Transcript North West Update

Greater Manchester Chamber of Commerce
Foundation for Growth
29th June 2012
#gmccouncil
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Welcome and Introductions
Martin Douglas OBE
President, Greater Manchester Chamber of Commerce
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QES Q2 2012 Results Briefing
Dr Brian Sloan
Chief Economist
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Before we begin
Chamber has maintained a realistic outlook
Low growth environment and experience will vary, but
must nurture confidence
Made forceful arguments for infrastructure investment
Highlighted the challenges in construction
Performance of our exporters
But cautious of weak domestic demand
This quarter’s better than expected
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Demand Measures
Our tale of two productive sectors continues
Manufacturing sector continues to see domestic growth, easing
slightly
Manufacturing domestic order book also slowing
Exports strengthen slightly
Construction continues to weaken the broader measure
Service sector growth continues
Domestic growth improved, across the sector
Export demand has held firm against Eurozone backdrop
Orders looking forward continue to grow
Domestic situation remains weak
What can be done? VAT changes/Infrastructure investment
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Manufacturing v Construction
Construction and Manufacturing Sales
Manufacturing
Construction
Broad measure
30
20
10
0
-10
-20
-30
-40
Q2 10
Q4 10
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Q2 11
Q4 11
Q2 12
Q1 2001
Q2 2001
Q3 2001
Q4 2001
Q1 2002
Q2 2002
Q3 2002
Q4 2002
Q1 2003
Q2 2003
Q3 2003
Q4 2003
Q1 2004
Q2 2004
Q3 2004
Q4 2004
Q1 2005
Q2 2005
Q3 2005
Q4 2005
Q1 2006
Q2 2006
Q3 2006
Q4 2006
Q1 2007
Q2 2007
Q3 2007
Q4 2007
Q1 2008
Q2 2008
Q3 2008
Q4 2008
Q1 2009
Q2 2009
Q3 2009
Q4 2009
Q1 2010
Q2 2010
Q3 2010
Q4 2010
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
NW Construction Orders £m
3,000
2,500
2,000
1,500
1,000
500
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Employment & Recruitment
Manufacturing
Positive recruitment maintained
Manufacturing recruitment slows but remains healthy
Permanent vacancies again stronger and temporary weaker
Recruitment difficulties have decreased, fewer hired
Services
This measure has been consistent for three quarters
Recruitment did not match Q1’s expectations
Shift to permanent full-time hires maintained at Q1 levels
Key message, employment is increasing in this region
North West 25,000 more people in employment
Unemployment up 8,000, decrease in economically inactive
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JSA v QES Employment Balance
Inverted Change in JSA
Weighted Employment Balance
20,000
20
15
10,000
10
0
5
-10,000
0
-5
-20,000
-10
-30,000
-15
-40,000
-20
Q4 05 Q2 06 Q4 06 Q2 07 Q4 07 Q2 08 Q4 08 Q2 09 Q4 09 Q2 10 Q4 10 Q2 11 Q4 11 Q2 12
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Exports
Manufacturing export growth continues
Stronger growth in demand for manufacturing exports
Orders remain firmly in positive territory
Indicates region likely to see continued export growth in Q2
Very few construction firms operating overseas
Service sector
Demand for services overseas has remained almost constant
Orders also remain steady for the coming quarter
Exports continuing to positively impact on the region’s
growth
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Exporter Performance
Comparison of exporters and non-exporters
Manufacturing exporters
Manufacturing non-exporters
Service exporters
Service non-exporters
45
40
35
30
25
20
15
10
5
0
-5
Employment this quarter
Employment expectations
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Turnover confidence
Profitability confidence
Jan-04
Apr-04
Jul-04
Oct-04
Jan-05
Apr-05
Jul-05
Oct-05
Jan-06
Apr-06
Jul-06
Oct-06
Jan-07
Apr-07
Jul-07
Oct-07
Jan-08
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
Selected Interest Rates
20
18
16
14
12
UK
US
10
EU
8
Brazil
Russia
6
India
China
4
2
0
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Confidence & Investment
Manufacturing
Confidence improves slightly
Construction confidence improves, reverses Q1 decline
Manufacturing turnover confidence eases
Investment plans for plant and machinery fall, training
maintained
Services
Confidence improves further
Investment in training maintained
All confidence measures now exceed Q3 2010 levels
Investment levels are weak by historic levels
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Cashflow and Prices
Manufacturing
Cashflow for manufacturing firms positive for a second quarter
Construction firms remain cash constrained
Raw material price pressures easing, helping improve margins
and cashflow, along with other overheads
Intentions to increase prices have fallen
Services
Cashflow remains negative
Intentions to increase prices has eased –other overheads being
less of a pressure this quarter
Inflationary pressures are easing in supply chains
Input prices and tough trading environment
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May 2012
Mar 2012
Jan 2012
Nov 2011
Sep 2011
Jul 2011
May 2011
Mar 2011
Jan 2011
Nov 2010
Sep 2010
Jul 2010
May 2010
Mar 2010
Jan 2010
Nov 2009
Sep 2009
Jul 2009
May 2009
Mar 2009
Jan 2009
Nov 2008
Sep 2008
Jul 2008
May 2008
Mar 2008
Jan 2008
Nov 2007
Sep 2007
Jul 2007
May 2007
Mar 2007
Jan 2007
Oil Prices
Brent Spot (£/barrel)
90
80
70
60
50
40
30
20
10
0
Summary
Signs of continued growth and optimism
Some weakness, though to be expected
Potential for growth and opportunities will arise
Confidence needs to be nurtured and domestic economy
supported for longer term growth
Critical to get construction sector back on growth path
Region’s economy is seeing growth and there are
employment opportunities
Government needs to back up its words with action;
including Bank of England
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QUESTIONS AND DISCUSSION
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IPPR North
• IPPR’s dedicated think-tank in the North of England
• Based in Newcastle but pan-Northern presence
• Core themes:
– Northern economic futures
– Fair localism
– Creative & capable communities
• To make the North of England the place-to-be for progressive
policy-making in Europe
• Leading not pleading!
Northern Economic Futures Commission
• To develop a 10-year strategy for economic growth across the
North of England.
– To articulate a strong vision for the kind of economy we are seeking to
develop in the North of England, understanding its role within a
national and global context;
– To propose a coherent policy agenda and spatial framework within
which national government and other players can take decisions
about strategic investment;
– To provide a clear evidence base for strategic planning and local
decision-making within and between local enterprise partnerships;
– To develop a clear implementation plan to translate ideas into action.
Commissioners
NEFC Progress:
• Call for Evidence & Regional Roundtables
• 8 Briefing Papers / Evidence Sessions
• Interim Report: Northern Prosperity is National Prosperity
(April 2012)
• Deep dive research (on-going)
• Northern Rail Priorities Statement (16 March)
• EU Funding Statement (June)
• Final Report (November)
Analysis:
NORTHERN ECONOMY IN CONTEXT
Total Employment Index Forecast
Total employment index (1990=100)
110
108
106
104
North West
Forecast
Yorkshire & Humber
North East
102
100
98
96
94
92
90
Source: Oxford Economics
Employment Change by sector 2008-2011
Agriculture
Extraction
Manufacturing
Utilities
Construction
Distribution & retail
Hotels & catering
Transport & comms
Financial services
Business services
Public admin & defence
Education
Health
Other personal services
Total
North West
(000s)
(%)
4.3
10.9
-0.5
-21.7
-19.4
-5.3
8.3
96.8
-47.3
-19.8
-20.4
-3.6
-13.5
-6.3
-12.9
-6.3
-5.6
-5.0
-5.0
-0.9
1.4
0.8
6.3
2.3
-1.9
-0.4
12.9
6.4
-96.4
-2.8
Yorkshire & Humber
(000s)
(%)
6.0
15.8
0.0
-0.9
-6.7
-2.2
6.1
64.7
-28.7
-15.9
-22.7
-5.3
-6.9
-4.3
-8.8
-5.8
-1.0
-1.1
-32.4
-8.9
-8.8
-7.1
-11.4
-4.8
36.5
11.7
7.2
5.3
-73.4
-2.9
North East
(000s)
(%)
0.6
4.8
0.2
6.1
-9.8
-7.7
3.8
50.8
-5.0
-6.7
-19.1
-10.3
-8.6
-10.9
1.8
2.6
-4.7
-15.2
-18.0
-10.8
-8.1
-9.2
-7.1
-7.2
0.0
0.0
-11.3
-16.6
-86.8
-7.3
North
(000s)
(%)
10.8
12.2
-0.4
-3.9
-35.9
-4.5
18.3
71.3
-80.9
-16.4
-62.2
-5.3
-29.0
-6.4
-20.0
-4.7
-11.3
-4.8
-55.5
-5.1
-15.6
-4.0
-12.2
-2.0
34.6
3.7
8.8
2.2
-256.6
-3.6
Labour “Potential” (‘000s) 2011
Claimant Count
(Sept 2011)
Tees Valley and Durham
Northumberland and Tyne and Wear
North East
Cumbria
Cheshire
Greater Manchester
Lancashire
Merseyside
North West
East Riding and North Lincolnshire
North Yorkshire
South Yorkshire
West Yorkshire
Yorkshire and The Humber
North
42
47
88
9
22
82
34
51
199
32
13
43
70
158
445
Labour
Total available
"potential"
labour
from inactivity
59
70
129
20
39
135
64
72
331
37
30
67
108
242
702
101
117
218
29
61
218
98
123
529
70
42
110
178
400
1147
•
•
Source: Oxford
Economics
Note: labour potential is
based upon 20% of
students, 25% of
looking after the home,
50% of sick, 20% of
retired and 20% of other
inactivity becoming
available to work
Unemployment by occupation sought (% total)
Tees Valley and Durham
Northumberland and Tyne and Wear
North East
Cumbria
Cheshire
Greater Manchester
Lancashire
Merseyside
North West
East Riding and North Lincolnshire
North Yorkshire
South Yorkshire
West Yorkshire
Yorkshire and The Humber
North
Managerial, prof &
associate prof
Admin, personal
service & sales
15
11
9
11
11
12
15
10
9
10
11
10
12
10
11
40
37
36
39
41
42
34
39
38
36
40
38
40
38
39
Skilled trades
& machine
Elementary
operatives
17
21
23
16
15
18
17
19
19
23
16
21
17
18
18
28
31
32
34
33
29
34
32
34
32
33
32
32
33
32
Northern Economic Strengths?
FIVE PROPOSITIONS ABOUT
NORTHERN ECONOMIC FUTURES
Goal and indicators
• By 2025, the north of England will have an economy which is
outperforming similar European regions in terms of
competitiveness, sustainability, resilience, equality and
quality of life.
• Comparator regions to be defined according to OECD
categorisation with two or three selected as key benchmarks.
• New basket of short-medium term indicators and long-term
international benchmarks.
Proposition 1: Northern prosperity is
national prosperity
•
•
•
•
Quantum and ‘the long tail’
Natural assets
Resilience
Limits to agglomeration
Proposition 2: Northern potential for growth
• Under-sized mid-sized cities
– Overmans, McKinseys, OECD
• Key drivers of growth:
– Human capital
– Innovation
– Entrepreneurship
Proposition 3: The North faces significant
structural challenges
• An incomplete transition and the problems of peripheral
places
• Polarisation in the labour market and demographic challenges
• Policy-bias towards the south
– New economic geography and HMT
– Appraisal methodology
– Rebalancing & spatial blindness
• Creating a ‘tipping-point’ for self-sustaining growth
Proposition 4: The North as an inter-connected
metro-region
• Overlapping geographies of economic development
• The complementary roles of urban centres and their
hinterlands
• Connectivity weaknesses and their costs
Proposition 5: Northern leadership and
autonomy
•
•
•
•
Political inequality and the North-South Divide
Local Enterprise Partnerships & City Deals
The need for a paradigm shift in regional / industrial policy
The need for Northern leadership
Where do we go from here?
UNLOCKING ECONOMIC POTENTIAL
Ed Cox
Director, IPPR North
[email protected]
@edcox_ippr
07961 979 262
WWW.IPPR.ORG/NORTH
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Chris Fletcher
Director of Policy, Research & External Affairs
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Intelligent Procurement
Calls for Evidence
Local transport
Broadband/digital infrastructure
Funding growth
APD/aviation policy
Future Issues
Business is Good for Britain
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Intelligent Procurement
Working group set up after last Council meeting
Tackle complexity
Maximise social value and impact
Central suppliers register
Increase capability of buyers and suppliers
Make the pledge standard practice
Comments and further action
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Calls for Evidence
Local transport – examples of hotspots and pinchpoints.
Broadband/digital infrastructure – acting as a barrier to growth
and direct funding allocated.
Funding growth – alternative sources through necessity or
choice.
APD/aviation policy – need to establish the wider economic
impact of APD and feed into aviation policy work.
Future Issues
VAT reduce threshold but extend the base.
Retail – high streets, town centres and Saturday jobs.
Industrial Policy/Engineering and Manufacturing.
Over to you
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Action For Business
Business is Good for Britain
BCC campaign throughout the network.
Change perception that business is “bad”.
Take the opportunity to show the role that the private sector
plays in the country and society.
50 words to say why Business is Good for Britain.
www.businessisgoodforbritain.co.uk
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Next steps.
Q3 action plan - activity and support eg communications
Circulated to all councils and committees next week
Link to the website – open access and engagement
Review, refresh and update
Next round of council and committee meetings
Party conferences
MPs briefing
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ACTION FOR BUSINESS
Chris Fletcher
Director of Policy, Research & External Affairs
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ANY OTHER BUSINESS
Martin Douglas
President, Greater Manchester Chamber
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CLOSE OF MEETING
Martin Douglas
President, Greater Manchester Chamber
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