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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MAY 2011

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Tough times ahead for business

The announcement this month of a marginal increase in output of 0.5% in Q1 of 2011 has generally been taken as a positive sign of growth in the national economy. However, expectations of an upwards revision in May or June may be premature. Q4 figures, showing an unexpected decrease, were revised further down before settling on a fall of 0.5%. For businesses, this is a worrying period. The recent figures suggest that for the past six months output has, at best, flatlined.

For Greater Manchester, many of the indicators show business wariness and a belief that local economic recovery is still not fully entrenched. Whilst indicators do not show a contraction in the local economy – far from it – they do indicate that businesses are unsure about the future, and are waiting for public sector cuts to feed through the system.

Vacancies are a prime indicator of this. Whilst not covering all vacancies in the economy, Jobcentre Plus reported vacancies do indicate the general trend for businesses in taking on new employees. The situation has improved somewhat from last month, where there were just 19 job opportunities for every 100 jobseekers, with the number of opportunities rising marginally to just over 16,700 – around 22 jobs per 100 claimants. But year-on-year, vacancies have fallen by 8.7%, in comparison with March 2010, when the UK was only just emerging from recession.

On a more positive note, though, claimant numbers have once again begun to fall. Year-on-year, claimant numbers have fallen by 8.0% – faster than national or regional averages. At the same time, those claimants who are the furthest from the labour market have seen more dramatic decreases – long-term claimants, for example, have seen a decrease of 27.3%. However, if the long-term reduction in vacancies continues, and if businesses continue to hold off on employing new staff, these numbers could start to rise again.

The business environment remains tough. Businesses are involved in fewer mergers and acquisitions than last year, and the number of court judgments against companies remains high. Greater Manchester, and the city centre in particular, has shown a slight drop this month, compared to March last year, in hotel occupancy rates, and footfall in the city centre is down significantly. Retail turnover has shown an increase since this time last year, but this is nowhere near the annual increases seen in January and February. This may largely be down to Easter falling late this year. It remains to be seen whether April’s figures will show a boost for the tourism industry, with two weekends of bank holidays.

Looking forward, it is clear that bringing both business and consumers into Greater Manchester will be important. As such, it is good news that Manchester Airport is seeing large annual increases in both passenger numbers and flights – beyond the growth rates of the main London airports, Heathrow and Gatwick.

All in all, the economic climate is becoming more demanding. New growth opportunities such as the recently Airport City Enterprise Zone will ultimately help boost growth, employment and trade for Greater Manchester, but at the moment the business view seems to be ‘wait and see’, with businesses wanting to see whether the Easter holiday period has brought summer sunshine or April showers.

You can find more detailed analysis and the data throughout the Manchester Monitor for May 2011:

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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.