Manchester Monitor Quarterly January 2015 Forecasting Greater Manchester’s Future Prospects
Decline in unemployment continues Increase in business start-ups Service sector expected to drive growth Visitor economy buoyant House prices on the rise Crime volumes increase www.neweconomymanchester.com research@neweconomymanchester.com
Monitor Focus Forecasting Greater Manchester’s Future Prospects This issue of the Manchester Monitor Quarterly includes a detailed feature on the latest results from the 2014 edition of the Greater Manchester Forecasting Model (GMFM). The focus is on which sectors are expected to lead Greater Manchester’s (GM) employment growth over the next decade, which industries will contribute towards increased economic output and how the conurbation’s occupational structure will change up to 2024.
(41.7%) when compared with the figure 12 months previously. Looking at a combined estimate for both JSA and Universal Credit (UC) claimants, the number of people claiming JSA or UC in GM in November 2014 was 45,400, representing an annual decline of 32.9%. This is less than the 41.7% decline for JSA claimants, although it still represents a substantial fall over 12 months and highlights the ongoing economic recovery.
From an employment perspective, business, financial & professional services and the cultural & creative industries are expected to be the largest contributors to jobs growth in GM over the next decade – with almost 88,000 new opportunities being created in the these sectors. The longterm decline in manufacturing employment is still evident, although manufacturing’s contribution towards economic output is expected to grow considerably up to 2024 as the sector becomes ever more productive in order to remain globally competitive. Analysis of GM’s sector specialisation reveals that it is performing well in traditional industries, and also in a number of sub-sectors associated with business, financial and professional services.
The visitor economy in GM continues to perform well, with hotel occupancy rates recorded at 83.6% for GM and 87.1% for Manchester city centre for November 2014. When December figures are released, they are expected to show that 2014 was the strongest performing year to date in terms of occupancy levels. There are also encouraging signs for 2015, with Manchester hosting 40 national and international conferences that are expected to bring 34,000 delegates to the city and generate £61million for the local economy. Manchester Airport handled more than 2 million passengers in October 2014, 128,200 (6.8%) more than 12 months previously. With passenger numbers close to reaching 22 million on a rolling 12 month basis, a figure not achieved since 2007, it was reported in December that the Airport is aiming to double the annual number of passengers by 2036.
The latest Business Demography dataset released by the Office for National Statistics (ONS) shows there was a sharp rise in the number of start-ups in GM between 2012 and 2013. There were 14,705 new businesses started in GM in 2013, a substantial increase of 3,850 (35.5%) on the 10,855 business births in 2012. Business deaths in GM were recorded at 10,005 in 2013, an annual decline of 510 (4.9%). For the third year in succession, the number of births exceeded the number of deaths and this means that net change in GM in 2013 was 4,700. GM’s business start-up rate has increased over time. In 2013 there were 84 new business starts per 10,000 resident working age population, up from 55 in 2009. The 2013 figure was also virtually in line with the UK average of 85 new starts per 10,000 working age residents. Turning to look at the regular data on the labour market, the latest unemployment figures from the Department for Work and Pensions (DWP) show further reductions in the number of people claiming Jobseeker’s Allowance (JSA) in GM. Current JSA data show that around 38,100 people – or 2.2% of the working age population – were claiming JSA in GM in November 2014. This represents a decrease of 27,300
1 | Manchester Monitor – January 2015
The latest data from the Land Registry show that the average house in GM cost £108,400 in November 2014, an increase of 4.5% (£4,600) from this time last year, but slightly below the annual rise of 7.1% (£11,700) in house prices for England & Wales. In terms of properties sold, house sales in GM grew by 16.4% (418) between September 2013 and 2014. This is proportionally more than in the North West and nationally, where house sales have risen 10.0% and 5.0% respectively on an annual basis. On the crime front, the latest data from GM Police show an increase of 8.2% (14,800) in the number of reported crimes in the year ending December 2014, to 194,400 reported offences. Within this total, victim-based crimes (stealing, criminal damage & arson, violence and sexual offences) saw 175,200 cases recorded over the same period, representing an annual increase of 8.3%. The latest figures from GM Fire & Rescue Service show a 24.3% reduction in the total volume of deliberate fires in GM for the 12 months to December 2014.
Monitor Dashboard Jobseeker’s Allowance (JSA) claimants
Airport Passengers
41.7%
6.8%
since last year
Number of businesses started in GM in 2013
since October 2013
Hotel Occupancy
1.0%pts
14,705
since November 2013
new jobs forecast to be created over next ten years
House Prices
Crime
4.5%
since November 2013
8.2%
since December 2013
Manchester Monitor – January 2015 | 2
People Monitor Decline in unemployment continues The latest figures show that 38,100 people were claiming Jobseeker’s Allowance (JSA) in Greater Manchester (GM) in November 2014 – a decrease of 3,700 (8.8%) when compared with the figure for October 2014 of 41,800. On an annual basis the number of JSA claimants in GM is 27,300 (41.7%) lower than in November 2013. JSA Claimants Around 2.2% of the resident working age population in GM were claiming JSA in November. The rate remains marginally higher than the North West (2.1%) and Great Britain (2.0%). The number of male JSA claimants in GM fell on a monthly basis by 8.3% (2,200) to 24,200, and similarly, female claimants fell by 9.5% (1,500) over the month to 13,900. On an annual basis both male and female claimants continue to decrease – down by 18,500 (43.3%) and 8,700 (38.6%) respectively. Long-term JSA claimants (6 months+) in GM in November 2014 were 17,400, representing an annual decline of 42.8% (13,000). This was above the regional (38.8%) and national falls (36.2%). Youth unemployment (JSA claimants aged 16-24) in GM fell on an annual basis between November 2013 and 2014, decreasing by approximately 8,900 (54.0%) to 7,600. Universal Credit Data sourced from the Department for Work and Pensions (DWP) show that there were 10,400 people claiming UC in November 2014. These people are not included in JSA claimant count statistics, meaning that analysing the unemployment outlook based purely on trends in JSA claimants may look more flattering than it actually is. At a UK level, the DWP data show that around 70.0% of people claiming UC are not in employment. Assuming similar trend in GM and that these people would otherwise be claiming JSA in the absence of UC would add 7,300 people to the JSA figure for GM. This gives a combined JSA/UC total of over 45,400 in November 2014.
On an annual basis, combined JSA/UC claimants fell by 32.9% from 67,200 to 45,400. This is less than the 41.7% decline for JSA claimants, although it still represents a substantial fall over 12 months and highlights the ongoing economic recovery. Reflecting the better economic environment, the ONS released data last month that showed wages for UK workers increased by 1.6%, excluding bonuses, when the three months to October 2014 are compared with the same period in 2013. This is higher than the rate of inflation, which currently stands at 1.0%. Vacancies Data There were just over 12,000 vacancies in GM in December 2014. Just under two-thirds of GM based-vacancies were situated in Manchester (8,100), followed by Stockport (800) and Bolton & Salford (both at 600). The highest proportion of vacancies (36.2%) in December 2014 was in professional occupations – 4,400 jobs. Associate professional & technical roles (21.5%, or 2,600) was the second largest occupation group, followed by administrative and secretarial occupations (9.7%, or 1,200). Skills cluster analysis reveals that the top three most sought after specific skills by GM employers for December 2014 were specialised skills; software & programming skills; and ICT (programming, developing & engineering).
Jobseeker’s Allowance - Annual Change
Total Jobseeker’s Allowance Claimants in November 2014
38,148
Decreased by 41.7% year-on-year
Women
Men
Youth
Long-term
$38.6% $43.3% $54.0% $42.8% Source: Labour/Insight (Burning Glass Technologies)
1
3 | Manchester Monitor – January 2015
Business Monitor Business births and deaths in GM, 2009-13 16,000
12,000
14,705 12,070 10,605 9,520
10,855 10,515
10,595 9,595
9,310
10,005
8,000 4,700 4,000 1,000
340
0 -1,295 -4,000
-2,550 2009
2010
2011 Births
Deaths
2012
2013
Net Change
Increase in business start-ups The latest Business Demography dataset released by the Office for National Statistics (ONS) shows there was a sharp rise in the number of start-ups in GM between 2012 and 2013. The number of business failures in the conurbation in recent years has remained broadly consistent, while start-ups have been increasing over the last three years.
There were 14,705 new businesses started in GM in 2013, a substantial increase of 3,850 (35.5%) on the 10,855 business births in 2012. At a UK level, the number of business births increased by 28.5% from 270,000 to 346,000. As noted by ONS, the rise coincides with the new Pay As You Earn (PAYE) Real Time Information (RTI) system, which was rolled out across businesses during 2013. Nonetheless, the increase in start-ups is a positive sign that the economy is continuing in its recovery from the downturn. Business deaths in GM were recorded at 10,005 in 2013, an annual decline of 510 (4.9%). For the third year in succession, the number of births exceeded the number of deaths and this means that net change in GM in 2013 was 4,700.
GM’s business start-up rate has increased over time. In 2013 there were 84 new business starts per 10,000 resident working age population, up from 55 in 2009. The 2013 figure was also virtually in line with the UK average of 85 new starts per 10,000 resident working age population. The ONS Business Demography dataset also provides information on survival rates of firms and this reveals that: • The 1-year survival rate of firms started in 2012 in GM is 91.9%, slightly above the UK average of 91.2% and also London (89.7%). • The 5-year survival rate for companies in GM (those started in 2008) is 38.7%, which is below the UK average of 41.3%, but higher than London (37.1%).
Manchester Monitor – January 2015 | 4
60.0%
100,000
50.0%
80,000
40.0%
60,000
30.0%
40,000
19.2%
20,000
7.9%
15.7%
20.0%
16.7% 12.0%
10.6%
14.2% 10.0%
5.1%
-
0.0%
-1.6%
-8.3% -10.0%
to r
es
M an uf ac
Pu bl ic
in du st ri y
Sc ie nc e
Pr im ar
C ul tu ra
l&
cr
ea t
iv e C on st ru ct io W n ho le sa le & re Tr ta an il po rt & st or ag Pe e rs on al se rv ic es
l pr of es si on a
to ta l
ss
&
G M
tu rin g
-9.4%
-20,000
Bu si ne
% change jobs 2014-2024
120,000
se c
Change in the number of jobs 2014-2024
Figure 1: Forecast employment change in GM, 2014-24
Greater Manchester’s economy over the next decade Results from the latest release of the GM Forecasting Model (GMFM – December 2014) give an indication of expected long-term trends in the economy. GMFM is produced by Oxford Economics for New Economy on behalf of the 10 GM local authorities, and this month’s quarterly feature provides more detailed analysis of the forecasts. The focus is on identifying sectors which are expected to lead employment growth, the industries which will contribute towards increased economic output and how the conurbation’s occupational structure will change up to 2024. Employment Around 110,000 jobs are forecast to be created in GM from 2014 to 2024 with employment (including self-employment) estimated to rise by 7.9% to reach 1.5 million. This is above the regional growth forecast of 6.0% over the same period. The figures for the other four Local Enterprise Partnerships in the North West: • Cheshire & Warrington: 8.0% • Lancashire: 5.1% • Liverpool City Region: 3.7% • Cumbria: 1.0%
5 | Manchester Monitor – January 2015
The North West is expected to see 216,000 additional jobs created between 2014 and 2024, meaning GM would account for more than half of all employment growth across the North West over the next decade. In absolute terms, the two largest contributors to the forecast increase in jobs in GM are business, financial & professional services (driven by head office activities, the office support sector, as well as legal & accounting activities), and the cultural & creative industries (creative, digital, leisure and culture). Combined, these sectors are expected to see nearly 88,000 new jobs over the next 10 years (see Figure 1). Construction is forecast to create the third highest number of jobs in GM in absolute terms, with an increase of just under 14,000 over the next ten years – a rise of 16.7%. Wholesale & retail is just behind this, with a forecast of 11,200 additional jobs – representing growth of 5.1%. At the opposite end of the scale, the public sector is forecast to see a decline of 5,400 jobs over the next decade – a fall of 1.6%. The long-term decline in manufacturing employment is forecast to continue in GM, with 10,300 fewer roles between 2014 and 2024. However, the sector will remain a key contributor to GM’s economic output as manufacturing productivity continues to rise.
Gross Value Added GM’s gross value added (GVA) currently stands at £54.7bn and is forecast to grow by 31.6% (£17.3bn) to £72bn in 2024. The forecasts suggest that business, financial and professional services will experience the largest rise in economic output from 2014 to 2024 at £7.3bn – growing from £15.5bn to £22.9bn.
1 for a sector means that relatively, its GVA in GM is lower than in the UK, while a value of above 1 shows a concentration. High values on the index can be regarded as a potential indication for the existence of agglomeration/urbanisation economies, i.e. external benefits to firms based on their geographic co-location in an area.
It is important to note that while manufacturing is forecast to see a fall in total employment, its importance to GM in terms of economic output is still expected to grow, with its GVA contribution increasing by £2bn from 2014 to 2024.
The highest degree of specialisation is observed in the textiles sector, with an SI of 3.5 (not shown on the chart), meaning the sector’s GVA in GM is 3.5 times higher than UK average. Textiles falls within the wider manufacturing sector, which has an SI of 1.2. Legal & accounting (1.4), office support (1.3), water & air transport (1.3), postal services (1.3), insurance (1.2), and employment services (1.2) also exhibit stronger concentrations in GM than in the national average.
In order to establish GM’s economic strengths, Figure 2 looks at sectors in more detail and provides a specialisation index (SI), which is calculated by dividing the share of GVA in a particular sector in GM by the UK share. A value below
Figure 2: Specialisation Index for Greater Manchester 2014
14.0% Manufacturing 12.0%
Real estate
Sectoral % of GM's GVA
10.0%
8.0% Wholesale
Education 6.0%
2.0%
0.0% 0.5
Construction
Financial services
4.0%
ICT
Retail Health
Public administration
Publishing & Broadcasting Advertising & market research 0.6
0.7
Culture & Sports
Architecture & Engineering
0.9
Employment activities Office support Postal & courier Water & air transport
Insurance
Accommodation 0.8
Legal and accounting
Head offices
Food & beverage services
1.0
1.1
1.2
1.3
1.4
1.5
Index of Specialisation
Manchester Monitor – January 2015 | 6
Occupational Structure In line with results from the 2013 GMFM, the forecasts for 2014 again suggest that an increasing number of roles will be created at both the high and low ends of the skills spectrum in GM over the next 10 years. For higher-skilled roles, managerial & senior official roles in GM are forecast to grow by 6.7% over the next 10 years, as well as for associate professional & technical occupations. This is followed by professional roles at 5.9% (see Figure 3). At the lower end of the skills spectrum, personal services are forecast to rise by 7.3%, followed by elementary occupations (5.5%) and then sales & customer roles (5.3%). Intermediate level occupations are expected to either show
a smaller increase or decline between 2014 and 2024. Skilled trades as well as administrative and secretarial roles are forecast to grow by 1.5%, while process, plant & machine operative roles are forecast to decline by 1.7%, which is consistent with the forecast for a decline in the numbers of jobs in manufacturing. The trends suggested by GMFM continue to indicate that the GM labour market is being reshaped and that jobs are being created at the top and bottom of the skills scale, while those in the middle tier are being squeezed. This could have implications for the distribution of income of the GM working population.
Figure 3: Forecast Change in GM’s Occupational Structure, 2014–24
Forecast Change in Occupations in GM, 2014-24 (%)
Managers and senior officials
6.7%
Professional Associate professional & technical
6.7%
Administrative & secretarial
1.5%
Skilled trades
1.5%
Process, plant & machine operatives
High Skill
5.9%
Intermediate Skill
-1.7% 7.3%
Personal service Sales & customer service
5.3%
Elementary
5.5%
Low Skill
Summary From an employment perspective, business, financial and professional services (driven both by head office activities, the office support sector as well as legal & accounting), and the cultural & creative industries are expected to be the largest contributors to jobs growth in GM over the next 10 years – with almost 88,000 new opportunities being created in the two sectors. In addition, they are expected to see GVA grow by more than £9.6bn over the next decade. Analysis of GM’s sector specialisation reveals that while it is performing well in traditional industries, and also in a number of sub-sectors associated with business, financial and professional services. 7 | Manchester Monitor – January 2015
The long-term decline in manufacturing employment is still evident, although the sector’s contribution towards economic output is expected to grow considerably to 2024, due to increases in productivity. The 2014 GMFM results also suggest that an increasing number of roles in the conurbation will be created at the higher and lower ends of the skills ladder in GM over the next 10 years, with fewer at intermediate levels. This is likely to impact on the type of job opportunities that become available in GM and significantly, on the level of qualifications people need in order to access them.
Place Monitor Visitor economy remains buoyant The hotel occupancy indicator continues to perform well and with one set of figures still to come for December, 2014 is looking like it will be the strongest performing year on record. In addition to strong hotel occupancy levels, the latest monthly data from the Civil Aviation Authority show passenger numbers are still growing at Manchester Airport. Hotel Occupancy The average hotel occupancy rate in Manchester city centre was recorded at 87.1% in November 2014, consistent with the same month last year. Weekend occupancy in the city centre reached the highest on record for the month at 93.9%, a 1.2 percentage point increase on the November 2013 figure of 92.7%. The weekday average occupancy in the city centre was 83.0%, comparable with the 83.2% recorded for November 2013. For GM as a whole, average occupancy rates in November were 83.6%, a rise of 1 percentage point compared to 2013. Key dates for hotel occupancy in the city centre during November were: • 15 November – occupancy of 99% was achieved on the opening weekend of the Christmas markets, John Bishop performed at the Manchester Arena and a number of exhibitions were hosted in the city. • 29 November – 99% occupancy was also recorded when Manchester United played at Old Trafford, Enrique Iglesias performed at the Manchester Arena and the National Cycling Centre hosted a BMX track event. • 25 November – 99% was reached when the Etihad Stadium hosted a UEFA Champions League match and Manchester Central hosted a 900-delegate conference relating to the energy sector. When December figures are released, they are expected to show that 2014 was the strongest performing year to date in terms of occupancy levels. There are also encouraging
Hotel occupancy (city centre)
87.1%
Hotel occupancy (GM)
(0% pts)
(+1.0% pts)
83.6%
signs for 2015, with Manchester hosting 40 national and international conferences that are expected to bring 34,000 delegates to the city and generate £61million for the local economy. Events include the Conservative Party Conference and Soccerex Global Convention. Airport Passenger Numbers Manchester Airport handled more than 2 million passengers in October 2014, 128,200 (6.8%) more than 12 months previously. The annual growth was higher than that experienced by Birmingham (5.8%) and Heathrow (0.4%), while Stansted (16.8%) and Gatwick (7.8%) experienced higher year-on-year rises in passenger numbers. With passengers numbers close to reaching 22 million on a rolling 12 month basis, a figure not achieved since 2007, it was reported in December that the Airport is aiming to double the annual number of passengers by 2036. In the shorter term, a number of new routes should help support growth at the Airport. This includes the launch of the first non-stop direct flight to China (Hong Kong), operated by Cathay Pacific, which began last month. Increased frequencies on existing routes have also been announced, including: • An increased capacity of 8,000 seats in the summer between Manchester and North America on Virgin routes to and from Orlando and Las Vegas. • An increased number of flights per week from February on the Manchester to Doha route operated by Qatar Airways. • An increased capacity of 48,000 seats per year on the Emirates service to Dubai
Airport passenger numbers
(+6.8%)
2,007,549
Flights
(1.5%)
14,803
% represents year-on-year change IMPORTANT NOTE: The source of the hotel occupancy data referenced in this newsletter is STR Global Ltd. Republication or other reuse of this data without the express written permission of STR Global is strictly prohibited.
Manchester Monitor – January 2015 | 8
Housing Monitor Average house prices and % change in GM boroughs, 2013-14 £250,000
12.0% 9.8%
10.0%
£200,000
7.8%
8.0%
5.0%
£150,000
4.5%
3.6%
3.5%
2.8%
£100,000
6.0%
4.5% 3.3%
3.0%
4.0% 2.0%
£50,000
0.0%
-1.2%
£-
Average House Price, November 2014
ld ha m O
n lt o Bo
Ta m es id e
hd al e
Ro c
an ig W
rd Sa lf o
ch es te r
G M
M an
ry Bu
ck po rt
St o
Tr
af fo rd
-2.0%
% change, November 2013-November 2014
House prices on the rise again House prices in GM have grown year-on-year, based on analysis of the latest data sourced from the Land Registry. The cost of a property in GM increased more than in the North West as a whole, but at a lower rate than in England & Wales. The average property in GM cost £108,400 in October 2014, up slightly on the previous month’s figure of £108,300. On an annual basis, the average cost of a property in GM is 4.5% (£4,600) higher than it was in October 2013. This means that year-on-year prices in GM have now risen for 13 consecutive months. The annual increase in GM was above the 3.1% rise in the North West, however it was below the increase for England and Wales of 7.1%. Nationally, the cost of an average property now stands at £176,600. All GM districts except for Tameside recorded annual increases in house prices from November 2013-14. On a relative basis, Trafford (9.8%) and Salford (7.8%) experienced the highest rises. House sales data from the Land Registry show that there were a total of 2,964 properties sold in GM in September
9 | Manchester Monitor – January 2015
2014, an increase of 418 units (16.4%) over the same period a year earlier. This was a higher figure than across England and Wales (5.0%), and well above the regional increase of 10.0%. Nationally, figures released by Halifax reveal that the number of first-time buyers climbing on to the property ladder rose by more than a fifth in 2014 to a seven-year high. In its review, Halifax said the number of buyers joining the UK property market for the first time jumped by 22% to 326,500 in 2014, following a 23% increase in 2013. Looking ahead, the Centre for Economics and Business Research (CEBR) has forecast that house prices will fall by 0.6% across Britain this year. CEBR said factors such as the threat of higher interest rates, the May general election will send the market into reverse in 2015 – including in London.
Crime Monitor Victim based crime December 2013 - December 2014
+24.8% 40,000
38,027
35,000 30,000
+4.0% 28,211
27,834
28,956
25,000 Sep-13 Sep-14
20,000 15,000
+43.5%
10,000 5,000 0
3,105
Violence
4,455
Sexual Offences
Criminal Damage & Arson
Victim-based crime rising The latest figures for crimes committed in Greater Manchester show that total crime continues to rise – particularly in relation to violent crime and sexual offences - compared with the same period last year. Crime Volumes
GM Fire & Rescue Service Data
Figures for the year ending December 2014 show that there were 194,359 reported crimes in GM – an annual increase of 8.2%, or 14,754 additional offences.
The total volume of deliberate fires has reduced by 24.3% across GM over the last 12 months. Deliberate secondary fires in GM (i.e. smaller fires affecting open spaces and the public realm rather than property) were recorded at just over 5,600 for the 12 months to December 2014, compared to a figure of 7,700 for the previous year, an annual decrease of 27.5% (2,100).
Victim-based crimes (stealing, criminal damage & arson, violence and sexual offences) saw 175,213 cases recorded over the same period, representing an annual increase of 8.3% (13,371). Key to this rise has been the continued increase in violent crimes (homicides, and violence both with and without injury) which have undergone a 34.8% (9,816) increase in the period. In particular, sexual offences have increased by 43.5% (1,350) over the past 12 months.
The number of deliberate primary fires (those where owned property is involved) also fell by 8.9% annually, with around 1,400 primary fires recorded to December 2014 compared to just under 1,600 to December last year. The reductions are mainly due to interventions such as youth engagement and school visits, as well as collaboration with GM Police and the Environmental Services.
Manchester Monitor – January 2015 | 10
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11 | Manchester Monitor – January 2015