The Manchester Monitor is a dashboard of Greater Manchester specific data and indicators designed to provide a monthly analytical snapshot of the economic wellbeing of the city region.

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NOVEMBER 2010

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Claimant numbers fall as consumer confidence and business activity increases

The national economy has received a short term boost in confidence this month, as the Office for Budget Responsibility upgraded their growth predictions for the UK in 2010 from 1.2% to 1.8%. Despite downgrading forecasts for the next few years, many organisations – including the British Chambers of Commerce – think that these forecasts are still too optimistic.

This comes on the back of unrevised GDP estimates for Q3 from the Office of National Statistics, showing a quarterly growth of 0.8%. Economic growth has been supported by a weak pound – driving exports, and reducing the overall trade deficit.

Amongst all this, the forecasts for public sector job losses from the OBR have been revised downwards – from an estimate of 490,000 as part of the Spending Review, to just 330,000 between 2010-11 and 2014. However, with significant numbers of job losses coming within the next year, the number of claimants and even the ratio of claimants to jobs could also be set to rise.

Despite Greater Manchester’s relatively low proportion of public sector employment it is far from immune to the cuts. Many local authorities have announced employment reductions, adding to the number of unemployed at a time when the number of benefit claimants still remains relatively high.

With national reductions in the welfare bill standing at roughly £18bn in 2014-15, New Economy estimates that Greater Manchester’s share of these reductions is around £850m from claimants in that year alone. Unless employment opportunities rise dramatically there is also likely to be a substantial knock-on effect on local businesses and the wider economy.

However, there are positive signs that Greater Manchester’s economy is providing at least some of this growth. Claimant levels fell across all local authorities in the month to October, with youth claimant numbers seeing the greatest decrease. However many deprived neighbourhoods are still experiencing monthly increases in claimant levels. It is therefore crucial that any public spending reductions do not impact these areas as strongly as other, more resilient areas, and that these areas are linked to opportunities for growth and prosperity,

From a business point of view, both investor deals and consumer confidence have grown, highlighting the potential for further growth in the economy. Given reductions in public sector spending coming in the next few years, this private sector-led growth will be crucial. Additionally, CityCo figures have highlighted both increased footfall and spending in the city centre – with a greater average spend – that has outperformed the national average.

However, Manchester is still struggling with the effects of the recession whilst other cities are faring much better. Figures from the Department of Justice show that Greater Manchester is suffering a more significant increase in the number of companies winding up, whilst a slower fall in the number of bankruptcies. Simultaneously, landlord and mortgage repossession claims have increased significantly – far beyond the national average. This suggests that Greater Manchester businesses and residents continue to require support to ensure that they can all benefit from the potential for growth.

Whilst many indicators are positive, it is only in comparison with periods immediately succeeding the recession. Forecasts for New Economy suggest that relatively high unemployment levels will persist and that the restructuring of the public sector will be painful – particularly for those in low paid jobs and the unemployed.

With the international situation becoming more worrying, the situation actually improves for exporters. As such, the UK is looking to forge an export-led recovery to counter low public sector growth at home. But with reductions to public spending likely to have a heavy impact on the labour market – and on growth – it is unsurprising to find that, despite positive indications for Greater Manchester’s economy, the prospect for strong medium-term growth is still in doubt.

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worklessness
MONITOR

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With the impact of last month’s Spending Review set to hit claimants particularly harshly in the coming years it is encouraging to see falling claimant levels and claimant off flows correlating strongly with an increase in vacancies. Greater Manchester saw faster decrease in claimants than both the North West and Great Britain, youth and long term unemployed figures are also down on last month and on last year. The unemployment rate is now at its lowest since January 2009.

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business
MONITOR

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The number of mergers and acquisitions in Greater Manchester rose significantly for the second month in a row, outperforming the region and the nation which both saw decreases. Nonetheless numbers are down on the year and remain below pre recession levels. The number of high risk firms is also down.

However bankruptcies and the number of companies winding up has also increased on the quarter, though this too has fallen on last year. Comparatively other cities are faring better, and have seen more substantial falls in creditor and debtor bankruptcies.

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economic
MONITOR

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House prices fell marginally from August to September though by less than in England and Wales, sales also increased significantly on the previous month.

Greater Manchester’s tourism industry experienced an annual and monthly drop in airport activity, but hotel occupancy rates are up on the previous month and on the previous year.

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DISCLAIMER

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All data contained in the Manchester Monitor, and all Monitor-related reports, has been compiled by New Economy from a range of sources and is published for general information purposes only. While every effort has been made to ensure the accuracy of the data and other material contained in this report, the Commission for the New Economy does not accept any liability (whether in contract, tort or otherwise) to any person for any loss or damage suffered as a result of any errors or omissions. The information, opinions and forecasts set out in the report should not be relied upon to replace professional advice on specific matters, and no responsibility for loss occasioned to any person acting, or refraining from acting, as a result of any material in this publication can be accepted by the Commission for the New Economy.