Introduction This quarterly economic bulletin looks at a variety of indicators to provide an overview of the economic health of the West of England Combined Authority and North Somerset. It is bulletin is divided into four sections: 1. Business Conditions 2. Sectors (selected) 3. Employment / Labour Market 4. Property and Planning Comparator Local Enterprise Partnerships (LEPs) Where comparable statistics are available, the West of England is benchmarked against 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 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 - The 2 nd quarter of 2017 saw a 7.6% decrease in the number of businesses being started up in the West of England compared to Q2 the previous year. Headline Data Direction of Change 1,965 Employment Rate - The employment rate amongst the working age population stood at 78.0% in the year to March 2017, increasing by 0.9 percentage points (pp) on the same period the previous year. Unemployment Rate In the year to March 2017 the unemployment rate for the working age population stood at 3.6%, a reduction on the same period the previous year by 0.1 pp 78.0 3.6 Jobseeker s Allowance Claimant Rate - As of June 2017 the claimant rate in the West of England stood at 0.9%. This is a decrease of 0.1 pp on the same month the previous year. Advertised Jobs During Q2 2017 there were approximately 57,089 online advertisements for jobs in the West of England area. An increase of 9.5% on the same period in 2016. House Prices As of March 2017 average house prices across the West of England continued to increase. House prices are becoming increasingly unaffordable. Median annual earnings are being vastly outstripped by house prices - varying from 8 times average earnings in North Somerset and 10.5 times in B&NES. 0.8 57,089 266,507 Inward Investment New Jobs - Since April 2017, 185 new jobs have been committed by 11 successful projects. 185 new jobs committed N/A WECA also supports the Local Enterprise Partnership, which includes North Somerset. 1
1. Business Conditions International Context 1 The International Monetary Fund s World Outlook report published in April 2017 shows that global economic activity is gaining momentum. This is the result of a long awaited cyclical recovery in investment, manufacturing and trade. World growth is now expected to rise from 3.1% in 2016 to 3.5% in 2017 and 3.6% in 2018. However continued structural issues such as low productivity growth and high income equality hold back a stronger global recovery, with the balance of risks remaining tilted towards the downside. Increased pressures for inward looking policies in advanced economies threaten global economic integration. National Context 2 The UK economy is projected to slow in 2017 and 2018 owing to the uncertainty about the outcome of Brexit negotiations. While policies have supported private confidence and consumption, household spending is projected to ease as a result of a weakening labour market and higher inflation reduces real wage growth. Recent analysis from the Centre for Cities suggests that wealthy cities in the south of England will be the hardest hit by Brexit- under both a hard or soft Brexit scenario. This reflects the fact that southern cities tend to specialise in large knowledge-intensive sectors such as business and financial services, which the research shows will be most affected by the increase in tariff and non-tariff barriers that Brexit could bring. However, southern cities are also better equipped to adapt to the changing economic context. Local Context In the 12 months to April 2017 the employment rate for the West of England stood at 78.0%; the highest since before the recession in 2007/08. In other good news there has been a significant increase in the number of international visitors to the region, with both Bristol and Bath ranking within the top 15 cities/towns for overseas visits. While Bath attracts more visitors for holidays, Bristol has seen a significant increase in the number of business visits; which enjoyed an annual increase of 33.5% in 2016. 3. The weaker pound as a result of Brexit should boost tourism across the region even further. Although Brexit has been a boost to the tourism industry, the recent analysis from Centre for Cities suggests that the West of England will be one of the worst hit city regions regardless of whether we face a hard or soft Brexit. However, due to our large proportion of highly-skilled people in the labour market; significant number of innovative firms and strong business networks the West of England should be well placed to adjust and adapt to the changing economic circumstances that Brexit will present. 1 World Economic Outlook April 2017 http://www.imf.org/en/publications/weo/issues/2017/04/04/world-economicoutlook-april-2017 2 http://www.centreforcities.org/press/wealthy-southern-cities-will-hit-hardest-soft-hard-brexit-also-best-placedadapt-economic-shocks-ahead/ 3 https://www.ons.gov.uk/peoplepopulationandcommunity/leisureandtourism/datasets/overseasresidentsvisitstotheu k WECA also supports the Local Enterprise Partnership, which includes North Somerset. 2
Business start-ups Indicator 2 nd Quarter 2017 % Change on 2 nd Quarter 2016 % Change on 1 st Quarter 2017 Direction of Change on 2 nd Quarter 2016 Business start-ups in the West of England 1,965-7.6-4.1 Business start-up rate Source: BankSearch 27.2 N/A N/A The 2 nd quarter of 2017 saw a decrease in the number of business start-ups compared to the same quarter in 2016, decreasing by 7.6%. There was also a decrease on the previous quarter, of 4.1%. When comparing the 2 nd quarter of 2017 with the same quarter of 2016 the largest increase in the number of start-ups has been within transport, storage and communication; accommodation and food service. Business start-up data fluctuates quarter to quarter. Start ups are an indication of entrepreneurialism and innovation and it is within these business start-ups 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 WECA also supports the Local Enterprise Partnership, which includes North Somerset. 3
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. a) Retail Nationally in June 2017, the volume of retail sales is estimated to have increased by 2.9% compared with June 2016, sales also increased on the previous month by 0.6% this was primarily in non-food retail. The three months to June shows an increase of 1.5%; with increases seen across all types of stores. (source: Retail Sales in Great Britain: June 2017, Office of National Statistics). B&NES The city has experienced increases in footfall and a high level of churn in the last 12 months, which has increased vacancy rates to a little under 5%. SouthGate arcade has been reconfigured and now houses a range of new eateries and Brexit s impact on demand from non- UK operators has been minimal, with three continental European operators recently opening in the city and. Interest in the retail market remains strong and prime rentals have increased to 205 per sq ft in Zone A. Bristol As of July 2017 there was a city wide retail vacancy rate of 6.7%. With an average 7% overall city-wide retail vacancy rate the rate hasn t changed significantly over the last two years, ranging from 6.5% to 7.4%. North Somerset As of April 2017 there was a retail vacancy of 12.1% in Weston-super-Mare town centre. This is a decrease on April 2016 by 2.4% with 15 units becoming occupied. A number of the vacancies are within the wider town centre area with the primary frontage having a 9% vacancy rate, a decrease since April 2016 from 11%. South Gloucestershire As of July 2017 the retail vacancy rate across South Gloucestershire remained static at 4.9%. The trend continues in South Gloucestershire of smaller high streets and town centers seeing longer-term unoccupied premises. WECA also supports the Local Enterprise Partnership, which includes North Somerset. 4
b) Tourism Indicator 2 nd Quarter 2017 % Change on 2 nd Quarter 2016 Direction of Change on 2 nd Quarter 2016 Visitors to attractions in the West of England* 1,484,741 13 Total room sales (Bristol) 465,413 7.6 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 totals are for a regular sample of attractions to allow trends to be identified and the figures do not represent the total number of visitors to all attractions. In Q2 of 2017 the number of visitors to attractions in the West of England increased by 13% compared the same quarter for 2016. However this increase can be attributed to the difference in the Easter holiday which partly fell in March in 2016, but in April in 2017. Room sales were also up on the same period for 2016 by 7.6%. The West of England is able 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 countryside. The tourism sector may be set to benefit from the UKs decision to leave the European Union, as the weaker pound attracts international visitors and encourages Britons to take staycations. Graph 2: Number of visitors to attractions in the West of England source: Destination Bristol WECA also supports the Local Enterprise Partnership, which includes North Somerset. 5
Graph 3: Room sales by quarter in Bristol based hotels and guest houses source: Destination Bristol Graph 4: Total passenger numbers at Bristol Airport Source: Civil Aviation Authority WECA also supports the Local Enterprise Partnership, which includes North Somerset. 6
Like the rest of the visitor economy passenger numbers are prone to seasonal fluctuations with a higher number of passengers during the summer months. During quarter 1 of 2017 more than 1,547,800 passengers went through Bristol Airport; this is 14% higher than the 1 st quarter of 2016. 3. Employment/labour market England Indicator Apr 2016-Mar 2017 WE Apr 2016-Mar 2017 WE Apr 2015- Mar 2016 Direction of Change Employment Rate 74.4 78.0 77.1 Unemployment Rate 4.9 3.6 4.1 Source: Annual Population Survey, NOMIS The West of England employment rate in the year to March 2017 stood at 78.0 (approx. 559,700 people). This is the highest employment rate in the West of England since the 2008 financial crisis. The West of England has a higher economic rate than that of England as a whole and the Core City LEP areas. Since June 2015 employment growth in the West of England has been slowing (graph 5). We note that smaller areas are more susceptible to survey based confidence limits consequently the West of England seemingly experiences greater fluctuations, making the data appear erratic. Unemployment rates within the West of England for the working age population (16-64) in the year to March 2017 stood at 3.6% (approx. 21,100 people), a reduction on the same period the previous year by 0.5p.p. The unemployment rate for the West of England remains below the average for England and the Core City LEP areas. Graph 5: Employment Rate (16-64) Source: Annual Population Survey, NOMIS WECA also supports the Local Enterprise Partnership, which includes North Somerset. 7
Graph 6: Unemployment rate (16-64) Source: Annual Population Survey, NOMIS Indicator West of England June 2017 West of England June 2016 Direction of Change comparison with this month last yr Jobseeker s Allowance Claimant Count 5,692 6,740 Jobseeker s Allowance Claimant Rate 0.8 0.9 - Source: NOMIS, ONS As of June 2017 the claimant rate in the West of England stood at 0.8%. This is a decrease of 0.1 pp on the same month the previous year. The West of England continues to follow national trends with the claimant rate for the West of England being 0.3 pp lower than it is for England. Graph 7 identifies that since January 2017 there has been a slight increase in the number of claimants within the West of England, although these figures mask pockets of long-term unemployment in the West of England. WECA also supports the Local Enterprise Partnership, which includes North Somerset. 8
Graph 7: Claimant Rate Monthly Time Series Source: NOMIS, ONS Indicator WE Job Vacancies Advertised Q2 2017 WE Job Vacancies Advertised Q2 2016 Direction of Change Job Vacancies Advertised 57,089 52,147 During Q2 2017 there were approximately 57,089 online advertisements for jobs in the West of England area, an increase of 9.5% on Q2 2016 Please note that these figures are susceptible to change and that the data is only representative of those jobs advertised online and may not capture job placements advertised internally within an organisation or through other methods such as an advert in a shop. This more traditional form of job advertisement tends to effect particular sectors such as the construction industry and independent retailers. WECA also supports the Local Enterprise Partnership, which includes North Somerset. 9
Graph 8: Jobs advertised in the West of England quarterly time series Source: Labour/ Insight Burning Glass Vacancies by occupation sought June 2017 Occupation Advertised Sought Vacancies Occupation Occupation unknown 89 405 Managers and senior officials 1,725 175 Professional occupations 6,603 50 Associate professional and technical occupations 4,538 55 Administrative and secretarial occupations 1,936 420 Skilled trades occupations 1,338 165 Personal service occupations 888 80 Sales and customer service occupations 1,087 3,745 Process, plant and machine operatives 959 85 Elementary occupations 815 505 Source: Labour/ Insight Burning Glass / Claimant Count, ONS There is a clear mismatch between advertised vacancies and occupations sought. The majority of jobs advertised are within professional occupations and associate professional and technical occupations, both of which require higher and rather specific skills and qualifications. However there are a lower number of people currently claiming Job Seekers Allowence looking for these types of occupations. Conversely there are a high number of people seeking lower skilled occupations, in particularly sales and customer service occupations. WECA also supports the Local Enterprise Partnership, which includes North Somerset. 10
Top 10 Occupations Advertised during Q2 of 2017 Occupation Number of Job Advertisements Programmers and software development professionals 4,046 Business sales executives 1,712 Human resources and industrial relations officers 1,608 Web design and development professionals 1,549 Other administrative occupations 1,487 IT business analysts, architects and systems designers 1,347 Sales accounts and business development managers 1,122 Managers and proprietors in other services n.e.c. 1,030 Nurses 1,007 IT user support technicians 979 Source: Labour/ Insight Burning Glass (Apr. 01, 2017 - Jun. 30, 2017) During Q2 of 2017 the skill with the greatest demand was customer service with 4,172 advertisements citing it as a requirement. This was followed by Microsoft Excel (3,937 ads), business management (3,917 ads), and project management (3,115 ads). Top 10 Skills advertised during Q2 of 2017 Skills Job Postings Customer Service 4,172 Microsoft Excel 3,937 Business Management 3,917 Project Management 3,115 Sales 2,710 SQL 2,541 Contract Management 2,350 Microsoft Office 2,294 Business Development 2,246 JavaScript 2,052 Source: Labour/ Insight Burning Glass (Apr. 01, 2017 - Jun. 30, 2017) 4. Property and Planning a) House Prices Indicator West of England in March 2017 Comparison with this month last year House Prices 266,507 House Sales 1,288 Source: West of England figure calculated by the West of England Office using Land Registry Data. In March 2017 the average house price across the West of England was 266,507; exceeding the maximum cap for a help to buy ISA of 250,000. There was a significant increase in price when comparing on the same month during the previous year, with an increase of more than WECA also supports the Local Enterprise Partnership, which includes North Somerset. 11
13,387. During the year to March 2017 house prices have increased by 3.8% in B&NES, 7.4% in Bristol, 6.4% in North Somerset and 5.9% in South Gloucestershire. While house prices continue to rise across the West of England the rate of growth seems to be slowing. Average house prices in the West of England remain higher than that of England and Wales, although following a similar trend pattern. It should be noted that there are marked variations between the local councils in 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. Affordability Median Annual Earnings 2016 Average House Prices 2016 Ratio B&NES 29,842 314,412 10.5 Bristol 27,519 253,241 9.2 North Somerset 29,933 239,344 8.0 South Gloucestershire 29,752 249,765 8.4 Source: Land Registry; Annual Survey of Hours and Earnings, Office for National Statistics. Direction of Change In 2016 average house prices continued to outstrip median annual earnings varying from 8 times average earnings in North Somerset and 10.5 times in B&NES. 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 pattern of in-bound commuting from more affordable areas within and outside the partnership area; this in turn has a knock on effect for the success of businesses operating in the area. Graph 9: Average house prices annual time series Source: West of England figure calculated by the West of England Office using Land Registry Data. WECA also supports the Local Enterprise Partnership, which includes North Somerset. 12
b) Invest Bristol & Bath inward investment activity Graph 10: Cumulative activity Apr Jun 2017 200 180 160 140 120 100 80 60 40 20 0 New Activity Generated Successes Source: Invest Bristol & Bath, Agilebase database During April-June 2017, Invest Bristol & Bath (IBB) generated 38 new inward investment leads, including 11 new projects and 18 new qualified leads, and have successfully supported 11 new companies locate or expand in the West of England. New activity generated by IBB since April has decreased slightly compared to the previous year; this is due partly to the ongoing transition to a new team structure, with a slowdown in some campaign activity, but due mainly to an increased focus on a higher number of longer term projects and supporting a pipeline of more than 10,000 potential new jobs. Graph 11: Total new jobs April June 2017 1400 1200 1000 800 600 400 200 Activity Apr-Jun 2016 Activity Apr-Jun 2017 Annual Target 2017/18 0 Total New Jobs Apr - Jun 16 Apr - Jun 17 Annual Target 2017/18 NB; job numbers are provided as an estimate of job creation over a three year period as indicated by the investing company and independently verified. Source: Invest Bristol & Bath, Agilebase database WECA also supports the Local Enterprise Partnership, which includes North Somerset. 13
During April-June 2017, IBB successfully supported 11 companies to locate or expand in the West of England with 185 new jobs committed. We are increasing our jobs related outputs year on year and focusing on a growing number of large strategic projects. Graph 12: Priority sector activity New Activity Apr - Jun 17 12 10 8 6 4 2 0 Advanced Engineering & Aerospace Creative / Digital Source: Invest Bristol & Bath, Agilebase database Professional & financial services High Tech Low Carbon Other Graph 13: Priority sector activity new jobs committed 2017/2018 120 100 80 60 40 20 0 Advanced Engineering & Aerospace Creative / Digital Source: Invest Bristol & Bath, Agilebase database Professional & financial services High Tech Low Carbon Other WECA also supports the Local Enterprise Partnership, which includes North Somerset. 14
During April-June 2017, IBB handled 38 new leads and projects across all five of the West of England priority growth sectors. A number of digital and high tech leads have created more than 50 new jobs in the first quarter, but one large project in the financial services sector has created 100 new jobs in the region with the creation of a new digital/tech centre. Graph 14: Current pipeline Source: Invest in Bristol and Bath, Agilebase database NB; job numbers are provided as an estimate of job creation over a three year period as indicated by the investing company and independently verified. IBB continue to work on a strong pipeline of 140 active qualified leads and projects, in addition to 71 early stage opportunities. The IBB pipeline of active projects indicates there are 9,385 potential new jobs for the region of which IBB are confident that 643 new jobs will be committed in the next six months. c) Commercial data Office Take-up Indicator Q2 2017 (sq ft) Q2 2016 (sq ft) Direction of Change Bristol city centre take-up 141,670 185,789 Bristol out of town take-up 58,999 60,603 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 WECA also supports the Local Enterprise Partnership, which includes North Somerset. 15
Demand has been static for the past quarter and it still remains at a relatively low level, masked by the record low levels of supply. The standout fact within the figures is that grade A availability in the city centre stands at its lowest ever total of 102,452 sq ft (19.7% of available stock) but even more concerning is that 43,000 sq ft of that is under offer, leaving only 59,000 sq ft available today Office Rents Indicator Rents ( psf) Net effective rent Q2 2017 Q1 2017 Q2 2017 Q1 2017 Bristol City Centre Rents a,b 28.50 28.50 24.94 24.94 Bristol Out of Town Rents a,b 21.50 21.50 - - Bath Rents b 31.00 31.00 - - Source: a Bristol Property Market Update Spring 2017, GVA b Market Monitor South West of England & South Wales 2016, Alder King Direction of Change - - - Office rents in Bristol city centre and out of town have remained static. Bath saw a huge jump in rents at the beginning of 2017 following the letting of a floor at 20 Manvers Street, reaching 31 psf, setting a regional high. 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. http://www.westofenglandlep.co.uk/about-us/economic-intelligence/reports-and-surveys Queries: For any queries on this bulletin please contact: Charlotte Hopley, Senior Economic Intelligence Officer, West of England Combined Authority Email: Charlotte.Hopley@westofengland.org Tel: 0117 9036816 WECA also supports the Local Enterprise Partnership, which includes North Somerset. 16