West of England LEP Quarterly Economic Bulletin April 212 Issue 1 Introduction This quarterly economic briefing note is intended to provide an overview of the economic health of the West of England looking at a variety of indicators. This note 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 (Positive, Neutral, Negative, increase, decrease, - no change) Data Sets Business start-ups in the WofE - Since the recession in 28 there has been a steady rise in the number of businesses being started up across the West of England. Employment Rate - The employment rate amongst the working age population across the West of England has shown no significant change between July 2 and June 2. Unemployment Rate Unemployment has shown no significant change across the West of England between July 2 and June 2. Jobseeker s Allowance (JSA) Claimant Rate those claiming JSA in the West of England has increased, this is in line with national trends. Claimants per Vacancy In February 212, there were 4.7 Jobseeker s Allowance claimants for every vacancy advertised by Jobcentre Plus, this is an increase on January 212, which was 4.5, however it could be argued that this isn t a significant change. Direction of Change 2,438 74.8-6.3-3.2 4.7 House Prices As of November 2 average house prices in the West of England were 176,724 this is a decrease on November 2. 176,724 1
1. Business Conditions The world economy lost momentum through 2 and has levelled out somewhat in early 212, reflecting a marked contrast between a North American recovery and a European malaise. In aggregate, the United Kingdom has been more influenced by the latter than the former. The significant dependence of most of the SW England on domestic consumption and government spending, both areas of demand under downward pressure, continues to keep the local economy soft. Rebalancing towards investment and exports remains modest. In 212 to date, most private sector surveys have shown business conditions to be mixed, confirming the better performance of export-orientated, value added products and services and the relative weakness of markets dependent on discretionary spending. In the West of England, local conditions have reflected these global and national trends, with the slowing of economic activity pushing unemployment higher. Claimant count levels and rates are notably higher than a year earlier in each of the four unitary authorities that make up the West of England. With virtually all forecasters expecting UK real growth to average below 1% again this year and below 2% next, the local labour market will probably continue to deteriorate. Despite the continuing weakness in the overall economy, there are firms offering value added, bespoke or niche products and services in robust supply chains that continue to prosper across the West of England. There are many others, however, particularly those providing more mass market commodity outputs and those dependent upon domestic discretionary demand, that are finding conditions more difficult. Cost pressures through the supply chains and on profit margins, and uncertainties about credit finance, are all discouraging aggregate investment. Faced with a moderate trading background, good businesses are pursuing product and service innovation and trade rebalancing to markets with better growth prospects. For many, however, especially those dependent on consumer or public spending, the incentives to invest for growth are limited. The forecasting consensus for 212/13 is that UK and SW businesses, particularly those with a local, national or EU focus, are likely to see modest growth in demand. Household real incomes are under pressure from the negative interplay of wages and prices, and from job losses in the public sector. Any resolution of the Euro-zone crisis is likely to entail a further drag on credit and exports. Even some of the Far Eastern growth economies are facing more headwinds. In this subdued environment, actions that capture opportunity and bolster long term competitiveness will make all the difference for West of England enterprise. Business Start-Ups Indicator 4 th % Change on 4 th Direction of Quarter 2 Quarter 2 Change Business start-ups in the WofE 2,22 3.% Business start-up rate (per 32.6% N/A, working age population) Source: BankSearch Since the recession in 28 there has been a steady rise in the number of businesses being started up across the West of England. There is a general pattern of peaks and troughs in the number of business start ups throughout a year, with business start-up usually being at a yearly low during the 4 th quarter. 2
Graph 1: Business Start-ups in the West of England 3 25 2 15 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 28 29 2 2 Source: BankSearch 2. Sectors (Selective Indicators) This section looks primarily covers indicators for retail and tourism, which provide a dynamic picture of the health of the local economy. (Further information on all of the priority sectors identified by the West of England LEP setting out the key business news affecting the priority sectors will be appended to this bulletin in future). a) Retail There has been a lot of national news coverage over recent months over the health of the high street, with a number of high profile retail chains going into administration e.g. Peacocks, La Senza, Habitat, Pumpkin Patch; with several more currently at risk such as GAME. It is therefore unsurprising that relatively high levels of retail vacancy are exhibited across the WofE. B&NES As of December 2 retail vacancy in B&NES stood at 2.25%. This relatively low vacancy rate can potentially be attributed to the festive period with a number of short-term leases being taken out. Bristol As of January 212 retail vacancy rates in Bristol stood at 8.6% this is down on the vacancy rate for October 2, which stood at 8.9% and July 2 at 9.9%. This decrease in retail vacancy can be attributed to a rise in short-term leases being taken out on retail properties over the festive period. It is anticipated that vacancy rates will start to rise again from February onwards. North Somerset As of April 212 the retail vacancy for Weston-super-Mare town centre was 16.3%, this is higher then the vacancy rate for April 2, which was 14.3%. The retail vacancy rate of 16.3% means that of the 644 retail units within Weston-super-Mare Town Centre (as defined by the Replacement Local Plan), 5 are currently vacant. This follows many national chains going into administration and also local retailers struggling to survive the economic conditions. Also, some of the vacant units can be attributed to the Dolphin Square area, currently the focus of major regeneration. The council is working closely with Weston Town Centre Partnership to try and address this issue. South Gloucestershire As of February 212 there were 124 empty retail premises in South Gloucestershire, which equates to a vacancy rate of 6.44%. Of the 1,925 retail premises in South Gloucestershire 3
almost 5% have a business rate discount applied. Major shopping destinations continue to churn whilst the smaller high streets and town centres see longer-term unoccupied premises. b) Tourism Indicator 4 th % Change on 4 th Direction of Quarter 2 Quarter 2 Change Visitors to attractions in the 765,993*.7% West of England Total Room Sales (Bristol) 353,18 3.3% 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. The tourism sector has been performing well with visitor numbers to attractions in the West of England and the surrounding area. The 4 th quarter of 2 is up significantly on the 4 th quarter of 2 by.7%. Hotel room sales have also increased by 3.3% on the 4 th quarter of 2. As illustrated by graphs 2 & 3 there are clear trends in visitor numbers and hotel room sales, with yearly peaks in the 3 rd quarter and troughs during the 1 st quarter. Visitor numbers peaked in the 3 rd quarter of 29 (based on 14yr trend data), this potentially reflects the impacts of the recession and fewer people holidaying abroad over the summer months. Graph 3 illustrates that hotel room sales have shown a steady increase since 28. Graph 2: Visitors to attractions in the West of England 1,6, 1,4, Visitor Numbers 1,2, 1,, 8, 6, 4, Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 28 29 2 2 Source: Destination Bristol Graph 3: Room Sales by Quarter in Bristol Based Hotels and Guest Houses 4, 36, Room Sales 32, 28, 24, 2, Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 28 29 2 2 Source: Destination Bristol 4
The growth in the sub-regions tourism sector is also reflected in Bath: Overall room occupancy rates have increased from 42.2% to 58.8% year on year. The total number of visitors to attractions in and around Bath has increased by 13.5% over the last year. Graph 4: Room Occupancy in Bath 7 6 5 4 % 3 2 All Serviced Hotels B&B/Guesthouse Self Catering Q1 2 Q1 212 Source: Bath Tourism Plus Graph 5: Visitors to Attractions in Bath 4, 35, 3, 25, 2, 15,, 5, All City Attractions Out of Town Roman Baths Q1 2 Q1 212 Source: Bath Tourism Plus 3. Employment / Labour Market Indicator July 2 June 2 July 29 June 2 Direction of Change Employment Level 543, 536,5 - Employment Rate 74.8 74.6 - Unemployment Level 36,4 36,4 - Unemployment Rate 6.3 6.3 - Source: Annual Population Survey, ONS The employment rate amongst the working age population has shown no significant change across the West of England between July 2 and June 2. The unemployment rate has also remained static for the same time period. 5
A time lag on the availability of the Annual Population Survey masks recent changes in the labour market, but we suspect based on recent national publications that unemployment will have gone up in the West of England. Graph 6: Employment Rate (16-64) 8 78 76 Employment Rate (%) 74 72 7 68 66 64 July 24 - June 25 July 25 - June 26 July 26 - June 27 July 27 - June 28 July 28 - June 29 July 29 - June 2 July 2 - June 2 Source: Annual Population Survey, NOMIS West of England Core City LEP Comparators Southern LEP Comparators Graph 7: Unemployment Rate (16-64) 9 8 7 6 5 4 3 2 July 24 - June 25 July 25 - June 26 July 26 - June 27 July 27 - June 28 July 28 - June 29 July 29 - June 2 July 2 - June 2 West of England Core City LEP Comparators Southern LEP Comparators Source: Annual Population Survey, NOMIS Indicator West of England in February 212 6 Direction of Change comparison with this month last yr Jobseeker s Allowance Claimant Count 23,356 Jobseeker s Allowance Claimant Rate 3.2 Vacancies Advertised by Jobcentre Plus 5,19 Claimants per Vacancy 4.7 Source: ONS Crown Copyright In February 212, there were 4.7 Jobseeker s Allowance claimants for every vacancy advertised by Jobcentre Plus, this is an increase on February 2 when there was 4.4 Jobseeker s Allowance claimants for every vacancy advertised by Jobcentre Plus.
The direction of change currently being experienced in the West of England is in line with National trends. 4. Property and Planning West of England in Comparison with this month Indicator November 2 last year House Prices 176,724 (-4.3%) House Sales 1332 (3.9%) Source: West of England figure calculated by the West of England Office using Land Registry Data. a) House Prices (Monthly Trend ; Annual Trend ) The average house price across the West of England increased by about 1,6 on the previous month of October in November 2 at 176,724. Average house prices in the West of England remain higher than the rest of the South West and England and Wales. 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. Despite a decline in house prices the number of house sales in the West of England is up on November 2. Graph 8: House Prices Monthly Time Series 19, 185, 18, 175, Price ( ) 17, 165, 16, 155, 15, 145, Oct- Nov- Dec- Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- WofE South West England & Wales Source: West of England figure calculated by the West of England Office using Land Registry Data. b) Commercial Property Enquiries West of England in March Comparison with this month Indicator 212 last year Total new property enquiries 5 (+6) Source: West of England Inward Investment Service/Evolutive database 7
Graph 9: West of England Total New Property Enquiries Received 8 7 6 5 4 3 2 48 71 72 65 5 44 Jan Feb Mar 2 212 Source: West of England Inward Investment Service/Evolutive database Graph 9 illustrates that for the 1 st Quarter of 212 the number of new property enquiries received is greater than for the 1 st Quarter of 2. Graph : New Property Enquiries Received by Sector 4 35 3 25 2 15 5 Advanced Engineering Agriculture Business/Professional Services Construction Industry Contact Centres Creative Industries Distribution Education Low Carbon Financial Services Health/Social Work ICT/Telecommunications Leisure & Tourism Manufacturing Industry Personal Services Public Sector R&D Retail Transport Unspecified Utilities Source: West of England Inward Investment Service/Evolutive database Q1 2 Q1 212 Graph illustrates that for the 1 st Quarter of 212 the largest number of new enquiries received was within the Leisure and Tourism Sector, this is followed by Retail; Business/Professional Services and Creative Industries. 8
Graph : Demand Q1 212 Unit/Size Requirements 8 7 6 No of enquiries 5 4 3 2 Up to 5 Up to 2 Up to 5 Up to Up to 5 Up to 2 Over 2 Size (SqFt) Industrial Office Source: West of England Inward Investment Service/Evolutive database Notes: Unit/size figures are derived in most cases from enquirers online registration on the Invest West Property Search c) Commercial Data Take-up Indicator Q1 212 (sq ft) Q1 2 (sq ft) Direction of Change Bristol City Centre Take-up 91,56 159,6 Bristol Out of Town Take-up 4,25 72,399 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 BANES and is not comprehensive for NS although we continue to work on this and we welcome any support. Office Rents Indicator Rents Rent free incentives Net effective rent ( yr term) Bristol City Centre Rents a,b 27.5psf 36 months 19.94 Bristol Out of Town Rents a,b 21.psf - - Bath Rents b 18.5psf - - Source: a The Big Nine Regional Office Market Report Q3 2, GVA b Market Monitor South West of England & South Wales 2, Alder King d) Property Availability Office Locality Property (Units) Availability as at 17 th April 212 B&NES 3 Bristol 312 North Somerset 135 South Gloucestershire 128 Source: West of England Inward Investment Service / Evolutive database Industrial Locality Property (Units) Availability as at 17 th April 212 B&NES 61 Bristol 259 North Somerset 141 South Gloucestershire 61 Source: West of England Inward Investment Service / Evolutive database 9
Graph 12: Property Availability as at 17 th April 212 35 3 25 2 15 5 Industrial Office BCC SG NS BANES Source: West of England Inward Investment Service / Evolutive database 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 several useful documents providing the business view on the health of the economy; these are: West of England LEP Barriers to Growth Survey Report: Quarter 1 212 Quarterly Economic Report: Quarter 1 212 Request for Information: In our next edition we are looking to include market intelligence from sector leads, if you can help with this or provide information/data on any other area of this bulletin we would like to hear from you. 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: 7 936816 Many thanks to Nigel Jump for providing the section on Business Conditions and to all other contributors.