West of England LEP Quarterly Economic Bulletin Issue 6

West of England LEP Quarterly Economic Bulletin Issue 6

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 2 nd quarter of 2013 there was a decrease 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 in the year to March 2013 on the same period the previous year. Unemployment Rate The West of England unemployment rate in the year to March 2013 stood at 6.7; this is an decrease of 1.0 percentage points on the same period for the previous year. Jobseeker s Allowance (JSA) Claimant Rate As of June 2013 the claimant rate in the West of England stood at 2.7%. This is a decrease on the same month during the previous year House Prices As of March 2013 average house prices in the West of England were 181,435 this is an increase on March 2012. Inward Investment Enquiries The Inward Investment Service, Invest in Bristol + Bath, received 166 new property enquiries in the 2 nd quarter of 2013. This is a minimal increase on quarter 2 of 2012 Direction of Change 2,209 73.6 6.7 2.7 181,435 166 1

1. Business Conditions Through the spring of 2013, there were signs of increased economic activity at a global, national and local level. Progress remains modest and risks high, but there is some light in the long tunnel of the current downturn. Real growth in the US economy has continued. Changing expectations about relative interest rates have pushed up the dollar. In time, the shift from 1.58 US$:UK to 1.48 during the first half of 2013 should give West of England (WoE) exporters a fillip. In China, although growth may be slowing, this should make it more sustainable in the long run. Moreover, the shift from investment to consumption led growth means mediumterm potential for WoE exporters. Meanwhile, facing significant austerity and high unemployment, many parts of Europe remain in recession, damaging some WoE trade prospects in the eurozone. In the United Kingdom, the historical run of real GDP figures has been revised, showing a removal of the double dip but a deeper downturn overall. In the first quarter of 2013, output was still 3.9% below the previous peak. As a result, with employment defying gravity, productivity is extremely weak GDP per hour about 5% below the pre recession ratio in the first quarter. At the same time, the current account deficit remained large an unsustainable 3.6% of GDP and corporate net rates of return were flat and modest (only 8.9% for manufacturing and 15.1% for services in the first three months of the year). The second quarter showed some improvement from these lows. The initial estimate of real GDP shows a 0.6% increase, reducing the gap with pre recession levels to 3.3%. All output elements showed growth production +0.6% (manufacturing +0.4%), services +0.6% (distribution +1.5%, transport +0.6%, business/finance + 0.5%, government +0.1%), construction +0.9% and agriculture +1.1%. Several recent surveys suggest there were higher orders, exports and overall output in the April June period at a national and local geography. Industrial production and services, and retail sales, still experienced mixed fortunes but the housing market made progress, partly fuelled by policy intervention. Labour markets were also fairly buoyant, with claimant rates falling across the south. SW employment growth has been positive for a year and the unemployment picture is improving across the West of England. In June, claimant counts were lower than earlier this year and then a year earlier down to 3.7% in Bristol, 2.2% in North Somerset, and 1.8% in Bath and NE Somerset, and in South Gloucestershire. Moreover, activity surveys, from professionals to chambers, suggest output will now expand further. If, in the second half of 2013, this is supported and pushed further by increased business investment and hiring, we may see more sub regional growth than was expected earlier in the year. Nevertheless, recent economic gains are from a very low level and, largely, in spite rather than because of the policy environment. What went down is starting to come up but high risks remain. The constraints of falling real incomes, problematic access to finance, public austerity and weak aggregate demand, net exports and investment remain profound. Against this background, any forward progress is welcome. Business Start ups Indicator Business Start ups in the West of England Business Start up rate (per 10,000 working age population) Source: BankSearch 2 nd Quarter 2013 % Change on 2 nd Quarter 2012 % Change on 1 st Quarter 2013 Direction of Change on previous Quarter 2,209 3.9 4.1 30.1 N/A N/A 2

The 2 nd quarter of 2013 saw an increase in the number of businesses being started up across the West of England (+87 business on the previous quarter). Resulting in a 4.1 percentage point increase on the previous quarter. However, the number of business start ups for this quarter is 3.9 percentage points down on the same quarter for 2012. Business start ups are an indication of entrepreneurialism and innovation and it is within these business startups 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 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, in times of economic downturn, when people are more cautious on what they spend. a) Retail The health of the high street is beginning to show signs of improvement; however it is still frail as the global and national economy remains weak. 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 2013, the quantity bought increased by 0.9% (Source, ONS). B&NES As of June 2013 there was a retail vacancy rate of 11.6% in B&NES. Although this is relatively high this reflects the closure of a number of retail units in Keynsham as part of a major redevelopment project in the town centre. Conversely the retail offer in Bath city centre remains strong. Bristol As of there was a retail vacancy rate of 8.2% in Bristol. This has remained relatively static since reporting in the last quarter, but the vacancy rate in Broadmead and Cabot Circus has fallen in recent months. 3

North Somerset As of June 2013 there was a retail vacancy of 8.3% across North Somerset. 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 there was a retail vacancy rate of 6.6% this is a decrease on the vacancy rate for March 2013, which stood at 7.2%. Smaller high streets and town centres continue to see longer term unoccupied premises. b) Tourism Indicator 2 nd Quarter 2013 % Change on 2 nd Quarter 2012 Direction of Change on 2 nd Quarter 2012 Visitors to attractions in the West of England* 1,304,069 25% Total Room Sales (Bristol) 401,035 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 2013 the number of visitors to attractions in the West of England was up on the same quarter for 2012 by 25%. Room occupancy was also up on the same period for 2012. 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 Source: Destination Bristol 4

Graph 3: Room Sales by Quarter in Bristol Based Hotels and Guest Houses Source: Destination Bristol Graph 4: Room Occupancy in Bath 90 80 70 60 50 40 30 20 10 0 Q1 Q2 Q3 Q4 2011 2012 2013 Source: Bath Tourism Plus. 5

Graph 5: Visitors to Attractions in Bath 1,000,000 900,000 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 Q1 Q2 Q3 Q4 2011 2012 2013 Source: Bath Tourism Plus. Note: Q4 2012 & Q1 2013 was taken from a lower sample than in previous years. 3. Employment / Labour Market Indicator England April 2012 March 2013 WofE April 2012 March 2013 WofE April 2011 March 2012 Direction of Change Employment Level 24,017,000 545,200 535,800 Employment Rate 71.1 73.6 72.6 Unemployment Level 2,080,100 40,100 44,400 Unemployment Rate 8.0 6.7 7.7 Source: Annual Population Survey, NOMIS The West of England employment rate in the year to March 2013 stood at 73.6%. 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 in the year to March 2013 stood at 6.7; this is a decrease of 1.0% on the same period for the previous year. 6

Graph 6: Employment Rate (16 64) Source: Annual Population Survey, NOMIS Graph 7: Unemployment Rate (16 64) Source: Annual Population Survey, NOMIS Indicator Jobseeker s Allowance Claimant Count Jobseeker s Allowance Claimant Rate Source: NOMIS, ONS West of England June 2013 West of England June 2012 Direction of Change comparison with this month last yr 18,661 21,754 2.7 3.1 7

Graph 8: Claimant Rate Monthly Time Series 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 0.7% 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 2013 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) 4. Property and Planning West of England in Comparison with this month Indicator March 2013 last year House Prices 181,435 (+1.8%) House Sales 1059 ( 3.5%) Source: West of England figure calculated by the West of England Office using Land Registry Data. a) House Prices (Monthly Trend ; Annual Trend ) In March the average housed prices across the West of England decreased by about 310 on the previous month of February 2013. 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 8

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 9: Average House Prices Annual Time Series 190,000 170,000 150,000 130,000 110,000 90,000 70,000 50,000 1995 1996 1997 1998 ( ) 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 WofE England & Wales Source: West of England figure calculated by the West of England Office using Land Registry Data. b) Commercial Property Enquiries Indicator West of England Q2 2013 Comparison with this month last year Total new property enquiries 166 (+1) Graph 10: West of England Total New Property Enquiries Received The number of new property enquiries received by the West of England Inward Investment Service during the second quarter of 2013 was only minimally up on the same quarter of 2012. 9

Graph 11: New Property Enquiries Received by Sector In the 2 nd quarter of 2013 creative industries received the largest increase in the number of property enquires compared to the same time last year. Business Services, Education, Environment and Water, Low Carbon and ICT also saw an increase in the number of enquiries compared to the same quarter in 2012. There has been a decrease in the number of enquiries for premises in two of the LEPs priority sectors, Aerospace and Financial Services. Graph 12: Demand Q2 2013 Unit/Size Requirements Notes: Unit/size figures are derived in most cases from enquirers online registration on the Invest West Property Search 10

c) Commercial Data Take up Indicator Q1 2013 (sq ft) Q2 2013 (sq ft) Direction of Change Bristol City Centre Take up 145,555 143,931 Bristol Out of Town Take up 81,650 47,055 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 Net effective rent ( psf) Q2 2013 Q1 2013 Q2 2013 Q1 2013 Bristol City Centre Rents a,b 27.50 27.50 19.94 19.94 Bristol Out of Town Rents a,b 21.50 21.50 Direction of Change Bath Rents b 21.00 21.00 Source: a The Big Nine Regional Office Market Report Q1 2013 & Q4 2012, GVA b Market Monitor South West of England & South Wales 2013, Alder King Commercial take up in Bristol City Centre is down in the second quarter of 2013 compared to the previous quarter. As is Bristol out of town take up. However, office rents remains static. d) Property Availability Office Locality Property (Units) Availability as at 26 th B&NES 110 Bristol 376 North Somerset 128 South Gloucestershire 149 Industrial Locality Property (Units) Availability as at 26 th B&NES 38 Bristol 269 North Somerset 108 South Gloucestershire 69 11

Graph 13: Property Availability as at 26 th Notes: Office data doesn t include available serviced/managed workspace The Invest West property database relies on commercial agents to update property availability; the database only includes properties actively marketed by local commercial agents or owners. We are currently re launching the property database and working on a major update. In the future, we will be able to provide more reliable data including properties on/off the market. 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/reports and 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: 0117 9036816 Many thanks to Nigel Jump for providing the section on Business Conditions and to all other contributors. 12