Bristol Economic Briefing March 2014 Summary ONS 1 reported that the UK economy grew by 1.8% in 2013. The OBR 2 published 3 summaries of the forecasts for 2014 and 2015. All forecasts had been revised upward with averages of 1.9%, 2.7% and 2.4% for 2013, 2014 and 2015 respectively. Inflation corrected UK economic output remains 1.3% below the pre-recession peak that occurred in the first quarter of 2008. According to the Institute of Fiscal Studies (IFS), in 2013, real income in the UK was 6% below the pre-recession peak and as a whole the UK is a much poorer country than it was before the 2008 recession. The number of JSA claimants in Bristol was the lowest since February 2009 and the number of young people claiming JSA is at its lowest level since January 2009. Bristol s labour market continues to show more weakness in lower skilled occupations. Although new business starts in Bristol were at their lowest levels since August 2011 growth in professional, scientific and technical activities, and transport and communications is still strong whilst construction continues to show weakness. Vacancy rates amongst retail properties in Bristol fell to the lowest levels (on record) since 2011. Several research reports that have been published over the last quarter have predicted strong growth for the Bristol economy over the next couple of years. 1 Office of National Statistics 2 Office of Budget Responsibility 3 https://www.gov.uk/government/collections/data-forecasts
1 Bristol Economic Briefing March 2014 1 Overview According to ONS 4 in 2013 the UK economy grew by 1.8%, somewhat more than was predicted (1.2%) by the Office of Budget Responsibility (OBR) at this time last year. The UK economy has grown for four consecutive quarters for the first time since 2010. Forecasts for 2014 and 2015 from various sources have been increased. The OBR reported average growth forecasts of 2.7% and 2.4% for 2014 and 2015 respectively. The Guardian reported 5 the reactions of ten economists from a variety of organisations. The chief economist at the ONS said: the economy does seem to be improving consistently but pointed out that the GDP still remains 1.3% below the pre-recession peak. Others have been more positive and the consensus seems to be that the economy will continue to grow in 2014 with the CBI SME trends survey suggesting that small manufacturers are planning to invest and other research from the CBI indicating that business investment will rise at its fastest rate since 2007. This is not to say that there are no doubters: at least one has argued 6 that this is a bubble and it will burst. While there is little official data to describe the current local economic conditions, what there is suggests that conditions have improved. In January 2014 the JSA claimant count increased by 2.8% but, having decreased for the previous 22 months, remained at its lowest since February 2009. Further data from the APS suggests that although the number of part time jobs in Bristol has been falling over the last 2 years or so the number of full time jobs has increased and as of September 2013 was the highest on record, about 10% above the level of September 2009. Reports from three different sources have suggested that the economy of Bristol is on the road to recovery. A report from Alder King indicated that the commercial property market in Bristol will bounce back strongly in 2014. The Cities Outlook 2014 indicated that Bristol is one of the strongest performing major English cities outside London. A report from Jones Lang Lasalle suggests that Bristol will undergo significant economic expansion over the next five years. The growth will be led, in tandem, by the city s relatively new information and communications technology (ICT) and well established professional, scientific and technical services sectors. In addition, the city s emerging creative and media industry will make a significant contribution. Bristol is likely to overtake fast-growth cities like Manchester and Birmingham. 4 http://www.ons.gov.uk/ons/rel/naa2/second-estimate-of-gdp/q4-2013/tsd-second-estimate-of-gdp--q4-2013.html 5 http://www.theguardian.com/business/2014/jan/28/uk-economic-growth-what-economists-say 6 http://www.theguardian.com/commentisfree/2014/feb/24/recovery-bubble-crash-uk-us-investors
2 Labour Market 2 (i) Employment Rates The employment rate 7 in Bristol increased slightly between June and September 2013 whilst that for England remained unchanged. There were just under 5,000 more people in employment in September 2013 (231,200) than in September 2011 (226,500). The employment rate for Bristol (71.2%) remains just below 8 the rate (71.4%) for England. Table 1: Employment Rates for England and the English Core Cities, September 2013 Location Bristol Birmingham Leeds Liverpool Manchester Newcastle Nottingham Sheffield England Employment Rate 71.2 58.7 69.2 60.6 61.1 58.7 57.2 68.4 71.4 Source: Annual Population Survey, 2014, Nomis, O.N.S., Crown Copyright The 95% confidence limits for this Core Cities data vary from 2.5% to 3.0%. The rate for Bristol remains the highest, by a significant margin, of the English Core Cities. However, areas such as Rugby, Stroud and Watford had employment rates significantly higher (at least 10 percentage points) than that of Bristol. (iii) Unemployment The JSA claimant rate 9 for Bristol (3.1%) is up 0.1 percentage points on the level of December and remains 0.2 percentage points above that for England (2.9%). Bristol still has the lowest claimant rate of all the English core cities, however it has been consistently higher than the rest of the West of England (WoE) and other areas such as Guildford (1.0%); Cambridge (1.4%); Oxford & York (1.6%) and Canterbury, Chelmsford & Maidstone (1.9%). As was expected 10 the number of Bristol residents claiming JSA (9,198) increased between Dec-13 and Jan-14. The count increased by 2.8% (from 8,951 to 9,198) whilst the historic record shows an average increase of 4.5%. The increase (3.1%) for England was slightly higher than that for Bristol and for the same periods between 2010-11 and 2011-12 counts increased by 5.9% and 4.9% respectively. Thus although there was an increase in the JSA claimant count for Bristol, it remains 23.6% below the level of January 2013 but is still twice the level of December 2007. 7 The percentage of all people aged 16 to 64 (working age population) who are in employment. 8 Note the 95% confidence limits for Bristol are 3% so there is no statistically significant difference between England and Bristol. 9 Proportion of Working Age Population (WAP). 10 In the last 30 years claimant count always increased between December of one year and January of the next.
JSA Claimants by Gender As of January 2013 there were 6,090 male and 3,108 female JSA claimants resident in Bristol. These numbers are about 24% and 22% below the maxima of 2011 to 2012 respectively 11. Thus whereas prior to the 2008 recession there were about 3 times as many male claimants as there were female, there are currently just under twice as many males as females claiming JSA in Bristol. The female population of Bristol has fared worse than males during the post-recession period 2009 to date. JSA Claimants by Duration Although the numbers of long-term 12, very long term 13 and extremely long term 14 were more of less unchanged between December 2013 and January 2014, they all fell for the 6 months to December 2013. At 3,985, 2,585 and 1,430 the numbers were down 21.7%, 18.2% and 14.6% from 5,090, 3,160 and 1,675 respectively. However the numbers remain much higher than pre-recession levels with numbers of long-term, very long term and extremely long term claimants 3.2, 4.4 and 12.4 times those of January 2008. JSA Claimants by Sought Occupation The chart below shows clearly that in January 2014 the numbers of JSA claimants for six of the nine major occupational groups were below or between the pre-recession of January 2007 and 2008. The numbers of claimants in a seventh group (Associate Professional & Technical Occupations) was within a few percent of the levels of January 3 2007. The two exceptions were Personal Service Occupations and Sales and Customer Services occupations. Of these, Personal Service Occupations has twice the prerecession numbers of claimants but accounts for only 5% (460) of the total. On the other hand Sales and Customer Services occupations account for 40% (3,650) of total claimants and remain at over four times the level of January 2008. In fact this group accounts for two thirds of the difference between the pre-recession (January 2008) and the current (January 2013) number of JSA claimants in Bristol. 11 September 2011 for female claimants and February 2012 for male claimants 12 Claiming for over 6 months 13 Claiming over 1 year 14 Claiming over 2 years
JSA by Ward for Bristol Year on year, the JSA claimant count for Bristol decreased by 23.6% from 12,035 in January 2013 to 9,198 in January 2014. The decrease left the claimant rate one percentage point below the January 2013 level, at 3.1%. As is evidenced by the chart below, the claimant rates of all but one (Cotham, which was unchanged) of the 35 wards 4 of Bristol fell between January 2013 and January 2014. The largest decreases (1.8, 1.5 and 1.6 percentage points) occurred in the three worst performing wards in the city (Lawrence Hill, Ashley and Easton respectively) and 18 of the other 32 wards had decreases of one percentage point or more. Even so, the claimant rate for Lawrence Hill remains more than 2 percentage points above all of the other wards and although the count is now less than 80% above 15 the pre-recession (Jan-2008) level, the sheer numbers are such that the difference (479) is close to twice 16 that for any other ward and 26% more than the number of claimants resident in the 6 best performing wards 17. In January 2014 Lawrence Hill had over twice as many claimants as any other ward except Ashley and over four times as many as 23 of the other 33 wards. In total the number of JSA claimants resident in Lawrence Hill was about 10% higher than the total for the best 10 performing wards of Bristol, in January 2014. (iv) Youth Unemployment Although the number of young 18 JSA claimants resident in Bristol increased by about 2% (2075 to 2012) between December 2013 and January 2014, it had fallen by 32% in the previous 11 months and as of January 2014 was 43% below the maximum (3,745) of February 2012. As of January 2014 the number (665) of young people classed as long term claimants was 51% below the peak (1,370) of July 2012 but remained more than 4 times the pre-recession level (155) of January 2008. Out of Work Benefits (Worklessness) In August 2013 the number (35,790) of Bristol residents claiming out of work benefits 19 fell to the same level (35,790) it was in November 2008. This is largely due to reductions in the numbers of Lone Parent (28%) and ESA/IB (6.6%) claimants, but the numbers of Job Seekers remains well (50%) above the November 2008 levels. 15 19 of the other 34 wards have claimant counts that are higher, by a larger margin, than pre-recession levels of January 2008 16 Eastville, (the fourth worst performing ward) had the second largest gap with 274 more claimants in Jan-14 than in Jan-08 17 Stoke Bishop, Henleaze, Westbury-on-Trym, Clifton East, Clifton and Redland - with a total of 379 claimants. 18 People aged 18yrs to 24yrs 19 As defined by DWP: includes ESA & Incapacity Benefits, JSA, Lone Parents & others on income related benefit
3 Retail and Commercial Property 5 Overview Nationally, as is evidenced by the Savills Commercial Development report for February, activity in public and private sector development continued to show growth. Confidence in the commercial development sector has been strengthened by new contracts and improving expectations for the UK economy. Retail In January 2014 Bristol's citywide retail property vacancy rate was 7%, which is the lowest it has been since mid-2011. In the year to January 2014 there were 356 (source Bank Search 20 ) new retail sector start-ups in Bristol. This is down 10% on the previous year but well above the level (263) of January 2009. Office 21 According to the Bristol Office Agents the level of take up (504,218 sq.ft.) in Bristol's city centre office market for 2013 was up about 23% on the take up (409,225 sq ft) in 2012. Out of town office take up (226,518 sq ft) in 2013 was 10% lower than take up (215,373 sq ft) in 2012. For both city centre and out of town markets, the majority of deals 22 (75%) were for spaces of less than 5,000sq ft. with only 4 city centre and 2 out of town deals over 10,000sq ft. According to CBRE 23, in the first 3 quarters of 2013, 78% of the Office take up in Bristol City Centre was associated with 5 business sectors, which were Manufacturing Industrial & Energy (26%); Business Services (12%); Consumer Services & Leisure (11%) and Professional Services (16%) and Public Sector / Regulatory Body (23%). Another 4% of take up was in the Computers / Hi-Tech sector. 4 Business Start Ups (BankSearch Data) In the year to December 2013 Bank Search 16 data indicate that there were just over 3,700 new business starts in Bristol, the lowest annual sum since August 2011. The same database indicates that in the 4 years to December 2013 there were 15,118 new business starts in Bristol; about 85% of these were in the sectors shown in the table Industrial Sector Number of New Business Jan to Dec % of 4yr % Change Dec-10 Dec-11 Dec-12 Dec-13 4yr Total Total 10-13 Manufacturing 135 154 138 179 606 4.0 32.6 Construction 407 399 313 312 1,448 9.6-23.3 Retail trade and repair 327 364 374 373 1,346 8.9 14.1 Accommodation & food service 267 308 322 253 1,134 7.5-5.2 Transport & communication 119 285 386 338 679 4.5 184.0 Development, buying, selling & renting real estate 187 108 87 101 649 4.3-46.0 Professional, scientific and technical activities 209 500 544 596 1,340 8.9 185.2 Administrative & support services 878 465 372 349 2,707 17.9-60.3 Recreational, personal & community service 756 636 706 591 2,842 18.8-21.8 All Industry 3,846 3,797 3,771 3,704 15,118 100-3.7 below. Of the nine sectors in the table, four have seen significant increases in new business starts and five significant reductions. The highest growth has been in professional, scientific and technical activities. Further it should be noted that in 2012 & 13 about 70% of starts in the transport & communication sector were in the Information and communications subsector. 20 Proprietary data base that counts new business bank accounts 21 Data supplied by Bristol Office Agents Society 22 Jones Lang Lasalle, Bristol Office Market Report: http://www.joneslanglasalle.co.uk/unitedkingdom/en-gb/pages/bristol.aspx 23 http://www.cbre.co.uk/uk_en/research (search on -Bristol and Office)
5 Selected Business News December 2013 February 2014 6 Aerospace, Defence and Advanced Engineering GKN Expands its Apprenticeship Programme The advanced engineering firm, GKN Aerospace is stepping up production and will, as a result, expand its apprenticeship scheme. The company will initiate a new technician apprenticeship and will increase its intake of apprentices to 48 up from 44 in 2103. The next academic year (2014) will see 129 apprentices training at GKN s Bristol sites. Bio Medical Synthetic Biology Research Centre A new synthetic biology research centre is to be set up at the University of Bristol with a grant of 13.6m. The centre, to be known as BrisSynBio, should establish Bristol as a world leader in the emerging field of synthetic biology. Business, Financial and Professional Services Home Office Contract won by Mitie Mitie, the outsourcing business based in Bristol, has won an eight-year Home Office contract worth 180m. A potential three-year extension would increase the value of the contract to 250m. Records for Hargreaves Lansdown Hargreaves Lansdown reported record profits in the 2 nd half of the 2013 calendar year. The firm, which was formed and is based in Bristol, also reported record revenues. Pretax profits and revenues were up 11% and 13% respectively. Bristol Law Firms A report from the Law Society indicates that the profits of most Bristol Law firms have increased over the past year. Creative Industries Post Production Business Comes to Bristol The London based TV post production company Evolutions has opened a new 1m state of the art, full service television post-production facility close to the BBCs regional headquarters on Whiteladies Road. The facility will employ 20 staff. Evolution chose Bristol for its first base outside London because of its growing reputation in the sector. Bristol Based Digital Marketing Company Strategy Internet Marketing has reported that its sales grew by a quarter in 2013. During the same period the Bristol based agency increased its headcount from 35 to 50. Theatre Royal Redevelopment Planning permission for a 12m redevelopment of the Bristol Old Vic has been granted. The theatre s artistic director said that These changes are vital to support the future viability of the theatre.
Construction 7 Whitchurch Site Development (Barret) The house builder Barratt has announced plans to develop four sites in the Bristol area, including one at Whitchurch in South Bristol, over the next year. In total the developments will support about 600 jobs and result in 300 new homes. South Bristol Green Business Park In January the Midas Group was appointed as contractor for the new 11.6m green business park to be built in Filwood. Construction started in early February. The park is expected to provide 40,000 sq ft of workshops and Offices and support about 350 jobs, Environmental Technologies City Wide Energy Deal Bristol City Council has approved ambitious plans that have the potential to slash energy bills in the city by 3.5m, cut the city s domestic gas use by 5% and save about 18,000 tonnes of CO 2. The so called Green Deal will be launched later this year. Food and Drink Small Loss to Large Profit Loungers, the Bristol based business, saw a pre-tax loss of 139,714 in year to 28 April 2012 turned into a profit of 1.1m the following year, on a turnover of 22.1m. Loungers have ambitions to have 90 venues nationwide by 2017. ICT Intel University of Bristol Collaboration The US tech group Intel has selected the University of Bristol as its first centre for parallel computing in the UK. The move reinforces Bristol s reputation as a centre for innovative advanced computing using the latest parallel computer architectures. IT Consultancy Opens Office in Bristol The award winning IT consultancy BJSS has opened an office in Bristol. BJSS General Manager said, Bristol is an important location for BJSS and the chair of Invest in Bristol & Bath commented The companies location choice clearly recognises the region s longstanding reputation as a UK hotspot for new investment and a first class centre for ICT, digital and high-tech industries." Blu Wireless Technology Blu Wireless Technology was awarded 1m grant from the West of England Regional Growth Fund towards development of its next generation wireless technology. The company s Chief Executive Officer said, This grant from the West of England Growth Fund, combined with the almost 2.4m we have raised from private investors over the last year, will allow us to complete the development of our prototype design by the end of 2014. Blu Wireless has more than doubled (7 to 17) its workforce in 2013 and hopes to have more than quadrupled it (to 30) by the end of 2014.
Leisure and Tourism 8 Cosy Club to Open in Bristol The Bristol based Loungers is to launch a Cosy Club on Corn Street in the centre of Bristol. The club is expected to create 40 jobs when it opens in May this year. Manufacturing Pieminister Sales Rise Bristol based pie maker, Pieminister, reported revenues of 9m in the year to 31 March 2013 an increase of 8% on the previous year. The company reported a pre-tax profit of 572,619 in the year ending 31 March 2012 and said growth was not restricted to England. Its operations in Ireland and Holland have been delivering double digit growth. Bristol Firm to Grow The Bristol based, Mawdsleys BER, that makes and services electric motors generators and pumps is to expand its business after acquiring Somerset Pumps which is based in Chard. Mawdsleys BER clients include, among others, Rolls-Royce and BEA Systems. Property Old Office Converts There has been a growing trend to convert older city centre office space into residential space. In particular several older office blocks have or are being converted into student accommodation. General News Items Local Enterprise Partnership (LEP) Skills Junction A new web site that brings together all training providers in the South West was launched in early February. The web site was developed by the West of England LEP skills team and provides a one stop shop for individuals and businesses interested in training courses across the SW. Regional Growth Fund Since its inception in the summer of last year the WoE Regional Growth Fund has helped to create over 1,000 new jobs and safeguard another 500. According to the chief executive of the WoE LEP that led the campaign, the programme has been more successful than pretty much every other scheme around the country. Temple Quarter Enterprise Zone Since April 2012 the Temple Quarter Enterprise Zone (TQEZ) has attracted about 60 businesses and over 650 jobs. Bristol City Council has approved funding for a 91m arena and work is due to start on the construction of a new bridge, funded by an investment of more than 11m from the HCA, to provide improved access to the Diesel Depot site.
9 Questions about the contents of this briefing should be addressed to: Stephen Usmar, Economic Intelligence Officer, Economy, Enterprise and Inclusion, Bristol Futures, Bristol City Council. email: stephen.usmar@bristol.gov.uk Phone: 0117 9222925