Tough times ahead for Greater Manchester

New Economy has released the latest edition of the Manchester Monitor, which provides an analytical snapshot of the economic wellbeing of Greater Manchester.

New Economy, whose purpose is to create economic growth and prosperity for Manchester, warns that conditions continue to be challenging for business in Greater Manchester.

The latest business indicators suggest that deals, whilst moving in a positive direction in March 2011, remain behind the level seen in March 2010. Judgements against businesses are also high, with 229 unsatisfied judgments in February 2011, and 273 unsatisfied judgments remaining from January 2011.

Vacancy figures also indicate that businesses are recruiting fewer individuals. The number of vacancies is down 8.7% year on year, despite the UK being further out of recession than in March 2010.

This leading indicator puts pressure on the number of jobseeker’s allowance claimants. JSA figures have fallen by 8.0% year on year, but with fewer job opportunities the reduction in JSA claimants may begin to tail off.

A more positive picture comes from the reductions in long-term claimant numbers, which have fallen by 27.3% year on year – more than three times the average fall of all JSA claimants. Similarly, the number of youth claimants has fallen by 15.4% – almost twice the average for all claimants.

March figures also show that hotel occupancy in Greater Manchester fell 1.7% year on year to 68.6. However, this may largely be due to Easte r falling later this year than last year. This has had a knock-on effect on footfall which has fallen 11.3 on the year – compared to an annual growth of 9.5% last month.

Retail spend has shown an increase of 2.7% on the year, but this is lower than the 5.4% annual growth seen last month.

Manchester Airport continues to attract business and commercial passengers to Manchester. There were 10,450 flights at Manchester Airport in February 2011 – a rise of 5.1% on the year. Similarly, the number of passengers rose 3.4% on the year, with 1,072,056 passengers passing through Manchester’s terminals in February 2011.

Dr Alexander Roy, head of research at New Economy said: “Last month we warned that business indicators showed the potential for tough times ahead. This month, the future is no more certain. Businesses remain unsure about future prospects – highlighted today by Reed’s vacancies index, which has shown a slowdown in jobs growth.

“Whilst many may take the recently announced GDP growth figures for Q1 2011 as a positive indicator for the economy, we cannot ignore that for the past 6 months the UK economy has, at best, flatlined. This has had serious consequences for major centres of activity such as Greater Manchester. The forward-looking business indicators this month highlight tough times ahead for the Greater Manchester economy, but a positive story must be taken from the continuing falls in benefit claimants.”

Baron Frankal, director of economics at New Economy said: “2011 will be a tough year – tough for businesses and tough for employees. Despite the recent fall in inflation, consumer price growth is outstripping wage growth; public sector cuts are beginning to kick in; and changes to the benefits system will mean more people are expected to find work at a time when vacancies are in short supply.

“But in Greater Manchester, we’re working to make sure that businesses have the right conditions for growth. The recently announced Airport City Enterprise Zone should help create new jobs and boost trade, and is symbolic of our plans for growth, which focus on making the most of our resources, whilst ensuring that everyone benefits from enhanced prosperity.”

ENDS