Transcript Economy Update - South East England Councils

Business Support Briefing Session
Economy Update
Economic Analysis, Market Intelligence & Evaluation – where it is
all going?
June 2011
Ivan Perkovic
Head of Economic Research
Overview
1. Economy Update
–
–
–
–
–
–
Output
Prices and inflation
Labour market
Confidence
Outlook
Key challenges ahead
2. SEEDA Economic Analysis, Market
Intelligence and Evaluation
– What we did and
– Where it is all going
Growth returns in Q1
GDP growth
% change, Q/Q
1.2
GDP Growth 2011 Q1 (selected countries)
0.8
Germany
0.4
France
0.0
EU27
-0.4
Greece
-0.8
US
-1.2
UK
-1.6
Spain
-2.0
Italy
-2.4
-2.8
Japan
Source: ONS 2011
I
II III IV
2006
I
II III IV
2007
q-on-q (%)
I
II III IV
2008
I
II III IV
2009
I
II III IV
I
II
2010
2011
Portugal
-0.8
Source: Eurostat 2011
-0.6
-0.4
-0.2
0.0
0.2
0.4
0.6
0.8
1.0
1.2
• The economy avoids a double-dip recession.
• Government expenditure contributes to growth in Q1
• Weakness in the domestic economy – negative contribution to growth
from consumer and business investment.
• Growth driven by export demand
• Weakening demand from Europe and US
1.4
1.6
Activity slows in the spring
Business Activity and UK GDP
New Orders
South East PMI
0.5
55
50
Q2*
-0.5
-1.0
-1.5
-2.0
40
UK GDP
-2.5
*NISER estimate (3-months ending in May)
Source: Markit PMI 2011, ONS 2011 and NIESR 2011
35
I
II III IV
2006
•
•
•
•
•
I
II III IV
2007
I
II III IV
2008
I
II III IV
2009
-3.0
I
II
II III IV
I
2010
2011
60
55
55
UK
50
50
Q2*
45
45
40
40
Source: Markit PMI 2011
35
May
Sep
2008
Jan
May
Sep
2009
Jan
May
Sep
2010
Jan
35
May
2011
Business activity growth in the region slowed in May
Retail sales fell by 1.4% between April and May
The biggest fall in service sector output in 15 months in April
New business growth in the region eased to a five month low
New orders growth in services in the region faster than in manufacturing
RISING
45
South East
60
FALLING
0.0
UK PMI
65
50 = no change
GDP growth (% change, Q/Q)
PMI Output Index (quarterly average)
65
1.0
60
Inflationary pressures starting to level off?
UK Inflation
RPI
2008
2008
2009
2010
52
48
2008
2009
2010
• Inflation unchanged in May; Global oil prices levelling off?
• Falling input prices in the South East
• Inflation likely to resume its uptrend over coming months (energy, food,
clothes)
• CPI inflation expected to gradually ease back from 2012
• Bank of England base rate to stay at 0.5%
M
ay
Fe
b
ov
N
g
Au
M
ay
44
Fe
b
44
48
charges
Source: Markit PMI 2011
ov
M
ay
Fe
b
ov
N
Au
g
M
ay
Fe
b
ov
N
Au
g
M
ay
Fe
b
ov
N
Au
g
-2
M
ay
M
ar
-2
52
N
-1
Source: ONS 2011
56
g
-1
56
Au
0
60
M
ay
0
60
Fe
b
1
64
input prices
ov
1
64
N
2
BoE Target
68
g
2
68
Au
3
CPI
72
M
ay
4
% change on a year earlier
4
72
RISING
5
3
76
recession
FALLING
recession
5
Prices (South East)
76
6
M
ar
6
2011
Labour market improving
Annual/Quarterly change
Labour Market - South East England
76.0
6.8
Unemployment
(RHS)
6.6
75.6
6.4
75.4
6.2
75.2
Employment
(LHS)
6.0
75.0
5.8
74.8
5.6
Source: ONS 2011
74.6
5.4
Feb-Apr 2009
Aug-Oct
Feb-Apr
ILO unemployment rate (%)
employment rate (%)
75.8
Employment
quarterly
annual
Unemployment
quarterly
S. East
13,000
46,000
-25,000
-26,000
UK
80,000
376,000
-88,000
-57,000
Aug-Oct 2010 Feb-Apr 2011
Source: ONS 2011
•
•
•
•
•
•
annual
General improvement in headline trends.
Employment up, unemployment down, but activity also down
Pay trends remain subdued
Survey evidence shows private sector continues to create jobs
Strong growth in ICT jobs in the region
Fragile recovery of the labour market this year
Falling unemployment
Unemployment rate - South East Counties
Change in unemployment rate - South East Counties
UK
UK
E. Sussex
E. Sussex
Kent
Kent
SOUT H EAST
SOUT H EAST
W. Sussex
W. Sussex
Hampshire
Hampshire
Buckinghamshire
Buckinghamshire
Oxfordshire
Oxfordshire
Surrey
claimant count - May 2011, %
Surrey
Source: ONS 2011
1.6 1.8 2.0 2.2 2.4 2.6 2.8 3.0 3.2 3.4 3.6 3.8
annual
quarterly
pp change
-.25
-.20
UK
UK
Kent, Essex and E. Sussex
Kent, Essex and E. Sussex
South East Midlands
South East Midlands
Coast to Capital
Coast to Capital
Solent
Solent
SOUTH EAST
SOUTH EAST
Thames Valley Berkshire
Thames Valley Berkshire
Enterprise_M3
Enterprise M3
claimant count - May 2011, %
-.15
-.10
-.05
.00
.05
.10
.15
Change in unemployment rate - South East LEPs
Unemployment rate - South East LEPs
Oxf ord City Region
Source: ONS 2011
Source: ONS 2011
1.6 1.8 2.0 2.2 2.4 2.6 2.8 3.0 3.2 3.4 3.6 3.8
annual
quarterly
Oxf ord City Region pp change
-.35
-.30
Source: ONS 2011
-.25
-.20
-.15
-.10
• Falling claimant count unemployment across most sub-regional
economies
-.05
.00
.05
Mixed performance across the region
Annual change (May 2010 – May 2011
• Rural areas performing better than larger urban centres
• Above the national average increase in a number of local authorities in
Kent
• Slower decline in parts of Surrey and Oxfordshire
• Public sector cuts to impact on unemployment
Confidence recovering?
Business Confidence
Consumer Confidence
40
40
recession
30
30
UK
20
140
140
120
South
East
10
10
0
0
100
100
Q2*
80
-10
-10
-20
-20
-30
-30
-40
-40
20
-50
0
80
60
Source: ICAEW 2011
I
II
III IV
2006
I
II III IV
2007
I
II
III IV
2008
I
II
III IV
2009
I
II
III IV
2010
I
II
2011
60
nationwide
index
40
-50
120
expectations
20
II
III
2008
IV
I
20
present
situation
Source: Nationwide 2011
I
40
II
III
2009
IV
I
II
0
III
IV
2010
• Business confidence bounces back, but not in South East and London
• One of the largest increases in consumer confidence in May (Nationwide)
• Boost in sentiment from warm weather, bank holidays and the Royal
Wedding.
• Household income sees biggest fall since 1977.
I
2011
II
Public sector cuts to come
7
Fiscal tightening
Potential impact on GVA by 2014/15 - South East England
Buckinghamshire
6
% of baseline GVA (2010)
Berkshire
% of national income
5
Surrey
4
West Sussex
3
SOUTH EAST
2
Oxfordshire
1
Hampshire
0
East Sussex
-1
-2
Kent
Source: IFS estabates based on HMT CSR data
2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16
3.0
3.5
4.0
4.5
5.0
5.5
6.0
6.5
7.0
7.5
Source: SEEDA 2010 estimate (national estimate constrained to OBR November 2010 forecast)
• Fiscal tightening underway: <0.5% last year, 2% this year
• Potentially significant impact across several counties in the region
• Uncertain impact on the private sector.
The outlook - back to the future?
• Spring/ Summer 2008 - A ‘perfect storm’ gathering
–
–
–
–
–
High inflation
Falling business activity
Low confidence
Credit crunch unfolding
Tight monetary policy
• Spring/Summer 2011
–
–
–
–
High inflation
Weakening business activity
Low confidence
Sovereign debt crisis (Credit Crunch v2.0)
– Policy response
– Loose monetary policy
– Strong global recovery
Output growth in 2011
GDP Growth in 2011 (UK)
The profiles of UK recessions
4
8
max
annual % change
OBR (June-10)
6
% change from peak
3 max
OBR (Nov-10)
max
2
consensus forecast
1
min
min
min
0
1990/91
2
A
0
-2
1980/81
-4
1930/31
2008/9
-6
-1
-2
4
-8
Source: HMT 2011 and OBR 2010
September 2010
Source: SEEDA 2011 calculations based on ONS and NIESR data
2
January 2011
June 2011
4
6
8
10
12
14
16
18
quarters from start of recessions
• Downward revisions to GDP growth
• Narrower range of independent forecasts (less surprising due to negative
growth and shorter forecast horizon)
• Output still some 4% below pre-recession peak
• Recoveries take longer following recessions caused by financial crises
20
How long before output goes back to
pre-recession level?
• Recovery to take some time
• Economy to recover lost output by 2011 (Experian,
Autumn 2010), more likely 2012.
Key challenges ahead
• Sovereign debt crisis and possibility of the Credit Crunch
v2.0
• Slowdown in demand from US and Eurozone economies
• Business investment fails to materialise
• Tighter monetary policy (when it arrives) and its impact on
the housing market
• Consumer spending ~2/3 of demand. How will UK
consumer react?
Economic Analysis, Market Intelligence &
Evaluation
What we did and where it is all going?
SEEDA Intelligence
Research &
& Evaluation
Economic Analysis
Research &
Economics
Evaluation
Sectors &
Market Intelligence
GIS
Economic Analysis e-Archive
Economic
Analysis
Economy &
Evidence
•
•
Business
Surveys
Commissioned
Research
Economic
Models
dB
Some reports available on SEEDA website:
http://www.seeda.co.uk/what-we-do/economic-intelligence-and-research
Transferred to South East England Councils (SEEC)
http://www.secouncils.gov.uk/
Economy & Evidence Programme
Economy &
Evidence
Monthly
Updates
Economy
Reviews
PMI
Intelligence
Snapshot
Presentations
Economy
Dashboard
Economic Briefs
Labour Market
Update
South East
Briefings
Evidence
Monitoring
continue
stop
historic reports/models
•
•
•
•
Intelligence Snapshot – BIS (new provider
for sub-national economic and business
intelligence)
Economy Dashboard – SEEC
Labour Market Update – LAs
PMI – Markit
Economy Reviews Theme
Economy &
Evidence
Monthly
Updates
Economy
Reviews
Evidence
Profile of the
South East
South East
Economy Reviews
Policy & Economics
Briefs
Sub-regional
Economy Reviews
Economic & Business
Bulletins
Monitoring
Evidence Theme
Economy &
Evidence
Monthly
Updates
continue
stop
historic reports
•
Economy
Reviews
Evidence
Monitoring
RES Evidence Base
IRS Evidence Base
Coastal Evidence Base
Skills Evidence Base
Rural Evidence Base
Sub-regional Evidence Bases
SEEDA Priority Sectors
Diamonds for Investment
& Growth
Local Economic Assessment
Crosscutting Analysis
Local Authorities
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Economy &
Evidence
Economy &
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Commissioned
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dB
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Model
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REEIO
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ICAEW
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FSB
EEF
GVA Ready Reckoner
•
Monthly business survey – BIS (new provider
for sub-national economic and business
intelligence)
Sectors & Market Intelligence
• Sector-related material
• Regional/sub-regional propositions
• Business support, access to finance and regional profile
guides
• Performance Monitors
• Transferred to the new provider PA Consulting and UKTI:
http://www.ukti.gov.uk
http://www.paconsulting.co.uk/
GIS and SEEDA Evaluations
GIS – spatial data analysis
• Supported economic analysis, sectors & market
Intelligence work, property and area policy work
• Work done to date transferred to SEEC and PA Consulting
Evaluations of SEEDA Programmes and
Projects
• Published on SEEDA and OffPAT websites:
http://www.seeda.co.uk/news-andpublications/publications/1/evaluations
https://www.offpat.org/readingroom/Index.do
Thank you
SEEDA Research & Economics
Email: [email protected]
www:
http://www.seeda.co.uk/what-we-do/economic-intelligence-and-research