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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OCTOBER 2010

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Big news for Greater Manchester, but national spending cuts cast a shadow

October was a big month for news. The biggest news centred on government spending cuts, outlined in the Spending Review. Overall, cuts to spending put jobs at risk – the Office for Budget Responsibility estimates around 491,000 public sector job losses over the Spending Review period. Other independent estimates place the figure at up to 1.6 million nationally when including the private sector. In all, estimates seem to put around one private sector job lost for every public sector job loss.

New Economy’s own analysis shows that this will mean difficult decisions for local authorities – and the businesses that are reliant on the public sector, the so-called ‘para-public’ sector. Recent research by New Economy has shown that Greater Manchester is a more resilient place, with less employment based in the public and para-public sector – but there will still be job losses. In comparison to pre-recession levels this all hints towards continued higher levels of unemployment in the medium-term.

With JSA claimant numbers now standing at 74,685, this is substantially above lows of around 43,000, which were experienced in the last few months before the start of the recession. As highlighted at the launch of the Greater Manchester Forecasting Model 2010 this month, job losses could be kept to a minimum through a process of natural wastage. However, this reduces prospects for young people and graduates. Whilst youth unemployment has fallen, the best opportunities need to be kept open and available for youngsters to continue this trend. This approach also reduces opportunities for people to escape long-term unemployment.

The second major piece of news focused on local growth – and the approval of Greater Manchester’s Local Enterprise Partnership. This development is a good sign for Greater Manchester, and for businesses here. It recognises Greater Manchester’s functional economic geography, and the need for businesses and local government to work more efficiently and effectively together.

This implies a confidence from the government in business growth. The same is true of local businesses, which have highlighted a resurgent confidence – arguing for a cutting of red tape, reform on taxes, and more help for apprenticeships. Indeed, growing confidence has been highlighted in the Chamber of Commerce’s quarterly economic survey, with both manufacturing and service sector businesses indicating positive growth prospects in the coming months.

A range of other business indicators are positive this month as well. Business deals have increased on the month, whilst the number of high-risk businesses has fallen across Greater Manchester. This ties in closely with a recent report by Royal Mail, claiming Bolton has been the 15th best town in Britain for business start-ups.

Despite reports that Manchester retail remains sluggish – a recent Cushman and Wakefield report highlighted falling retail rents in the city – figures from CityCo have suggested that the city is actually doing very well. Retail turnover has increased at a faster rate than nationally over the year – a growth of nearly 7% compared with just 1% growth nationally.

The resurgence in business confidence in Greater Manchester also comes from outside the conurbation. Cushman and Wakefield’s annual was released this month, and shows Manchester moving up the rankings of the best cities in which to do business. Now standing in 12th position of 36 European cities, Manchester stands above cities such as Birmingham, Dublin, Leeds, Edinburgh and Rome.

Yet risks remain in the economy. Nationally, a steeper rate of government spending cuts in the first year is likely to impact significantly by the end of 2011. Whilst more locally, some indicators suggest a lull in economic activity. Hotel occupancy figures were down on the month, and on the year in August, whilst airport activity – in both passenger and flight terms – is still down on two years ago, at the start of the recession.

House prices also introduce a risk. Indications of a potential second house price slump follows limited growth in recent months – with August house prices rising only 0.2% on July’s. More recent figures from Halifax suggest a fall in house prices nationally of 3.6%.

Whilst the news has been more of a big bang this month, the reaction is more of a muted whisper. A five-year spending plan restores confidence for businesses, but not for employees, especially those in the public sector. Spending cuts also rely on private sector growth to both fill the gap, and expand the local economy.

But private sector growth is based on consumer confidence. With potential public – and private – sector job losses, low growth in the housing market and a rise in VAT in the new year, consumers are likely to take a more cautious approach to spending.

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worklessness
MONITOR

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In September 2010, JSA claimant figures fell marginally. JSA claimants now stand at 74,685, down 0.4% on July and down 9.6% on August 2009. Vacancies figures have not been reported this month due to calculation errors.

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business
MONITOR

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Business confidence remains in the economy, with more businesses in both the Manufacturing and Service sectors expecting positive growth than the number expecting negative growth.

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economic
MONITOR

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House prices increased only marginally in the month to August 2010, reaching an average of £111,758 across Greater Manchester.

Hotel occupancy figures are down on the month (though up on the year) whilst passenger numbers at Manchester Airport remain down on two years ago.

The commercial property market has seen an upturn, though. Take-up in the office market has increased this month, whilst prime office rents have also increased.

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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.