacancy rate was 9.1% that is more or less unchanged from the rate of 9.2% in May-12. In the year to Jun 2012 there were 351 (source Bank Search 16 ) new retail sector start-ups in Bristol. This is the one of the highest annual totals since 2008. Office 17 According to the Bristol Office Agents the level of take up (96,152 sq.ft.) in Bristol's city centre office market for the second quarter of 2012 was slightly up on 2011 but about 30% below the six year average (of 137,809 sq.ft.) to 2011. The same survey found that take up in the out of town market was 46,894 sq.ft. This figure is about 40% lower than that for 2011 and the long term second quarter average of 80,665 sq.ft. According to CBRE 18, in the first half of 2012, nearly 75% of the take up was associated with four business sectors, which were Banking and Finance (12%); Business Services (53%); Professional Services (9%) and Manufacturing and Energy (11%). Another 4% of take up was in the Computers and Hi Tech sector. 4 Business Start Ups (BankSearch Data) In the year to June 2012 Bank Search 16 data indicates that there were about 3,800 new businesses starts in Bristol. The same database indicates that in the 4 years to June 2012 there were 14,700 new business starts in Bristol, nearly 85% of these were in the sectors shown in the table below. The balance of new business starts has shifted dramatically. In particular new starts in Manufacturing, Professional, scientific & technical and Transport & communications have increased by about 40%, more than doubled and nearly tripled, respectively, whilst those in Construction have fallen by about 45%. Industrial Sector Number of New Business July to June 2008 09 2009 10 2010 11 2011 12 4 yr Total % of All Businesses Manufacturing 119 126 152 167 564 3.8 Construction 370 391 308 204 1273 8.7 Retail trade and repair 259 334 322 351 1266 8.6 Accommodation & food service 224 255 258 338 1075 7.3 Transport & communication 84 129 142 240 595 4.0 Development, buying, selling & renting real estate 205 212 173 172 762 5.2 Professional, scientific and technical activities 156 211 274 362 1003 6.8 Administrative & support services 789 846 765 653 3053 20.8 Recreational, personal & community service 743 805 637 661 2846 19.4 16 Proprietary data base that counts new business bank accounts 17 Data supplied by Bristol Office Agents Society 18 http://www.cbre.co.uk/uk_en/research (search on United Kingdom -Bristol and Office)
5 Selected Business News June 2012 August 2012 [Top] 7 Advanced Engineering, Aerospace and Defence Airbus Overtakes Boeing During the last 18 months Airbus has become the largest aircraft manufacturer in the world pushing its main rival Boeing into second place. Rolls-Royce sees profits rise on engine demand Rolls-Royce has announced a rise in profits thanks to strong demand from aeroplane manufacturers for fuel-efficient engines and expects profits to continue growing for the rest of 2012. Environmental Technologies The Fastest Growing Business in the SW This year the list of the 100 fastest growing companies in the SW was headed by the New Earth Solutions Group that is based in Verwood. The group opened their fifth and largest site in Bristol, during the year, and has plans to build a new energy falicity also in Bristol. The new facility is set to create 40 jobs and generate 12MW when it is fully operational next year. It will be the first commercial use of its energy recovery technology. Bristol's best place for green electricity, says power firm Good Energy, the energy provider that supports 35,000 households, small business and communities across the country who generate their own electricity has said that almost 3,000 of those energy generators are based in Bristol, the highest of any postcode in the country. Based on this data Bristol is the micro-generation capital of the UK and the greenest city in the country when it comes to environmentally-friendly electricity. Creative Digital Printer relocates to the Paintworks Canotec, a firm that specialises in digital printing, has moved into The Paintworks development as part of a drive to expand in the South West. McCann extends Bristol lease Communications agency McCann Bristol has extended its lease on its office for a further five years. McCann Bristol's managing director Andy Reid said: "We are lucky to have a very talented and creative workforce in our Bristol office, and want to continue to attract high calibre staff and be known as a great place to work." Drytac clinches funding facility Bristol-based business, Drytac Europe Ltd, which manufactures products for graphics finishing and display, has secured the facility from Leumi ABL to improve its working capital and support future growth ambitions. Food and Drink Market Gardeners to grow veg on derelict land by station A derelict parcel of land near Temple Meads railway station will become a temporary market garden. The nine-acre former diesel depot will be used for growing organic salad in polytunnels on a commercial scale, ahead of more long-term plans for an arena or other use as part of the Temple Quarter Enterprise Zone.
8 Hit cafe chain plans another 250 outlets [Top] A Bristol-based cafe chain is looking to open hundreds of branches across the country thanks to the enormous success of its brand. The Loungers chain, which was set up by three friends a decade ago, is in the throes of a major expansion after winning the backing of private financiers in a multi-million pound deal. Food business expands in Bristol The restaurant business PiriPiri Corner has opened its second outlet at The Triangle in Clifton. The family owned business has plans to open more outlets around Bristol and Bath. ICT ForgeRock launches Bristol office The California based software company ForgeRock has opened its UK headquarters in Bristol and created 20 new jobs. According to the company Bristol was chosen because the city already has possibly the best concentration of IT companies and research organisations in the UK across software, hardware, robotics, microprocessor design and digital media. Bright forecast for cloud company inty Bristol-based cloud computing business inty has been acquired by telecommunications investor Weather Investments. Chris Baldock, inty chief executive, said: "The investment, telecom expertise and global reach of Weather will add significant value to inty as we rapidly grow our business. Retail and Distribution Trespass in at The Galleries Outdoor clothing retailer Trespass has taken space at The Galleries in Bristol. The national brand has taken a 5,800 sq ft unit on Merchant Street South on a ten year lease. Transport Bristol rail investment plans welcomed Additional track capacity on the approach to Bristol is to be created as part of a 9.4bn plan package to improve rail infrastructure. The upgrades (that will affect the South West) include the creation of additional capacity from Bristol Parkway into Bristol. Bristol Metro Network The 100m Bristol Metro train network that will bring massive improvements to local railways is to go ahead with the first services running by 2016. It comes as a result of the City Deal agreed between local council and the Government. Health and Social Bristol office launch to create 100 jobs Homecare business Premier Homecare has opened its new office in Bristol and is set to create about 100 new jobs. The business has opened its new premises in Westbury-on-Trym and is planning on create 100 jobs. This includes care support roles and supervisory positions.
General News Items 9 [Top] Creative Industries Boost for Bristol Bristol is still a hub for creativity and digital innovation despite the tough economic climate, according to a new study. The inaugural Bristol Media Barometer 2012 found that creative companies in Bristol are more productive than the UK average. The study found that more than half of the companies within Bristol's creative industry are classified as micro businesses employing no more than five staff. The barometer also found that although these companies provide a living for owners and staff, they could do more in research & development, training and new business generation to strengthen what are often businesses with precarious finances and little or no net profit. On the plus side Paul Appleby, chairman of Bristol Media, said: "Creative industries are at the centre of the economic development strategy for Bristol and the wider West of England region, and we have a great foundation to build on. Small, talented companies with great creative ideas and the ability to learn fast are the cornerstone of economic development." West of England LEP Research completed by the fdi magazine has ranked the West of England Local Enterprise Partnership number one amongst the 39 UK LEP s. The study examined six main areas: economic potential; skills and education; cost effectiveness; quality of life; infrastructure and business friendliness and a panel of judges placed the West of England LEP top of the list. Questions about the contents of this briefing should be addressed to: Stephen Usmar, Economic Intelligence Officer, Economic Development & Regeneration, Bristol City Council. email: stephen.usmar@bristol.gov.uk Phone: 0117 9222925