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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JANUARY 2011

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Counting the cost of the big freeze

This month we learnt that in the quarter to December 2010 the UK economy contracted by 0.5%. Whilst the general expectation was for a lower rate of growth than in Q3 (0.7%), this figure took almost everybody by surprise. Some quarters blamed the “wrong kind of snow” – December 2010 was the coldest in 100 years – although the Office for National Statistics estimate that growth would have been “flattish” at best even taking the cold weather into account. Others pointed to the slowdown in construction, the recent boom in which was scarcely sustainable given the contraction of public and private sector capital spend and the stalling of the housing market. More optimistic observers noted that the headline contraction disguised growth in manufacturing on the back of increased exports, which could signal the start of the UK rebalancing away from its over-reliance on services. In any event, whilst it is true that the figure is only preliminary and is likely to be revised upwards, that the national economy shrank is more or less indisputable.

Against this backdrop, Greater Manchester seems to have performed relatively strongly. There was good news in the labour market, where jobseeker’s allowance claimant numbers fell by 1.0% , in direct contrast to a 0.9% rise in claimant numbers across the UK. The drop was greatest amongst long-term claimants (falling by 4.9% this month) and youth claimants (falling by 4.0% this month). However, in line with December trends, the number of Jobcentre Plus reported vacancies fell as seasonal jobs dried up, meaning fewer jobs for residents to move into in the New Year.

Businesses performance also improved slightly. Although mergers and acquisitions fell in the city region by 15.4% , this was smaller than the decline seen in the UK (17.4% ) and far less than the regional decline (30.6% ). The proportion of high risk firms also saw a small decrease and now stands at 37.3% – however this is still higher than the North West and the UK averages (36.6% and 33.8% respectively).

A seasonal decline was also observed in air transport movements at Manchester Airport, decreasing by 29.8% – unusually sharp but in line with annual cycles – and total movements were still 2.0% higher than last year. Hotel occupancies, which are usually low in December, fell to 65.7% , more or less in line with December last year (65.8% ). Although airport movements and hotel occupancy are expected to fall further in January, Manchester’s tourism industry received the welcome news that the city was one of only two in the UK to make it onto the New York Times’ top 41 places to see in 2011, coming 20th on the list.

The big question – for the UK and for Greater Manchester – is whether the next quarter will see growth as another quarter of contraction would technically put us back into recession. Past experience of weather affected growth figures suggests that quarter 1 2011 is likely to see a rebound as delayed spending provides a boost to the economy. In Greater Manchester the continued fall in claimants – despite national rises – signals that we may have avoided December’s big freeze in economic activity. However, with vacancies dropping sharply and public sector job losses to come, the year ahead still promises to be a challenging one.

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worklessness
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Some good news on the labour market front, with a reduction in jobseeker’s allowance claimants in Greater Manchester in December – against a rise nationally. However, with seasonal reductions in job opportunities, individuals face a potentially challenging New Year.

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business
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Business deals fell into December, yet did not show the proportionate falls seen across the North West and the UK. Simultaneously, the proportion of businesses considered high risk continued to fall.

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economic
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House prices are showing limited growth, with a monthly increase of only 0.8%. Yet the tourism sector received a welcome boost – more flights from Manchester Airport, and a nod from the New York Times as a place to visit in 2011.

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.