Cumbria Economic Bulletin
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CUMBRIA ECONOMIC BULLETIN March 2008 A JOINT PUBLICATION Cumbr ia Economic Intelligence Partnership Centre for Regional Economic Development CONTENTS Page Section Heading Number Introduction 1 1 Macro-Economic Overview 2 2 Selected National Economic Indicators 4 3 Corporate Change in Cumbria 5 4 Unemployment and Claimant Data 11 5 Notified Vacancies Data 21 6 Cumbria Economic Assessment 2008: A Summary 23 7 The Spatial Interaction of Housing and Labour Markets: the 26 Case of Cumbria 8 Trends in Logistics in Cumbria: Employment, Skills and 34 Competitiveness Appendix: Map of Cumbria Travel-to-Work Areas 38 Cumbria Economic Bulletin March 2008 INTRODUCTION Welcome to the March 2008 edition of the Cumbria Economic Bulletin . For the benefit of new users, the Bulletin is jointly produced by the Centre for Regional Economic Development (CRED), at the University of Cumbria in Carlisle, and the Cumbria Economic Intelligence Partnership (CEIP). CEIP is a countywide group established to improve the understanding of the local economy and labour market through research, analysis and data dissemination. Partners in the group include Cumbria County Council, district councils, Cumbria Vision, Invest in Cumbria, Cumbria Tourism, the Lake District National Park, Cumbria Learning & Skills Council and Further Education Colleges. The Bulletin is intended to contain data relevant to the County for the benefit of a broad readership, but especially for policy makers, industrialists and academics. We would like to take the opportunity to point out that a monthly unemployment and claimant count/rate briefing can be supplied via an e-mail distribution list. Names can be added to this list on request by e-mail to [email protected] . Requests for additions or deletions to our mailing list can be notified to any of the contacts listed below. Any part of the bulletin may be reproduced by readers, providing that full acknowledgement of the source is quoted and, where applicable, an appropriate copyright notice is held. We hope that you will find the Bulletin interesting and informative. The Editorial Panel Bulletin Contacts Centre for Regional Economic Development [University of Cumbria – Paternoster Row, Carlisle Campus] Frank Peck T. 01228 888840 E. [email protected] Gail Mulvey T. 01228 888837 E. [email protected] CEIP [Cumbria County Council] Daniel Bloomer T. 01228 606684 E. [email protected] [Invest in Cumbria] Ginny Murphy T. 01768 895363 E. [email protected] 1 Cumbria Economic Bulletin March 2008 SECTION 1 MACRO ECONOMIC OVERVIEW Continued volatility in global financial markets The past six months since the last Economic Bulletin has been marked by continued disruption to global financial markets and growing levels of uncertainty about medium- term prospects in the developed world economies. In its assessment of the international economy in January, the Monetary Policy Committee (MPC) drew attention to further deterioration in the housing market in the United States as a key factor in global instability although the extent to which this would affect other sectors of the US economy still remained unclear 1. Most market commentators, however, suggested that there is increased likelihood of recession in the US during 2008. The MPC February report continued its reference to weakness in the US situation reflecting what was referred to as the “largest fall in residential investments for 26 years”. As regards the Euro zone, signs of a slow-down in growth were reported in the fourth quarter of 2007. MPC noted that growth in the Euro area had previously been driven by good export and investment performances, hence this slow-down might suggest that deceleration of world demand was beginning to have an impact. Further grounds for pessimism arose when estimates of growth in Japan were revised downwards and surveys indicated a fall in the level of business confidence in that country. By comparison, other Asian and emerging economies appeared to remain robust. Trends in the UK economy The most immediate impact of these global changes in the UK has been experienced in the banking sector where new loans to households and businesses have been tightened considerably 2. Latest GDP estimates also show only modest growth in the 4 th quarter of 2007 with slowdown concentrated in particular in the financial and retail sectors. While the likelihood of economic slowdown would suggest that interest rates should be reduced, MPC has also been concerned with inflationary pressures arising from projected higher energy and food prices in early 2008. There remains uncertainty about levels of inflation, however, partly dependent upon the extent to which consumers are prepared to absorb the higher input costs to producers and retailers. Some reports suggest, in fact, that retailers in particular are accepting lower profit margins in order to maintain sales volumes (see below). In this fine balancing act, the base rate was reduced to 5.25 percent in February and held at that rate in the March meeting despite calls from some sectors of the economy (notably in manufacturing) for further cuts to stimulate growth. The Society of Motor Manufacturers and Traders, for instance, has reported that new car sales in February were down by over 5 percent on the previous year while the British Chamber of Commerce expressed the view that the decision to keep rates on hold in March was “mistaken given the worsening international and domestic situation”. On the one hand, there is tangible evidence of price rises in petrol, gas, electricity and food. However, it appears that recent rate cuts have failed to have any impact on the Consumer Confidence Index which has continued to fall 3. Figures released by the Halifax (HBOS) also suggest falling confidence in the housing market as house prices fell by 0.3 percent during February and reached a level over 4 percent lower than the average for the same month in 2007. 1 MPC Committee Minutes 9/10 th Jan 2008: http://www.bankofengland.co.uk/publications/minutes/mpc/pdf/2008/index.htm 2 Inflation report http://www.bankofengland.co.uk/publications/inflationreport/ir08febo.pdf 3 A. Seager, “Consumer confidence hits 9-year low”; guardian.co.uk: http://www.guardian.co.uk/business/2008/feb/28/retail.highstreetretailers 2 Cumbria Economic Bulletin March 2008 Consumer confidence and the retail and leisure sectors The reported fall in consumer confidence has not only affected the housing market but has also generated uncertainties in retailing and leisure markets. The trend in retail sales (by volume) has actually remained fairly steady to February 2008 (see Figure 1.1). Growth was 4.1 percent higher in the three months to January compared to the same period in the previous year. Growth was particularly strong for household good stores (up 9.8 percent). However, press reports during the early part of 2008 indicate that the retail sector itself is fairly pessimistic about the prospects for the remainder of 2008 4. It has been reported that consumer spending is projected to grow by only 2 percent during the year, the lowest rate since 2005 and there is an expectation that retailing could experience closures and job losses arising from corporate restructuring. Indeed, parts of the leisure sector, in particular restaurant chains and pubs, experienced corporate volatility arising from falls in share prices as early as December 2007 5. There remains, however, considerable uncertainty in consumer markets generally and businesses continue to experience difficulty in anticipating likely changes in patterns of spending. In March 2008, for instance, contrary to other analyses, the restaurant group that owns Garfunkel’s and various other chains actually reported a 4 percent rise in sales, up 1 percent on the last quarter of 2007. Most analysts, however, continue to predict full-year growth in the range 0-2 percent. Figure 1.1: UK Change in Retail Sales (monthly by volume) 2004-2008 Source: National Statistics Online: http://www.statistics.gov.uk/cci/nugget.asp?id=256 4 See, for example, S. Hawkins, “A rate cut is unlikely to take the pain away from the retail sector”; TimesOnline, 3 rd January 2008) 5 D Walsh and G Rozenberg “Restaurants and pub warnings deepen fears consumers are losing appetite” TimesOnline, October 4 th 2007; Also, M Leroux “Consumer spending fears spark leisure sell-off” TimesOnline, 3 rd December 2007. 3 Cumbria Economic Bulletin March 2008 SECTION 2 SELECTED NATIONAL ECONOMIC INDICATORS Table 2.1: Economic Indicators Change on previo Economic Indicator Level previous year us quarter earlier month Gross Domestic Product n/a +0.6% +2.9% (Q4 2007) Manufacturing output n/a +0.0% +0.3% (Jan. 2008) Service sector output n/a +0.6% +3.4% (Dec. 2007) Headline annual inflation 4.1% -0.5% (RPI) (Jan. 2008) Underlying annual inflation 3.4% -0.4% (RPIX 6) (Jan. 2008) Base (Repo) interest rate 5.25% -0.5% 0.0% (end Feb. 2008) UK claimant count / rate 0.81 million/ -32,300 -132,600 (Q4 2007) 2.6% UK ILO unemployment rate 5.2% -0.2% -0.3% (3 months to Dec. 2007) Whole economy productivity n/a +0.4% +2.6% (Q3 2007) Manufacturing productivity n/a +0.3% +2.8% (Q3 2007) Halifax house prices n/a -0.3% +4.2% (Feb. 2008) Sterling effective Exchange Rate Index (Jan. 2005=100) 95.05 -1.71% -5.89% -9.25% (end Feb. 2008) Sources: National Statistics; Halifax Bank Online Statistics; Bank of England Online statistics; 10/3/08. 6 RPIX = Retail Price Index excluding mortgage interest payments 4 Cumbria Economic Bulletin March 2008 SECTION 3 CORPORATE CHANGE IN CUMBRIA In the last six months, the number of reported job gains (685) has been roughly the same as the number of reported job losses (590). The sectoral distribution of reported job gains and losses can be seen in Table 3.1.