Economy Monitoring - Cornwall...Economy Monitoring Monthly Update, August 2017 2 741 were down on the March total of 839, but up 15.1% on the April 2016 figure. In August there were

Economy Monitoring

Monthly Update August 2017

Economic Growth Service

Contents

1 Commentary, profile and data summary 1 1.1 Introduction 1 1.2 Commentary 1 1.3 Cornwall data profile - August 4 1.4 Data Summary 5

2 Cornwall 10 2.1 Jobseekers Allowance 10 2.2 Labour market – Resident based 11 2.3 Labour market - Workplace data 12 2.4 Vacancies 12 2.5 Benefit claimants – working age client group 13 2.6 Housing 14 2.7 Chamber of Commerce 20 2.8 Defence Quarterly Location Statistics 22 2.9 Finance statistics 22 2.10 Size of business and productivity 24 2.11 approximate Gross Value Added (aGVA) - 2014 25

3 South West England 27

4 United Kingdom 28 4.1 Output 28 4.2 Investment 33 4.3 Trade and the Balance of payments 34 4.4 Labour market 36 4.5 Housing 37 4.6 Consumer and retail 42 4.7 Price inflation 44 4.8 Finance 46 4.9 Business Surveys and barometers 47 4.10 Consumer Surveys and barometers 50

5 International 54 5.1 EU Data releases – monthly 54 5.2 Markit Eurozone Composite PMIs 56 5.3 EU Quarterly data 57 5.4 Global data 58

6 Notes and information 59 6.1 UK Finance – formerly Council of Mortage Lenders 59

Economy Monitoring Monthly Update, August 2017 1

1 Commentary, profile and data summary

1.1 Introduction This report sets out a number of indicators which show what is happening in the

economy: such as jobseekers allowance, unemployment, house prices and repossessions. Some of these relate to Cornwall, some to the south west, while

others indicate what is happening across the UK and on an international basis, particularly the European Union. Not all indicators/reports are issued monthly; hence updates will vary in coverage. Some monthly data is for the current

month, some for the previous month. During months when a quarterly update is not available, the latest report will be shown. The usual health warning with

data should be borne in mind – data may be provisional and subject to revision. 1.2 Commentary

August – an overview The UK economy saw the level of GDP growth remain at a low level in Q2 with

the second estimate at 0.3%, up from 0.2% in Q1 but low compared to the Q4 2016 rate of 0.7%. The labour market continues to show employment at record highs and with unemployment dropping on a quarterly basis. The housing

market saw prices up on an annual basis but slowing month on month and with mortgage lending up on the previous months total. Business confidence

remained generally positive although the latest business barometer portrayed a gloomy picture. Consumer confidence was low with the household finances under pressure, although house price sentiment rose and consumer confidence

move up marginally.

In Cornwall

The JSA total for July was 2,435, down by 125 or 4.9% on the June figure. Compared to July 2016 the total was down by 12%. The monthly decrease, July compared to June, was expected although the change was above the average

decrease for the period 1993-2017. The continuing annual decline points to an improvement in the labour market, though the usual caveats relating to

numbers working part-time and those who are under-employed apply as with stagnant earnings.

APS labour market figures show that over the last year the total aged 16-64 has fallen slightly1, the numbers of economically active have risen while the numbers

of economically inactive have fallen. Employment numbers are up, with a rise in both self-employed and employees. Part-time numbers and full-time numbers

both rose. The number of unemployed fell substantially over the year. In August there were 2,509 job vacancy postings in Cornwall and Isles of Scilly. This was down by 10% from the 2,784 in July but up by 7% from 2,345 in July

2016. With the exception of July, for each month since February the monthly figure has been lower than for the same month in the previous year.

In June, house prices in Cornwall averaged £214,504, similar to the May total of £214,609. This represented no change, compared to increases of 0.8% for

England and the UK. House prices are below both the England and UK averages. Quarterly median house prices in Q4 2016 were £210,000 (similar

to the previous quarter, and up by 5% year-on-year). Total sales in April at

1 Due to the volatility of the data changes in figures from one period to another may not reflect

underlying trends.


741 were down on the March total of 839, but up 15.1% on the April 2016

figure. In August there were 4,410 properties for sale with 666 to rent, a total of 5,076 properties. Compared to July 2017: - the number of dwellings for sale decreased by 3% while the numbers for rent increased by 3%. Compared to

August 2016 properties for sale were down by 15% with those for rent down by 4%.

The latest Cornwall Chamber of Commerce survey takes the data up to Q2 2017. Compared to Q1 2017, there were positive readings2 for 11 of the 12 indicators,

with 1 positive. The most positive changes were increases were ‘UK sales’ up 15 %, ‘profitability over next 12 months expected to increase’ up 10%, while

‘size of workforce’ had increased by 9%. Those experiencing recruitment difficulties rose 2 points from 61% to 63%.

The latest defence employment statistics show that there were 3,600 people employed in the sector in Cornwall in July 2017, 30 fewer than in April 2017 and

20 fewer than in July 2016. For the UK

The second estimate for GDP growth in Q2 2017 was +0.3%, similar to the +0.2% in Q1 but down on the 0.7% figure for Q4 2016. Figures for the month

of June saw production, services and construction up compared to June 2016. On a three monthly basis, Production and Construction fell back but services rose.

The trade deficit in June stood at £4.6 billion, up £2.0 billion on the May total.

Q1 2017 balance of payments figures saw the current account deficit at £16.9 billion, up on Q4 2016 figures of £12.1 billion, and equal to 3.4% of GDP.

The labour market shows that employment is still at a high level, with numbers up on the previous quarter and compared to the same quarter the previous year.

The employment rate is now 75.1%, the highest since records began. Unemployment levels were down on both a quarterly and an annual basis.

Weekly earnings in real terms fell by 0.5% compared to the same quarter a year previously, leading to a fall in disposable income.

The housing market saw mean house prices in June of £223,000 for the UK.

Over the year the annual price changes now stands at +4.9%. House sales in April were down by 16.9% on March, but up on the April 2016 by 3.6%. Gross

mortgage lending was £23 billion in July, up by 4% on the figure for £21.1 billion in June.

July retail sales continued to remain in positive territory, at 1.3% in terms of

quantity, compared to July 2016, the 51st consecutive period of year-on-year growth. Consumer inflation in July was 2.6%, the same as the June figure. The

Bank of England expects inflation to rise to around 3% by the end of 2017, although what happens after that is difficult to forecast. The producer output price index fell back to 3.2% in July, high but suggesting less pressure on

consumer prices in the future. Public sector net borrowing for the financial year to date was £22.8 billion, up by £1.9 billion on the same period in the previous

financial year.

2 A plus reading for ‘had experienced recruitment difficulties is regarded as negative!


Business confidence indicators were still in positive territory in July, however,

Construction eased and Services saw marginal improvement. Jobs figures saw both permanent and temporary appointments continue to increase. The August business barometer saw economic confidence at the lowest for a year.

On the consumer front, indicators continued to remain pessimistic, the

Household Finance Index reported that the squeeze in household finances continued, while although the GfK Consumer Confidence Index increased by 2 points to -10, consumer confidence remains low. House price sentiment rose

again.

European Union At an EU level, comparing figures for June 2017 with June 2016 showed that Retail trade, Construction and industrial production were all up. Industrial

producer prices rose by 2.6%. The inflation rate in June was +1.5%, stable compared to June. A year earlier the rate was 0.2%. The Final composite PMI

3

for the Eurozone in July saw economic growth slow at the start of the third

quarter, although the August flash figures saw expansion continue. International

June world trade volume rose by 0.5%, while industrial production figures rose by 0.4% - both month-on-month.

3 Purchasing Managers Index


1.3 Cornwall data profile - August

Population: 553,700 (MYE for 2016). [NOMIS]. Enterprises: 23,270, Workplaces: 27,625, 2016 [UK Business Activity].

House prices: Mean £214,504 in June 2017. Median Q4 2016 £210,000.

[Land Registry].

Gross Value Added: Total GVA in 2015 was £9.9 billion. In 2014 it was £9.5

billion. [ONS].

Per head – 2015 was £17,964, up 3.3% on 2014 (£17,383). Equal to 70.9% of UK average. [ONS].

Main sectors 2015: Real estate £2,185m, (19.2%); Wholesale, retail and motors at £1,213m, (12.2%); Health and social work £901m, (9.1%); Construction

£753 m, (7.6%); and Manufacturing £745m, (7.5%). [ONS].

Productivity: in 2015 Nominal (smoothed) GVA per filled job was £38,175,

75.1% of the UK average of £50,830. [ONS].

Gross Domestic Product: Total GDP equalled £11.1 bn in 2015 (12.1 bn PPS), up from the £10.7bn figure for 2014. Per capita of 21,900 PPS equalled 76% of

the EU average. [Eurostat].

Employment (workplace): 235,859 in employment. 174,959 employees,

52,266 self-employed. [Census 2011].

199,800 employees in 2015 [Business Register and Employment Survey].

211,400 employed in 2015 [Business Register and Employment Survey].

257,200 employed YE March 2017 [APS, 16+].

Unemployed: 9,500 YE March 2017 [APS]; Jobseekers Allowance: July –

2,435, down 12% on July 2016 [NOMIS].

Workless households: 25,000, 14.9; People 31,000, 9.9%. England 10.2%,

UK 10.6%. 2016 [APS]. Employee earnings: Total workplace gross annual median earnings in 2016

were £17,873 at 77% of the UK average. (Full-time £23,009, Part-time £9,046). [ASHE].

Total resident gross annual earnings at £19,088, 83% of the UK average. [Annual Survey of Hours and Earnings].

Self-employed earnings (median): £11,500 for 2014-15. [UK £12,600].

[HMRC].

Vacancies: August 2,509 [2,345 August 2016]. [Burning Glass].

Gross Disposable Household Income: £17,224, 90.2% of UK average, 2015. [ONS].

Qualifications: 25% with Level 4 and above, 22.4% with no qualifications. [Census 2011, 16+]. 32.9% with NVQ4+ (UK 38.0%); 4.8% with no qualifications (UK 8.3%), 2016. [APS, 16-64].


1.4 Data Summary

Cornwall Jobseekers Allowance

The total JSA figure for July for Cornwall was 2,435. Since June numbers in Cornwall have decreased by 125 or 4.9%.

The July figure was the lowest recorded during the run of data since 1992.

Compared to July 2016, the number of claimants in Cornwall decreased by 346 or 12%.

Since November 2012 the numbers each month have fallen year-on-year.

Comparing the change in numbers for Cornwall between June and July each year (since 1993) indicates that numbers decreased in 21 of the 25 years.

The level of change varies from year to year. The decrease in July 2017 at 4.9% was above the average of 2.0% for decreases since 1993.

Cornwall’s JSA rate in July was 0.7%, down 0.1% on the figure for June.

Compared to July 2016, Cornwall’s rate fell by 0.2 points, from 0.9% to 0.7%.

Labour market - resident based Labour market figures for Cornwall and the Isles of Scilly from the Annual

Population Survey are available up to March 20174. This data set covers those of working age namely the 16-64 age group who are resident in the area5.

In total there were 320,600 aged 16-64, of whom 258,500 were

economically active with 249,000 who were employed. Of those employed, 193,900 were employees with 54,400 self-employed6, while 178,800

worked full-time with 69,900 working part-time. 9,300 worked on a flexible basis. There were 9,500 who were unemployed, and 62,100 who were economically inactive.

The figures show that over the last year the total aged 16-64 has remained

stable7, the numbers of economically active have risen while the numbers of economically inactive have fallen. Employment numbers are up considerably, with a rise in both self-employed and employees. Part-time

numbers and full-time numbers both rose. The number of unemployed fell substantially over the year.

Labour market - workplace based Latest data shows all those in employment, including those aged 65 plus,

whose workplace is in Cornwall8, up to the year ending March 2017. The

4 Figures cover a year and are produced quarterly; all figures for age group 16-64.

5 Data has been reweighted in line with the latest ONS estimates.

6 Numbers may not sum to all those employed. 7 Due to the volatility of the data changes in figures from one period to another may not reflect

underlying trends. 8 Data has been reweighted in line with the latest ONS estimates.


data shows there were 257,200 working in Cornwall in the year ending

March 2017. Of these 62,900 were self-employed, with 187,400 employees, and with another 6,900 employees deemed to be working on a flexible basis.

Over the year, numbers in employment, across all categories increased by

13,900 from 243,300 to 257,200, this was attributable to an increase in both employee and self-employed numbers. The number on flexible contracts fell back from 11,700 to 6,900.

The total has fallen back from the high of 263,300 reached in the period

year ending September 2016, suggesting it might have been the result of a statistical blip.

Vacancies There were 2,509 job postings in Cornwall and Isles of Scilly. This was

down by 10% from the 2,784 in July but up 7% from 2,345 in August 2016. So far this year vacancies are up by 6% over the same period last year.

Housing

Prices: In June, house prices in Cornwall averaged £214,504 similar to the May total of £214,609. This represented a monthly change of 0.0%, compared to increases of 0.8% for England and across the UK. Compared

to June 2016 house prices in Cornwall were up by £8,768 or 4.3%, compared to increases of 5.2% for England and 4.9% for the UK.

Total sales in April at 741 were down 11.7% on the March total of 8399.

Compared to April 2016, sales rose by 15.1%, from 629 to 741, above both

the England figure of 1.5% and the UK average of 3.6%.

In the year December 2016, median house prices in Cornwall equalled £210,000 compared to £224,000 for England. Compared to the previous

quarter, prices increased by £50, from £209,950. In comparison to Q34 2015 prices were up by £10,000 or 5%. The increase across England over the same period was 5.4%.

According to Zoopla10, in August there were 4,410 properties for sale with

666 to rent, a total of 5,076 properties. Compared to July 2017: the number of dwellings for sale decreased by 3% while the numbers for rent increased by 3%.

Compared to August 2016 properties for sale were down by 15% with those

for rent down by 4%.

Chamber of Commerce

The latest Cornwall Chamber of Commerce survey takes the data up to Q2 2017. Compared to Q1 2017, there were positive readings11 for 11 of the

12 indicators, with 1 positive. The most positive changes were increases were ‘UK sales’ up 15 %, ‘profitability over next 12 months expected to

9 Sales figures are often adjusted each month so that previous figures are superseded

10 http://www.zoopla.co.uk/house-prices/browse/cornwall/

11 A plus reading for ‘had experienced recruitment difficulties is regarded as negative!


increase’ up 10%, while ‘size of workforce’ had increased by 9%. Those

experiencing recruitment difficulties rose 2 points from 61% to 63%.

Over the year, all indicators had seen an improvement, particularly UK

sales in the previous quarter up by 15% while the workforce over the next quarter had also risen by 15%. Those experiencing recruitment difficulties

had decreased over the year down 1 point from 64% to 61%.

The percentage of businesses operating at full capacity was 40%, up on the Q1 2017 figure of 37% and up 2 points on the Q2 2016 figure of 38%.

Defence

The latest defence employment statistics show that there were 3,600

people employed in the sector in Cornwall in July 2017, 30 fewer than in April 2017 and down 20 on the July 2016 figure.

SW England

Employment in the South West rose at the fastest rate in 18 months in July, underscoring an overall improvement in regional economic

performance. The pick-up in job creation coincided with stronger growth in output and order books, as well as a recovery in business confidence from an 11-month low in June. Inflationary pressures meanwhile remained high,

with prices charged for goods and services rising at the fastest rate for three months.

UK Output

UK gross domestic product (GDP) was estimated to have increased by 0.3% during Quarter 2 (Apr to June) 2017, up on the 0.2% recorded in the previous quarter.

The seasonally adjusted Index of Production increased by 0.3% between

June 2016 and June 2017.

The seasonally adjusted Index of Services increased by 2.5% between June 2016 and June 2017.

Output in the construction industry increased by 0.9% between June 2016

and June 2017.

New car output: UK car manufacturing rose 7.8% in July (136,397) compared to July 2016.

Trade The UK’s total trade deficit (goods and services) widened by £2.0 billion

between May and June 2017 to £4.6 billion, due to increases in imports of both goods and services; erratic commodities had little impact within the total trade balance on the month.

Labour market - Main points for the three months to June 2017

Estimates from the Labour Force Survey show that, between the quarter

January to March 2017 and the quarter April to June 2017, the number of

people in work increased, the number of unemployed people fell, and the


number of people aged from 16 to 64 not working and not seeking or

available to work (economically inactive) also fell.

There were 32.07 million people in work, 125,000 more than for the quarter January to March 2017 and 338,000 more than for the quarter a

year earlier.

The employment rate (the proportion of people aged from 16 to 64 who

were in work) was 75.1%, the highest since comparable records began in 1971.

The unemployment rate (the proportion of those in work plus those

unemployed, that were unemployed) was 4.4%, down from 4.9% for the same quarter a year earlier and the lowest since 1975.

There were 8.77 million people aged from 16 to 64 who were economically

inactive (not working and not seeking or available to work), 64,000 fewer

than for January to March 2017 and 90,000 fewer than for a year earlier.

Housing House prices - The average UK house price was £223,000 in June 2017.

This is £10,000 higher than in June 2016 and £2,000 higher than last month.

UK sales - decreased from 83,652 in March to 69,545 in April, down 16.7%. Month on year totals were up 3.6% from 67,025 to 69,545.

Gross mortgage lending – reached £23.0 billion in July.

Consumer, retail and prices Consumer Trends – In Quarter 1 (Jan to Mar) 2017, household spending

(adjusted for inflation) grew by 0.4% compared with Quarter 4 (Oct to Dec) 2016.

Retail - The volume of retail sales in July 2017 is estimated to have

increased by 1.3% compared with July 2016.

CPI annual inflation - The Consumer Prices Index (CPI) rose by 2.6% in the year to July 2017, the same as the June rate.

Producer prices - Factory gate prices (output prices) rose 3.2% in the year to July 2017, down marginally on the previous month.

Public sector Public sector net borrowing – Public sector net borrowing (excluding

public sector banks) increased by £1.9 billion to £22.8 billion in the current financial year-to-date (April 2017 to July 2017), compared with the same

period in 2016.

Business Surveys and barometers

Lloyds Bank Regional Purchasing Managers’ Index (PMI®): July - third quarter starts with rises in business activity and employment.

UK Manufacturing PMI: July - UK manufacturing boosted by near survey-

record growth of new export orders.


UK Construction PMI: July - Construction growth eases to 11-month low

in July amid weakness in commercial building.

UK services economy: July - Marginal improvement in service sector growth.

Jobs: July - Staff appointments increase at fastest rate for over two years as candidate availability drops.

Consumer Surveys and barometers Household Finance Index™: August - UK household finances remain

under pressure.

Gfk’s Consumer confidence index: increased by two points to -10 in August.

European Union Annual

EU28. June 2017 compared to June 2016: Industrial producer prices up by 2.6%; retail trade index up by 3.1%; industrial production up by 2.9%; Construction up by 3.6%.

Unemployment in June at 7.7%, down from 8.6% in July 2016.

Unemployment in July at 7.7%, down from 8.5% in July 2016.

EU28. Annual inflation was 1.5% in July 2017, stable compared to June. A year earlier the rate was 0.2%.

Markit Eurozone Composite PMI®– final data: July: Eurozone economic growth

slows at start of third quarter.

Quarterly

Gross Domestic Product Q2 2017 Seasonally adjusted GDP rose by 0.6% in the EU28 during the second

quarter of 2017, compared with the previous quarter. In the first quarter of

2017, GDP grew by 0.5%. Compared with the same quarter of the previous year, seasonally adjusted GDP rose by 2.3% in the EU28 in the second

quarter of 2017, after +2.1% in the previous quarter.

Global data

Developments in international trade and industrial production: June 2017 World trade volume increased 0.5% month-on-month (growth was 1.9% in

May, initial estimate 2.0%) and 0.4% in 2017Q2 (1.4% in 2017Q1).

• World industrial production grew 0.4% month-on-month (0.4% in May, initial estimate 0.1%) and 1.2% in 2017Q2 (0.6% in 2017Q1).


2 Cornwall

Data sets now use the 16-64 age group as the “working age” category.

A complete set of tables for the labour market section is to be found in the previous monthly labour market analysis.

2.1 Jobseekers Allowance The total JSA figure for July for Cornwall was 2,435. Since June numbers in

Cornwall have decreased by 125 or 4.9%.

The July figure for Cornwall was the lowest recorded during the run of data since 1992.

Compared to July 2016, the number of claimants in Cornwall decreased by 346 or 12%.

Since November 2012, the numbers have fallen each month compared to the same month in the previous year in Cornwall.

Comparing the change in numbers for Cornwall between June and July each year

(since 1993) indicates that numbers decreased in 21 of the 25 years. The level of change varies from year to year. The decrease in July 2017 at 4.9% was above the average of 2.0% for decreases since 1993.

Cornwall’s JSA rate in July was 0.7%, down one point on the figure for June.

Compared to July 2016, Cornwall’s rate fell by 0.2 points, from 0.9% to 0.7%.

Community Network Areas On a monthly basis 14 of the 19 CNAs saw decreases, while 2 were stable

(including increases or decreases of only 1 each) and 3 saw increases. The largest decreases were in Truro & Roseland (-18%) and St Agnes & Perranporth (-16%).

Compared to July 2016, only China Clay (+9%), and Hayle & St. Ives (+8%),

and Liskeard & Looe (+4%) saw increases, while 14 areas saw decreases.

Highest rates in July were in Camborne-Pool-Redruth (1.4%) then Bodmin (1.0%). Lowest rates were found in Wadebridge & Padstow (0.3%) and then St. Agnes & Perranporth at 0.4%.

Compared to July 2016, 13 areas saw rates decline, 5 no change, while China

Clay saw rates rise. Occupations

In July 2017 there were 345 fewer jobseekers12 compared to July 2016. Of the 26 occupational groups, 9 were static and 17 saw numbers fall.

Comparing July 2017 to June 2017, overall numbers decreased by 125. There was 1 occupation where numbers rose, 15 occupations which were static and 10

where numbers fell. ‘Sales occupations’ fell by 60.

12

All numbers are rounded. Includes ‘Occupation unknown’.


JSA on and off-flows

In July there were 704 off-flows and 580 on-flows. Of the 70513 off-flows, 46.1% were accounted for by people obtaining a job, 22.0% failed to sign and with 19.1% the reasons not known.

2.2 Labour market – Resident based

Labour market figures for Cornwall and the Isles of Scilly from the Annual Population Survey are available up to March 201714. This data set covers those

of working age namely the 16-64 age group who are resident in the area15.

In total there were 320,600 aged 16-64, of whom 258,500 were economically

active with 249,000 who were employed. Of those employed, 193,900 were employees with 54,400 self-employed16, while 178,800 worked full-time with

69,900 working part-time. 9,300 worked on a flexible basis. There were 9,500 who were unemployed, and 62,100 who were economically inactive.

The figures show that over the last year the total aged 16-64 has remained stable17, the numbers of economically active have risen while the numbers of

economically inactive have fallen. Employment numbers are up considerably, with a rise in both self-employed and employees. Part-time numbers and full-time numbers both rose. The number of unemployed fell substantially over the

year.

Looking at percentage changes over the year, the number employed rose by 4%, in contrast to no change in the 16-64 age group, with self-employed up by 13% and part-time up by 6% with economically inactive down by 8%.

Over the year, the employment rate rose from 74.7% to 77.7%, the self-

employment share of employment moved up from 20.3% to 21.9%. The share taken by full-time decreased from 72.0% to 71.8% while part-time went up from 27.7% to 28.1%. Unemployment rates fell back from 5.2% to 3.7%.

Pre-recession employment figures peaked at 236,300 then fell back between

2008 and 2010 before picking up in mid-2011.

Self-employed numbers increased from early 2006 until early 2008 before falling

back slightly. Highs were reached again in late 2011 (52,300), declining up to early 2013 before rising again and peaking at 55,100 in 2014. Numbers then

fell back before picking up again in 2016 to reach 54,400 for the latest period.

Employee numbers rose from 2004 to 2006 (191,000), then steadily declined to

172,300 in 2010. Numbers then rose again to reach 188,300 in mid-2014, since when numbers fell back until early 2015, then remained stable prior to the latest

increase to 193,900.

After reaching a low of 7,500 in early 2006 the numbers of unemployed rose to peak in 2010 at 23,000 before falling back to 12,400 in early 2012. Numbers

13

Numbers are always rounded for this dataset. 14

Figures cover a year and are produced quarterly; all figures for age group 16-64. 15

Data has been reweighted in line with the latest ONS estimates. 16 Numbers may not sum to all those employed. 17

Due to the volatility of the data changes in figures from one period to another may not reflect

underlying trends.


climbed again until mid-2013 to 15,600 then fell until mid-2015 to 9,700. There

was then a period when numbers rose again reaching 15,100 in mid 2016, since when numbers have fallen back and now stand at 9,500.

Economic activity numbers peaked in the mid and late 2011 periods then fell back until mid 2012. Numbers then increased reaching 255,500 in late 2014

before dropping back to a low of 250,800 in mid 2016. Since then numbers have climbed back with the latest figure at 258,500.

2.3 Labour market - Workplace data Latest data shows all those in employment, including those aged 65 plus, whose

workplace is in Cornwall18, up to the year ending March 2017. The data shows there were 257,200 working in Cornwall in the year ending March 2017. Of these 62,900 were self-employed, with 187,400 employees, and with another

6,900 employees deemed to be working on a flexible basis.

Over the year, numbers in employment, across all categories increased by 13,900 from 243,300 to 257,200, this was attributable to an increase in both employee and self-employed numbers.

The number on flexible contracts fell back from 11,700 to 6,900.

The total has fallen back from the high of 263,300 reached in the period year ending September 2016, suggesting it might have been the result of a statistical

blip.

Over the year as a share of the workforce, the employee and self-employed shares were up, while those on flexible contracts fell from 4.8% to 2.7% of the total. The fall in those on flexible contracts continues a trend

Sixty-five plus

Overall since 2004 there has been a general upward trend in both the numbers and share of the workforce of those aged 65 plus. In 2004 there were 6,600

while the figure in mid 2011 was 15,000. Numbers dipped in the 2011 downturn before recovering in early 2014. From then onwards numbers dipped until late 2015 to peak in late 2016 at 20,000, before falling back to 17,900.

2.4 Vacancies

In August there were 2,509 job postings in Cornwall and the Isles of Scilly. This was a decrease of 275 or 10% on the July figure of 2,784. Compared to the August 2016 total of 2,345, numbers were up by 7%.

So far in 2017 after peaking in May at 3,237 month-on-month totals have fallen

back, however, from March (with the exception of July) monthly totals have been up compared to the same month a year previously.

18

Data has been reweighted in line with the latest ONS estimates.


2.5 Benefit claimants – working age client group The latest release brings the working age data up to November 2016. This gives

a total of 38,580 claimants of whom 28,360 were claiming out-of-work benefits.

The number on out-of-work benefits in the November quarter rose compared to the previous quarter but fell on an annual basis. The all working age benefits total fell on both a quarterly and annual basis. Changes were largely

attributable to changes in the number of JSA claimants.

Over the year the total claimant rate fell by 0.6 points from 12.5% to 11.9%, the out-of-work rate fell by 0.4 points from 9.1% to 8.7%.

At 8.7% the out-of-work claimant rate was above the GB rate of 8.4%. The total Working Age rate at 11.9% was above the GB rate of 11.1%.

Both out-of-work and total working age rates across Great Britain fell on a quarterly and an annual basis.

Looking at the trends in all benefits comparing Cornwall and Great Britain: for

Cornwall there was a general decline in the all working age benefits rate from 1999 (15.1%) reaching a low of 12.9% in May 2008. With the onset of the recession figures then picked up to reach 14.7% in February 2009, and rising to

15.1% in February 2012. Since then the rate has fallen back to 11.9%. For most of the time rates in Cornwall have been below the GB average although

since August 2012 they have been slightly above. Out-of-work benefits trends: In Cornwall, there was a general decline in the

out-of-work benefits rate from 1999 (13.3%) reaching a low of 10.3% in May 2008. With the onset of the recession figures then picked up to reach 12.1% in

February 2009. Since then the rate has fallen back to stand at 8.7%. For most of the time rates in Cornwall were below the GB average, since November 2013

figures have been slightly above or more recently similar to the GB average.

-100

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2013 2014 2015 2016 2017

% Fig 2.1: Vacancy data - month, to month in previous year

change


2.6 Housing

Monthly house prices, Land Registry [This is a new set of house prices using a different methodology from the previous series].

In June, house prices in Cornwall averaged £214,504 down on the May total of £214,609. This represented stability in prices compared to increases of 0.8% for

both England and across the UK. Compared to June 2016 house prices in Cornwall were up by £8,768 or 4.3%, compared to increases of 5.2% for England and 4.9% for the UK.

Table 2.1: House Prices Year Month Cornwall England UK

2016 June 205736 228430 212887

2016 July 207573 230854 215061

2016 Aug 209482 231206 215128

2016 Sept 210567 230870 214747

2016 Oct 211862 230058 214114

2016 Nov 213334 231035 215036

2016 Dec 213264 231994 215498

2017 Jan 213626 231843 215296

2017 Feb 214141 233084 215873

2017 Mar 215376 232246 215393

2017 Apr 215270 235495 218977

2017 May 214609 238311 221389

2017 June 214504 240325 223257

Change £ £ £

Monthly -105 2014 1868

Yearly 8768 11895 10370

Change % % %

Monthly 0.0 0.8 0.8

Yearly 4.3 5.2 4.9

In June 2017, house prices in Cornwall were 96% of the UK average, the same as the 96% in June 2016.

On a quarterly basis, average house prices peaked in Q4 2007 at £216,174, they

then fell back to £180,812 in Q2 2009. There was then a recovery with prices reaching £199,404 in Q4 2010. This was followed by a decline down to

£187,698 in Q4 2012. Thereafter prices rose to reach £212,495 in Q4 2015 then fell back before increasing to reach £214,794 in Q2 2017.


Sales data

Total sales in April at 741 were down 11.7% on the March total of 83919. The UK figure decreased by 16.9%. Compared to April 2016, sales rose by 15.1%, from 629 to 741, above both the England figure of 1.5% and the UK average of

3.6%.

Table 2.2: Number of sales by area Period Cornwall England UK

Apr-16 629 52590 67025

May-16 717 60179 75345

Jun-16 885 74259 91702

Jul-16 899 77833 97074

Aug-16 939 79472 98152

Sep-16 895 75795 95281

Oct-16 893 70369 88739

Nov-16 906 73314 92012

Dec-16 1058 77949 96842

Jan-17 724 56158 70406

Feb-17 738 57476 71196

Mar-17 839 65939 83652

Apr-17 741 53410 69545

Change No's No's No's

Monthly -98 -12529 -14107

Yearly 112 820 2520

Change % % %

Monthly -11.7 -19.0 -16.9

Yearly 15.1 1.5 3.6

19

Sales figures are often adjusted each month so that previous figures are superseded

0

50000

100000

150000

200000

250000

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

£ Fig 2.2: Quarterly house prices


Fig 2.3 shows sales on a quarterly basis. There is a seasonal variation with sales

lower in the first quarter and higher in the third or fourth quarter. Sales in Q1 2017 were down on those in Q1 2016, 2,301 compared to 2,925, reflecting the artifical boost in March 2016 due to tax changes.

Fig 2.4 below shows house sales on an annual basis20. In 2007 there were 12,260 sales, the recession in 2008 saw sales drop by nearly half to 6,486.

Numbers increased in 2009 and in 2010 but fell back in 2011. There was a slight increase in 2012 with numbers rising in 2013 to reach 10,620 in 2014. 2015 saw numbers stabilise at 10,674 with a similar figure in 2016 at 10,715.

20 Figures from Land Registry have been revised.

0

500

1000

1500

2000

2500

3000

3500

4000

1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 17

No's Fig 2.3: Quarterly sales trends


Source: Land Registry, House Price Index, 15 August 2017.

Quarterly median house prices, Land Registry

“The quarterly House Price Statistics for Small Areas also use the Land Registry

data, but they report simple median house prices which are not mix-adjusted. These figures give an indication of the price of properties which actually sold in a

given period and area (they're also available for small geographic areas). Note that these figures cover a rolling 12 month period to ensure that a robust median price is reported, and this is updated each quarter, e.g. the most recent

quarter's publication refers to the year ending December 2016”.

In the year ending December 2016, median house prices in Cornwall equalled £210,000 compared to £224,000 for England21. Compared to the previous

quarter, prices increased by £50, from £209,950. In comparison to Q4 2015 prices were up by £10,000 or 5%. The increase across England over the same period was 5.4%. All data in Table 2.3.

21 UK figures not available.

0

2000

4000

6000

8000

10000

12000

14000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

No's Fig 2.4: Annual house sales


Table 2.3: Median House Prices

Cornwall England Difference

Q1-2014 187,000 190,000 -3,000

Q2-2014 187,500 191,950 -4,450

Q3-2014 190,000 195,000 -5,000

Q4-2014 193,000 198,000 -5,000

Q1-2015 195,000 200,000 -5,000

Q2-2015 197,000 205,000 -8,000

Q3-2015 200,000 209,750 -9,750

Q4-2015 200,000 212,500 -12,500

Q1-2016 205,000 215,000 -10,000

Q2-2016 206,000 219,995 -13,995

Q3-2016 209,950 220,000 -10,050

Q4-2016 210,000 224,000 -14,000

£ £

Qtr change 50 4,000

Year-on-year 10,000 11,500

% %

Qtr change 0.0 1.8

Year-on-year 5.0 5.4

Comparing house price trends in Cornwall and England since 1995 shows that in Q4 1995, average prices in Cornwall were £49,000, 89% of the England

average. House prices rose above the England average from Q4 2002 until Q4 2012. Since then house prices have fallen relative to the England average and now stand at 94%.

[Land Registry, House price statistics for small areas: year ending Dec 1995 to

year ending December 2016, 21 June 2017].

Source: House price data supplied by Land Registry © Crown copyright 2017.

0

50000

100000

150000

200000

250000

1995-0

3

1996-0

3

1997-0

3

1998-0

3

1999-0

3

2000-0

3

2001-0

3

2002-0

3

2003-0

3

2004-0

3

2005-0

3

2006-0

3

2007-0

3

2008-0

3

2009-0

3

2010-0

3

2011-0

3

2012-0

3

2013-0

3

2014-0

3

2015-0

3

2016-0

3

2017-0

3

£ Fig 2.5: Cornwall and England house prices

compared

England Cornwall

https://www.ons.gov.uk/releases/housepricestatisticsforsmallareasyearendingdec1995toyearendingdec2015

https://www.ons.gov.uk/releases/housepricestatisticsforsmallareasyearendingdec1995toyearendingdec2015


Properties available for sale and rent

According to Zoopla22, in August there were 4,410 properties for sale with 666 to rent, a total of 5,076 properties. Compared to July 2017, the number of dwellings for sale decreased by 3%, while the numbers for rent increased by

3%. Compared to August 2016 properties for sale were down by 15% with those for rent down by 4%. All figures in Table 2.4.

Table 2.4: Houses and flats for sale or rent

For sale For rent Total

Period No’s No’s No’s

Aug-16 5199 694 5893

Jul-17 4553 646 5199

Aug-17 4410 666 5076

Change

Month - no's -143 20 -123

Year - no's -789 -28 -817

Month - % -3 3 -2

Year - % -15 -4 -14

Fig 2.6 shows the trend in houses for sale or rent since July 2011. Numbers of both houses for sale and rent increased in late 2012, remaining at a high level until October 2014. Numbers then fell back up to February 2016 with an

increase up to July 2016, before falling back to a low of 4,977 in February 2017. Since then numbers have edged up marginally, although recording a drop in

August.

Table 2.5 below shows the breakdown of properties for sale. Houses composed

83.3% of total properties in August.

22

http://www.zoopla.co.uk/house-prices/browse/cornwall/

0

2000

4000

6000

8000

10000

12000

July

Oct

Jan

Ap

r

July

Oct

Jan

Ap

r

July

Oct

Jan

Ap

r

July

Oct

Jan

Ap

r

July

Oct

Jan

Ap

r

Jul

Oct

Jan

Ap

r

July

2011 2012 2013 2014 2015 2016 2017

No's Fig 2.6: Dwellings for sale and rent

Sale

Rent


Table 2.5: Properties for sale

Houses Flats Total Houses Flats Total

Period No’s No’s No’s Period % % %

Aug-16 4481 718 5199 Aug-16 86.2 13.8 100.0

Jul-17 3781 772 4553 Jul-17 83.0 17.0 100.0

Aug-17 3672 738 4410 Aug-17 83.3 16.7 100.0

Table 2.6 shows the breakdown of new properties for sale. In August a fifth

consisted of flats. Overall, new properties accounted for 9.3% of all properties for sale.

Table 2.6: New Properties for sale

Houses Flats Total Houses Flats Total

Period No’s No’s No’s % % %

Aug 394 98 492 80.1 19.9 100

Sept 404 68 472 85.6 14.4 100

Oct 401 61 462 86.8 13.2 100

Nov 377 70 447 84.3 15.7 100

Dec 355 89 444 80.0 20.0 100

Jan 380 77 457 83.2 16.8 100

Feb 346 53 399 86.7 13.3 100

Mar 330 65 395 83.5 16.5 100

Apr 315 73 388 81.2 18.8 100

May 411 61 472 87.1 12.9 100

June 364 76 440 82.7 17.3 100

July 360 81 441 81.6 18.4 100

August 330 81 411 80.3 19.7 100

Over the year, the number of new houses for sale fell by 16%, flats by 17%.

Source: Zoopla, 31 August 2017.

2.7 Chamber of Commerce The latest Cornwall Chamber of Commerce survey takes the data up to Q2 2017.

Compared to Q1 2017, there were positive readings23 for 11 of the 12 indicators, with 1 positive. The most positive changes were increases were ‘UK sales’ up

15 %, ‘profitability over next 12 months expected to increase’ up 10%, while ‘size of workforce’ had increased by 9%. Those experiencing recruitment difficulties rose 2 points from 61% to 63%.

All data in Table 2.7 below.

23

A plus reading for ‘had experienced recruitment difficulties is regarded as negative!


Table 2.7: Chamber of Commerce Survey

2016 2017 2017 Change

Q2 Q1 Q2 Quarterly Annual

Topic Status % % % % %

UK sales Have increased 39 39 54 15 15

UK orders Have increased 30 32 38 6 8

Size of their workforce Increased 27 26 35 9 8

Workforce over the next quarter Increase 25 35 40 5 15

Planned investment on training Intend to increase 20 22 24 2 4

Investment in plant and equipment Intend to increase current levels 21 23 29 6 8

Staff Attempted to recruit 46 46 52 6 6

Businesses looking to recruit Had experienced recruitment difficulties 64 61 63 2 -1

Turnover Increase over the next 12 months 69 68 73 5 4

Profitability of their business Expect to increase over the next 12 months 58 51 61 10 3

Export sales Increased 7 11 13 2 6

Operating capacity Full capacity 38 37 40 3 2

Over the year, all indicators had seen an improvement, particularly UK sales in the previous quarter up by 15% while the workforce over the next quarter had

also risen by 15%. Those experiencing recruitment difficulties had decreased over the year down 1 point from 64% to 61%.

Fig 2.7 shows the percentage of businesses operating at full capacity. A peak

was reached in late 2013 followed by a decline in 2014. There is a degree of seasonality with full capacity levels lower in Q4 in recent years. The latest figure

of 40% is up on the Q1 2017 figure of 37% and up 2 points on the Q2 2016 figure of 38%.

Source: Cornwall Chamber of Commerce, June 2017.

0

5

10

15

20

25

30

35

40

45

50

1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2

2011 2012 2013 2014 2015 2016 2017

%

Quarter

Fig 2.7: Operating at full capacity


2.8 Defence Quarterly Location Statistics

The latest defence employment statistics show that there were 3,600 people employed in the sector in Cornwall in July 2017, 30 fewer than in April 2017 and down 20 on the July 2016 figure. Data in Table 2.8.

Table 2.8: Defence employment in Cornwall Year Quarter Military Civilian MOD

2016 July 3,220 400 3,620

2017 Apr 3,230 410 3,630

2017 Apr 3,200 400 3,600

Change Qtr -30 -10 -30

Change YOY -20 0 -20

Fig 2.8 shows the trend in numbers of military personnel employed since 2010, (civilian numbers are excluded).

Source: Ministry of Defence, Quarterly Location Statistics, Statistical Bulletin, 17

August 2017.

2.9 Finance statistics UK Finance release data on SME lending, mortgage lending and personal loans at Postcode sector level. The banks and building societies providing data

“collectively account for about 73 per cent of UK mortgage lending and 60 percent of both personal loans and SME loans by banks and building societies”.

Using this data it is possible to give figures for the three categories for Cornwall, the data set is not complete but gives an indication of what is happening.

SME lending

SME lending data for Cornwall shows that in Q4 2016, total lending was £1.31 billion, down from £1.35 billion in Q3 2016. After reaching £1.43 billion in Q1 2015, there has been a steady decline in loans.

Fig 2.9 shows lending for each quarter since Q2 2013.

2700

2800

2900

3000

3100

3200

3300

3400

3500

3600

3700

3800

Jan July Jan July Jan July Jan July Jan July Jan July Jan July Jan July

2010 2011 2012 2013 2014 2015 2016 2017

No's Fig 2.8: Military


Mortgage lending Mortgage lending totalled £6,710 million in Q4 2016, down from £6,722 million

in Q3. Totals have been falling since Q4 2015 when the figure equalled £6,737 million. The total is well below the £6,800 reached in Q4 2013.

Value of Personal Loans outstanding Personal loans reached a total of £309 million in Q4 2016 up from £307 in Q3

2016. Compared to Q4 2015, the total was up by 28 million or 8.7%. Personal loans have been on an upward trend since Q4 2013.

1.24

1.26

1.28

1.30

1.32

1.34

1.36

1.38

1.40

1.42

1.44

1.46

2013 2014 2015 2016

2 3 4 1 2 3 4 1 2 3 4 1 2 3 4

£ billion Fig 2.9: SME lending

6620

6640

6660

6680

6700

6720

6740

6760

6780

6800

6820

2013 2014 2015 2016

2 3 4 1 2 3 4 1 2 3 4 1 2 3 4

£ million Fig 2.10: Mortgages


Source: UK Finance.

2.10 Size of business and productivity

There are a number of factors which impact on productivity including - Absorptive capacity, Agglomeration, the London Effect, connectivity, distance to

main economic hub, industry structure/mix, peripherality, rurality, size of firm and social capital. In general large firms tend to have higher productivity levels

than smaller firms. Size of firm can be measured in terms of both employment and turnover.

Workplaces by employment sizeband Cornwall has similar levels of micro-businesses to the UK average with slightly

more small businesses but lower medium and large workplaces. All data in Table 2.9.

Table 2.9: Workplaces by employment sizeband

Employment size band Cornwall UK Ratio

Micro (0 to 9) 84.16 84.36 1.00

Small (10 to 49) 13.65 12.62 1.08

Medium-sized (50 to 249) 1.97 2.62 0.75

Large (250+) 0.22 0.40 0.54

Total 100 100 1.00

Turnover by sector Turnover data by businesses is usually provided at the overall business level.

However, ONS have released data at sector level for both enterprises and workplaces. The data is for 2016 shown in Table 2.10. As expected, Cornwall

had a lower percentage of businesses with higher turnover than the UK average. 86.1% of enterprises had a turnover below £499,000 compared to the UK figure of 83.9%. Only 0.5% of enterprises had a turnover of £10 million plus,

compared to the UK average of 1.2%.

0

50

100

150

200

250

300

350

2013 2014 2015 2016

2 3 4 1 2 3 4 1 2 3 4 1 2 3 4

£ million Fig 2.11: Personal loans


Table 2.10 All enterprises

Turnover size band (£) Cornwall UK Ratio

0-49,000 19.6 17.0 1.15

50-99,000 20.8 23.6 0.88

100-249,000 31.4 31.1 1.01

250-499,000 14.3 12.1 1.18

500-999,000 7.1 7.1 1.00

1,000,000-1,999,000 3.8 4.1 0.92

2000000-4,999,000 2.0 2.7 0.73

5,000,000-9,999,000 0.6 1.0 0.58

10m+ 0.5 1.2 0.40

Total 100.0 100 1.00

79.9% of workplaces in Cornwall had a turnover of under £500,000 whereas the UK figure was 71.8%. All data in 2.11.

Table 2.11: All workplaces/local units

Turnover size band (£) Cornwall UK Ratio

0-49,000 18.1 14.5 1.25

50-99,000 19.2 20.1 0.95

100-249,000 29.1 26.6 1.09

250-499,000 13.5 10.5 1.28

500-999,000 7.1 6.4 1.10

1,000,000-1,999,000 4.2 4.0 1.04

2000000-4,999,000 2.7 3.3 0.81

5,000,000-9,999,000 1.4 1.9 0.77

10m+ 4.7 12.6 0.37

Total 100.0 100.0 1.00

Source: ONS, user requested data.

Both indicators show that Cornwall has a far lower share of larger enterprises than the UK average which could be a contributory factor in Cornwall’s low

productivity.

2.11 approximate Gross Value Added (aGVA) - 2014 As aGVA data is at a more detailed level than the GVA data it is possible to see the contribution sub-sectors make to the wider sector.

Transportation & storage accounted for £151 million (3.6%) of aGVA in 2014. The largest components were ‘Postal and courier activities’ £63 million (42%)

and ‘Land transport and storage via pipelines’ £59 million (39%). ‘Admin & support services’ accounted for £269 million (6.4% of total aGVA).

Broken down by sub-sector: ‘Employment activities’ £96 million (36%);

‘Office administrative office support and other business support activities’ £80 million (30%); ‘Rental and leasing activities’ £49 million (18%); and

‘Services to buildings and landscape activities’ £44 million (16%).


‘Information & communication’ accounted for 2.2% of total aGVA in 2014. This

was divided into: ‘Computer programming consultancy and related activities’£63 million (68%); and ‘Publishing activities’ with £20 million (21%).

Source: ONS, Annual Business Survey, Special analysis.

[The approximate estimate of Gross Value Added at basic prices (aGVA) published in this release is a measure of the income generated by businesses

within their industries and sectors, less the cost of goods and services used to create the income. The ABS measure of aGVA is called 'approximate' because it

does not fully allow for some National Accounts concepts such as taxes, subsidies or income earned in kind]. ONS.


3 South West England

Lloyds Bank South West PMI:

July- employment rises at fastest rate for

one-and-a-half years

Key findings

“Pace of job creation in July outstrips UK average

Faster increases in output and new orders

Average prices charged post sharpest rise for three months”

“Employment in the South West rose at the fastest rate in 18 months in July, underscoring an overall improvement in regional economic performance. The

pick-up in job creation coincided with stronger growth in output and order books, as well as a recovery in business confidence from an 11-month low in

June. Inflationary pressures meanwhile remained high, with prices charged for goods and services rising at the fastest rate for three months.

Output and demand: The headline Lloyds Bank South West Business Activity Index – a seasonally adjusted index that measures the combined output of the

region’s manufacturing and service sectors – registered 54.0 in July, up from June’s 52.6. This signalled a rebound in business activity growth from the modest pace seen at the end of the second quarter, with the rate of expansion

broadly in line with the UK-wide average. A driving factor behind the upturn was stronger demand for goods and services, with July’s survey also showing a

faster increase in the level of new orders received by local companies.

Employment and backlogs: Improved business performance in July led to the

creation of more jobs, with employment rising at the fastest rate since January 2016. Workforce numbers expanded across both manufacturing and services,

with the former recording the steeper rate of increase. Backlogs of work meanwhile fell for the first time in four months. The rate of depletion was the fastest seen since September last year.

Input and output prices: Elsewhere, July’s survey revealed ongoing strong

cost pressures facing businesses in the South West. Input prices rose at a sharp rate that was well above the historical series average. Reports from survey respondents highlighted the exchange rate and staff-pay as being the main

factors. Average prices charged for goods and services increased as a result, rising at the steepest rate in three months, and one that was the third-fastest of

all 12 UK regions monitored.

Future business activity: Adding to the picture, July data indicated a recovery

in South West businesses’ expectations towards output in the year ahead, up from June’s post-election 11-month low to the highest since March”.

© Markit Economics Limited 2017 [For further information, please contact:

[email protected] Source: Markit, Lloyds Bank England Regional PMI, 14 August 2017.

mailto:[email protected]


4 United Kingdom

4.1 Output Gross domestic product, Second estimate of GDP: Apr to June 2017 -

+0.3% (18th consecutive quarterly increase of growth since Quarter 1 2013)

Main points “UK gross domestic product (GDP) in volume terms was estimated to have

increased by 0.3% between Quarter 1 (Jan to Mar) and Quarter 2 (Apr to June) 2017, unrevised from the preliminary estimate.

In the output measure of GDP, growth was driven by services, which grew by 0.5% between Quarter 1 and Quarter 2.

In the expenditure measure of GDP there was relatively strong growth in

government spending and investment; there was, however, a slowdown in growth in both household spending and business investment, to 0.1% and

0.0% respectively in Quarter 2.

UK GDP growth in volume terms increased by 1.7% between Quarter 2 2016 and Quarter 2 2017.

UK GDP in current prices increased by 0.8% between Quarter 1 and

Quarter 2 2017.

Fig 4.1 shows the seasonally adjusted level of GDP along with quarterly growth”.

Fig: 4.1: Seasonally adjusted GDP(£ billions) and quarter-on quarter-growths

UK, Quarter 3 (July to Sept) 2004 to Quarter 2 (Apr to June) 2017

Source: ONS.

Source: ONS, second estimate: Apr to June 2017, Statistical Bulletin, 24 August

2017.


Index of Production: June 2017 - shows 0.3% annual increase

Main points “In the 3 months to June 2017, the Index of Production was estimated to

have decreased by 0.4% compared with the 3 months to March 2017, due

mainly to a fall of 0.6% in manufacturing.

The largest contribution to the fall in manufacturing in the 3 months to June 2017 came from transport equipment, which fell by 2.2%, along with smaller downward contributions from a range of other industries.

In June 2017, total production was estimated to have increased by 0.5%

compared with May 2017, due mainly to a rise of 4.1% in mining and quarrying as a result of higher oil and gas production.

Manufacturing monthly growth was flat in June 2017; the largest downward contribution came from transport equipment, which fell by 3.6%, which was

partially offset by an increase of 4.0% in other manufacturing and repair.

Total production output for June 2017 compared with June 2016 increased

by 0.3%, with manufacturing providing the largest upward contribution, increasing by 0.6%; energy supply partially offset the increase in total

production, decreasing by 4.6% due largely to warmer temperatures”.

Fig 4.2: Index of Production in UK, Seasonally Adjusted, June 2007 to June 2017

Source: Primarily Monthly Business Survey (Production and Services) - Office for National Statistics.

Source: ONS, Index of Production, Statistical Bulletin, 10 August 2017.


Index of Services: June 2017 shows 2.5% annual increase

Main points “Services output increased by 0.5% in Quarter 2 (Apr to June) 2017

compared with Quarter 1 (Jan to Mar) 2017; following growth of 0.1% between Quarter 4 (Oct to Dec) 2016 and Quarter 1 2017.

The largest contribution to quarterly growth came from the transport, storage and communication sector, which contributed 0.17 percentage points; the largest industry contribution came from retail sales, which

contributed 0.11 percentage points.

The Index of Services increased by 0.4% between May and June 2017.

The largest contribution to the month-on-month growth came from the transport, storage and communication sector, which contributed 0.18 percentage points of which motion pictures contributed 0.11 percentage

points.

Services output increased by 2.5% in June 2017 compared with June 2016,

following growth of 2.5% in May 2017 compared with May 2016”.

Fig 4.3 shows the pattern of Index of Services (IoS) since June 2007.

Fig 4.3: Seasonally adjusted Index of Services, June 2007 to June 2017

Source: ONS

Source: ONS, Index of Services, Statistical Bulletin, 24 August 2017.


Construction output in Great Britain: June 2017 shows 0.9% annual

increase

Main points “Construction output fell 3 month on 3 month by 1.3%, after growth of

1.1% in the first 3 months of 2017.

This 3 month on 3 month contraction in output has been driven by falls in both all new work, and repair and maintenance, which fell 1.3% and 1.4%

respectively.

Month-on-month construction output also fell in June 2017, contracting for the third consecutive month, decreasing by 0.1% compared with the previous month; however, construction output still grew 0.9% compared

with June 2016.

The month-on-month decline of 0.1% in June 2017 was driven by a 1.1% fall in all repair and maintenance; however, this was offset by a 5.1%

increase in private housing, which reached its highest level on record.

The estimate for construction growth in Quarter 2 (April to June) 2017 has been revised from negative 0.9% in the preliminary estimate of gross

domestic product (GDP) to negative 1.3%, which has no impact on quarterly GDP growth to 1 decimal place

Despite enduring both month-on-month and 3 month on 3 month falls, construction output remains at a high level, with 0.9% month-on-year

growth”.

Fig 4.4 shows components of all construction work.

Fig 4.4: Components of all work, June 2017, Chained volume measure,

seasonally adjusted, Great Britain

Source: Construction: Output and Employment - Office for National Statistics

Source: ONS, Construction output in Great Britain: June 2017, Statistical Bulletin, 10 August 2017.


Vehicle production and new car registrations

New car market falls in July as demand declines across business and consumer sectors

“161,997 new cars registered in July as market declines -9.3% – the fourth

consecutive monthly fall this year. Demand down across business, fleet and private buyers – with falls of -

23.8%, -10.1% and -6.8%.

New record market share for alternatively fuelled vehicles at 5.5% as demand surges 64.9% with 8,871 units registered”.

Fig 4.5 shows July car registrations since 2001.

Fig 4.5: Car registrations

www.smmt.co.uk/2017/08/new-car-market-falls-july-demand-declines-across-business-consumer-sectors/

British car manufacturing rebounds in July as new models hit production

“UK car output rises 7.8% in July as manufacturers ramp up production with new models.

Year-to-date performance remains strong, with production passing the one

million mark and in line with expectations”.

Mike Hawes, SMMT Chief Executive, said, “UK car production lines stepped up a gear in July, as usual bringing forward some production to help manage demand ahead of September and routine summer factory shutdowns. As the

timing and length of these manufacturing pauses can shift each year, market performance comparisons for July and August should always be treated with

caution, but as long as the economic conditions at home and abroad stay

http://www.smmt.co.uk/2017/08/new-car-market-falls-july-demand-declines-across-business-consumer-sectors/


broadly stable we expect new car production to remain in line with expectations

for the rest of 2017”. Fig 4.6 shows car output over time.

Fig 4.6: Car output – rolling year totals (millions)

www.smmt.co.uk/2017/08/british-car-manufacturing-rebounds-july-new-models-hit-production-lines/

Data from the Society of Motor Manufacturers. www.smmt.co.uk/data

Source: Society of Motor Manufacturers and Traders Limited, 4 and 24 August 2017.

4.2 Investment

Business investment in the UK: April to June 2017 provisional results [Quarterly].

Main points “Gross fixed capital formation (GFCF), in volume terms, was estimated to

have increased by 0.7% to £79.4 billion in Quarter 2 (Apr to June) 2017 from £78.9 billion in Quarter 1 (Jan to Mar) 2017.

Business investment was estimated to have been broadly unchanged at £43.8 billion in Quarter 2 2017 at 0.0%.

Between Quarter 2 2016 and Quarter 2 2017, GFCF was estimated to have increased by 2.5%, from £77.5 billion, and business investment was estimated to be broadly unchanged from Quarter 2 2016 (£43.7 billion).

http://www.smmt.co.uk/2017/08/british-car-manufacturing-rebounds-july-new-models-hit-production-lines/

http://www.smmt.co.uk/data


The sectors contributing most to GFCF growth between Quarter 1 2017 and

Quarter 2 2017 were general government, public sector dwellings and private sector transfer costs.

The assets that contributed most to GFCF growth for the same period were other buildings and structures (such as non-residential buildings, bridges,

factories and roads), along with information and communication technology (ICT) equipment and other machinery and equipment (such as computer hardware and machinery)”.

Fig 4.7 shows quarterly levels and growth rates of GFCF since 2008.

Fig 4.7: Quarterly levels and growth rates of gross fixed capital formation,

chained volume measure, seasonally adjusted, Reference year: 2013 Coverage: UK. Quarter 1 (Jan to Mar) 2008 to Quarter 2 (Apr to June 2017)

Source: ONS

Source: ONS, Business investment in the UK, April to June 2017 provisional results, 24 August 2017.

4.3 Trade and the Balance of payments

UK Trade: June 2017

Main points “Between Quarter 1 (Jan to Mar) 2017 and Quarter 2 (Apr to June) 2017,

the total trade deficit (goods and services) widened by £0.1 billion to £8.9 billion as increases in imports were closely matched by increases in

exports.

The UK’s total trade deficit (goods and services) widened by £2.0 billion

between May and June 2017 to £4.6 billion, due to increases in imports of


both goods and services; erratic commodities had little impact within the

total trade balance on the month.

Since the last UK trade release, the total trade (goods and services) deficits

for April and May 2017 have been revised down by £0.3 billion and £0.6 billion respectively; this is due to an upward revision to exports of goods in

April 2017 and downward revision to the imports of goods in May.

Comparing Quarter 2 2017 with Quarter 2 2016, UK goods export and

import prices rose by 8.2% and 7.8% respectively and sterling depreciated 8.7% over the same period.

Despite higher trade prices and weaker sterling, there were similar

increases in export and import volumes of goods, by 5.0% and 4.8%

respectively, in Quarter 2 2017 compared with the same period a year earlier”.

Fig 4.8: Balance of UK trade, June 2013 to June 2017

Source: Office for National Statistics

Source: ONS, UK Trade, Statistical Bulletin, 10 August 2017.

Balance of payments: Jan to Mar 2017. [quarterly]

Main points “The UK’s current account deficit was £16.9 billion in Quarter 1 (Jan to Mar)

2017, a widening of £4.8 billion from a deficit of £12.1 billion in Quarter 4


(Oct to Dec) 2016, due predominantly to a widening in the deficit on trade;

the current account deficit in Quarter 1 2017 equated to 3.4% of gross domestic product (GDP) at current market prices, up from 2.4% in Quarter 4 2016.

The total trade deficit widened to £8.8 billion in Quarter 1 2017 following a

sharp narrowing of the deficit in Quarter 4 2016 (£4.8 billion); this was due to a widening in the deficit on trade in goods and a narrowing in the surplus on trade in services.

The primary income deficit widened to £2.7 billion in Quarter 1 2017 from a

3-year low of £1.0 billion in Quarter 4 2016; this was due to the surplus on the direct investment balance narrowing to £5.3 billion along with the deficit on portfolio investment balance widening to £5.4 billion in Quarter 1

2017.

A current account deficit of £22.2 billion was recorded with the EU in Quarter 1 2017 whilst a surplus of £5.3 billion was recorded with non-EU countries.

The financial account shows a net inflow of £11.4 billion in Quarter 1 2017.

The international investment position shows UK net assets of £415.0 billion

at the end of Quarter 1 2017”.

Fig 4.9: UK trade in goods and services balances (seasonally adjusted),

Quarter 2 (Apr to June) 2014 to Quarter 1 (Jan to Mar) 2017

Source: ONS.

Source: ONS, Balance of payments: Jan to Mar 2017, Statistical Bulletin, 30 June 2017.

4.4 Labour market

Main points for the three months to June 2017


“Estimates from the Labour Force Survey show that, between the quarter

January to March 2017 and the quarter April to June 2017, the number of people in work increased, the number of unemployed people fell, and the number of people aged from 16 to 64 not working and not seeking or

available to work (economically inactive) also fell.

There were 32.07 million people in work, 125,000 more than for the quarter January to March 2017 and 338,000 more than for the quarter a year earlier.

The employment rate (the proportion of people aged from 16 to 64 who

were in work) was 75.1%, the highest since comparable records began in 1971.

There were 883,000 people (not seasonally adjusted) in employment on “zero-hours contracts” in their main job, 20,000 fewer than for the same

quarter a year earlier.

There were 1.48 million unemployed people (people not in work but

seeking and available to work), 57,000 fewer than for the quarter January to March 2017 and 157,000 fewer than for the same quarter a year earlier.

The unemployment rate (the proportion of those in work plus those

unemployed, that were unemployed) was 4.4%, down from 4.9% for the

same quarter a year earlier and the lowest since 1975.

There were 8.77 million people aged from 16 to 64 who were economically inactive (not working and not seeking or available to work), 64,000 fewer than for January to March 2017 and 90,000 fewer than for a year earlier.

The inactivity rate (the proportion of people aged from 16 to 64 who were

economically inactive) was 21.3%, down from 21.6% for a year earlier and the lowest since comparable records began in 1971.

Latest estimates show that average weekly earnings for employees in Great

Britain in nominal terms (that is, not adjusted for price inflation) increased

by 2.1%, both including and excluding bonuses, compared with a the same quarter year earlier.

Latest estimates show that average weekly earnings for employees in Great

Britain in real terms (that is, adjusted for price inflation) fell by 0.5%, both

including and excluding bonuses, compared with a the same quarter a year earlier”.

Source: Office for National Statistics, Labour Market Statistics, Statistical Bulletin, 16 August 2017.

4.5 Housing UK house prices – June 2017 [House prices are now calculated using a new methodology]

UK all dwellings


“Average house prices in the UK have increased by 4.9% in the year to June

2017 (down from 5.0% in the year to May 2017). The annual growth rate has slowed since mid-2016 but has remained broadly around 5% during 2017.

Fig 4.10: Annual house price rates of change, UK all dwellings from January 2006 to June 2017

Source: HM Land Registry, Registers of Scotland, Land and Property Services Northern Ireland and Office for National Statistics

The average UK house price was £223,000 in June 2017. This is £10,000 higher than in June 2016 and £2,000 higher than last month.


Fig 4.11: Average UK house price, January 2005 to June 2017

Source: HM Land Registry, Registers of Scotland, Land and Property Services

Northern Ireland and Office for National Statistics

House price index, by UK country

The main contribution to the increase in UK house prices came from England, where house prices increased by 5.2% over the year to June 2017, with the

average price in England now £240,000. Wales saw house prices increase by 3.6% over the last 12 months to stand at £152,000. In Scotland, the average price increased by 2.9% over the year to stand at £144,000. The average price

in Northern Ireland currently stands at £129,000, an increase of 4.4% over the year to Quarter 2 (Apr to June) 2017”.


Fig 4.12: Average house price, by UK country, January 2005 to June 2017

Source: Land Registry, Registers of Scotland, Land and Property Services Northern

Ireland and Office for National Statistics

UK sales decreased from 83,652 in March to 69,545 in April, down 16.7%. Month on year totals were up 3.6% from 67,025 to 69,545.

Source: ONS/Land Registry, 15 August 2017. Source: House price data supplied by Land Registry © Crown copyright 2017.

UK Finance24

Mortgage arrears and possessions fell again in the second quarter The number of mortgages in arrears of 2.5% or more of the outstanding balance

declined to 88,200 in the second quarter of this year, the lowest level since at least 1994 when this run of data began. The total was 5% lower than in the first

quarter (92,600) and amounted to 0.8% of the more than 11 million mortgages outstanding in the UK.

The number of properties taken into possession also declined in the second quarter from 1,900 to 1,800 (accounting for 0.02% of all mortgages). The total

was the same as in the final quarter of last year, and is the lowest figure since quarterly data was first published in 2008.

Commenting on the data, UK finance head of mortgages Paul Smee said: “These figures show that the overwhelming majority of borrowers are managing

their mortgage payments successfully, and many of those who have experienced some difficulty in the past are able to recover their financial position. The recent

improvement in the number of mortgages with high levels of arrears is

24

Formerly Council of Mortgage Lenders


particularly welcome.

Borrowers are being helped by low interest rates, but mortgage costs are certain to rise at some stage. It is important therefore for customers to plan ahead and

consider how their finances would be affected in those circumstances. As ever, lenders will continue to help borrowers resolve any financial difficulty if possible,

so customers should not hesitate to contact their lender if they anticipate any payment problems”.

Source: UK Finance, 10 August 2017.

Gross mortgage lending £23 billion in July “UK Finance also estimates that overall gross mortgage lending in July was £23.0 billion. Accounting for seasonal factors, this figure is above the average

lending figures seen over the past year.

First-time buyers and remortgage activity on the part of homeowners has supported lending for some time, but we anticipate the pace of growth to slow slightly, dampened by a potentially more challenging economic outlook”.

Commenting on the data, Eric Leenders Head of Personal at UK Finance

said: “Steady levels of mortgage activity seen through the first half of the year continued into July. First-time buyer numbers continue to be strong, helped in part by government schemes. But that has been offset by home movers,

where a shortage of homes on the market is limiting their activity”.


First-time buyer activity continues to grow in June

• “First-time buyers borrowed £5.9bn, up 26% on the previous month and 9% on June 2016. This equated to 36,000 loans, up 22% month-on-month

and 6% year-on-year. • Home movers borrowed £7.8bn, up 26% on May and 15% year-on-year.

This equated to 36,500 loans, up 24% month-on-month and 9% compared to a year ago.

• Home-owner remortgage activity totalled £6bn, up 5% by value on May

and 7% on a year ago. The number of remortgage loans totalled 34,300, up 5% month-on-month and 6% on a year ago.

• Gross buy-to-let totalled £3.0bn, up 3% on May and up 3% compared to June 2016. These equated to 19,700 loans, up 3% month-on-month and 6% year-on-year”.

Paul Smee, Head of Mortgages at UK Finance, commented: “June's figures

show a busy month in the mortgage market, with home movers having their highest monthly activity levels for over a year and an especially high number of loans for first time buyers. Buy-to-let activity remains subdued compared to its

2015 peak but consistent month-to-month since stamp duty changes in April 2016. But there are also signs of a softening market and we are not anticipating

that this performance will be sustained in the second half of 2017. A slightly lop-sided market could well show some growth in house purchase lending but alongside reduced remortgage and buy-to-let activity”.



4.6 Consumer and retail

Consumer trends, UK: Quarter 1 (Jan to Mar) 2017 Main points

“Unless otherwise stated all figures are chained volume measure, seasonally adjusted.

In Quarter 1 (Jan to Mar) 2017, household spending (adjusted for inflation)

grew by 0.4% compared with Quarter 4 (Oct to Dec) 2016.

The main contribution to growth can be seen in “Miscellaneous goods and

services”, which has increased by 2.1% compared with Quarter 4 2016. Household spending grew 2.6% in Quarter 1 2017, when compared with

Quarter 1 2016.

In Quarter 1 2017, current price spending increased by 0.9% compared

with Quarter 4 2016”.

Fig 4.13: Quarterly household final consumption expenditure total (£ billion), seasonally adjusted, UK, Quarter 1 (Jan to Mar) 1997 to Quarter 1 (Jan to Mar) 2017

Source: ONS.

Source: ONS, Consumer Trends, Quarter 1 (Jan to Mar) 2017), Statistical Bulletin, 30 June 2017.


Retail Sales: July 2017 – volume shows 1.3% annual increase

Main points “In July 2017, the quantity bought (volume) in retail sales increased by

0.3% compared with the previous month, due to strong sales in food stores

at 1.5%; recovering from a fall of 1.1% in June 2017.

All other sectors except food and household goods stores declined on the month for the quantity bought in retail sales.

The underlying pattern in the quantity bought, measured by the 3 month on 3 month estimate, shows an increase of 0.6%.

The quantity bought increased by 1.3% compared with July 2016; the 51st

consecutive year-on-year increase in retail sales since April 2013.

Online sales increased year-on-year by 15.1% and by 0.3% on the month,

accounting for approximately 16.0% of all retail spending”.

Fig 4.14: Rolling 3 month on 3 month, seasonally adjusted sales volumes, values and implied deflator, non-seasonally adjusted, Great Britain, January 2012 to July 2017

Source: Monthly Business Survey – Retail Sales Inquiry, Office for National Statistics.

Source: ONS, Retail Sales, Statistical Bulletin, 17 August 2017.


4.7 Price inflation

UK consumer price inflation: July 2017 at +2.6% Main points

“The Consumer Prices Index (CPI) 12-month rate was 2.6% in July 2017, unchanged from June 2017.

The Consumer Prices Index including owner occupiers’ housing costs 12-

month inflation rate was 2.6% in July 2017, unchanged from June 2017.

CPIH was re-designated as a National Statistic on 31 July 2017.

The price of motor fuel continued to fall and provided the largest downward

contribution to change in the rate between June 2017 and July 2017.

This was offset by smaller upward contributions from a range of goods and

services, including clothing, household goods, gas and electricity, and food and non-alcoholic beverages.

Fig 4.15 CPIH, OOH component and CPI 12-month rates for the last 10 years: July 2007 to July 2017”.

Fig 4.15: CPIH, OOH and CPI, July 2007 to July 2017, UK


Source: ONS, Consumer Price Indices, Statistical Bulletin, 15 August 2017.


Producer Price Inflation: July 2017 shows 3.2% annual increase

Main points “The annual rate of inflation for goods leaving the factory gate slowed for

the third time this year, mainly as a result of 2016 price movements

dropping out of the annual comparison.

Factory gate prices (output prices) rose 3.2% on the year to July 2017,

from 3.3% in June 2017, which is a 0.5 percentage points decline from their recent peak of 3.7% in February and March 2017.

Prices for materials and fuels (input prices) rose 6.5% on the year to July

2017, from 10% in June 2017; as per factory gate prices, the drop in July’s rate is due to 2016 price movements dropping out of the annual

comparison.

Food production continued to be the main source of upward contributions to input and output price inflation fuelled by rising prices for home food

materials and food products respectively.

Fig 4.16 shows input and output Producer Prices Indices (PPI) across the past 15

years. Looking at the trend across the period it can be seen that the two indices behave differently. Input PPI is mostly driven by commodity prices, which tend

to be more volatile over time compared with prices for finished goods. Input PPI is also sensitive to exchange rate movements as roughly two-thirds of inputs into the UK manufacturing sector are imported, which is reflected in the weight

of imported materials and fuels in the index”.

Fig 4.16: Input PPI and output PPI, July 2002 to July 2017, UK.

Source: ONS

Source: ONS, Producer Price Inflation, Statistical Bulletin, 15 August 2017.


4.8 Finance

Public sector finances – July 2017

Main points “Public sector net borrowing (excluding public sector banks) increased by

£1.9 billion to £22.8 billion in the current financial year-to-date (April 2017 to July 2017), compared with the same period in 2016.

The Office for Budget Responsibility (OBR) forecast that public sector net

borrowing (excluding public sector banks) will be £58.3 billion during the

financial year ending March 2018.

Public sector net borrowing (excluding public sector banks) was in surplus by £0.2 billion in July 2017, the first July surplus since 2002, while borrowing in July 2016 was £0.3 billion.

Public sector net borrowing (excluding public sector banks) decreased by

£27.0 billion to £45.1 billion in the financial year ending March 2017 (April 2016 to March 2017) compared with the financial year ending March 2016; this is the lowest net borrowing since the financial year ending March 2008.

The Office for Budget Responsibility (OBR) forecast that public sector net

borrowing (excluding public sector banks) would be £51.7 billion during the financial year ending March 2017.

Public sector net debt (excluding public sector banks) was £1,758.3 billion at the end of July 2017, equivalent to 87.5% of gross domestic product

(GDP), an increase of £143.9 billion (or 4.5 percentage points as a ratio of GDP) on July 2016.

Public sector net debt (excluding both public sector banks and Bank of

England) was £1,614.2 billion at the end of July 2017, equivalent to 80.3%

of GDP; an increase of £43.9 billion (or a decrease of 0.4 percentage points as a ratio of GDP) on July 2016.

Central government net cash requirement decreased by £25.5 billion to

£4.4 billion in the current financial year-to-date (April 2017 to July 2017),

compared with the same period in 2016, largely as a result of two large cash transactions; this is the lowest year-to-date central government net

cash requirement since 2002”.


Fig 4.17: UK public sector borrowing excluding public sector banks, April 1993 to

July 2017


Source: ONS and Treasury, Public sector finances July 2017, Statistical Bulletin,

22 August 2017.

4.9 Business Surveys and barometers Confidence surveys, with information generally released ahead of official statistical data, can indicate changes to the economic outlook as well as turning

points in the economic cycle. [House of Commons, Economic Indicators update].

Lloyds bank England and Wales regional PMI®: July - third quarter

starts with rises in business activity and employment

Key findings “England sees sustained moderate growth in business activity at start of

third quarter

Wales maintains its recent strong performance thanks to pipeline of new

orders

Yorkshire & Humber and West Midlands remain top-performing regions overall while the North East sees a decrease in business activity

Employment growth picks up to 18-month high”

Tim Hinton, Managing Director and Head of Mid-Markets and SME Banking, Lloyds Banking Group said: “Business activity continued to grow at a steady pace in July similar to the previous month’s performance. Job creation

improved to show the strongest rise in employment for 18 months, boosted by


particularly strong growth in the West Midlands and Yorkshire & Humber. Strong

price pressures remain a concern for businesses with costs rising at a faster rate for a second month in a row which is feeding through to higher prices for goods and services”.

Source: Markit, Lloyds Bank England Regional PMI, 14 August 2017.

Markit/CIPS UK Manufacturing PMI®: July - UK manufacturing boosted by near survey-record growth of new export orders

Key findings

“UK Manufacturing PMI ticks up to 55.1 in July

Solid new order intakes boosted by strong export performance

Job creation among best recorded in past three years”

Rob Dobson, Senior Economist at IHS Markit, which compiles the survey, said: “UK manufacturing started the third quarter on a solid footing. The headline

PMI signalled a growth acceleration for the first time in three months during July, as new order intakes were boosted by a near survey-record increase in new

export business. Although the exchange rate remains a key driver of export growth, manufacturers also benefitted from stronger economic growth in key markets in the euro area, North America and Asia-Pacific regions.

Continued expansion is also still filtering through to the labour market, with the

latest round of manufacturing job creation among the best seen over the past three years. Price pressures also continued to ease in July, as the rates of input cost and output charge inflation both slowed further. Input prices rose at the

weakest pace in over a year, down substantially from the record high seen at the start of the year. If this trend of milder price pressures is also reflected in other

areas of the UK economy, this should provide the Bank of England sufficient lee-way to maintain its current supportive stance until the medium-term outlook for economic growth becomes less uncertain”.

Source: IHS Markit, Markit/CIPS, UK Manufacturing PMI, 1 August 2017.

Markit/CIPS UK Construction PMI: July - Construction growth eases to 11-month low in July amid weakness in commercial building

Key findings

“Weakest construction performance since August 2016

Commercial work falls at fastest pace for 12 months

New orders decline”

Tim Moore, Senior Economist at IHS Markit and author of the

Markit/CIPS Construction PMI®, said: “July data reveals a growth slowdown in the UK construction sector, mainly driven by lower volumes of commercial development and a loss of momentum for house building. Weaker contributions

from the cyclically sensitive areas of construction activity more than offset resilience in the civil engineering sector.


Worries about the economic outlook and heightened political uncertainty were

key factors contributing to subdued demand. Construction firms reported that clients were more reluctant to spend and had opted to take longer in committing to new projects.

There was a knock-on impact for job creation and input buying following the

largest downturn in order books since August 2016. However, supply chain pressures remained intense, reflecting low stocks among vendors, and materials prices continued to rise at one of the fastest rates seen for six years.

The combination of weaker order books and sharply rising construction costs

gives concern that an extended soft patch for the construction sector may be on the horizon”.

Source: IHS Markit, Markit/CIPS, UK Construction PMI, 2 August 2017.

Market / CIPS UK Services PMI®: July - Marginal improvement in

service sector growth

Key findings “Activity growth picks up slightly from June’s four-month low

Employment numbers rise at fastest pace since January 2016 Optimism regarding the business outlook remains subdued”

Chris Williamson, Chief Business Economist at IHS Markit, which

compiles the survey, said: “The service sector PMI indicates that businesses remain in expansion-mode despite heightened uncertainty about the outlook, but also highlights how the risks to future growth remain firmly biased to the

downside.

Taken together, the three PMI surveys are broadly consistent with economic growth of just over 0.3%, putting the country on course for another steady but sluggish expansion in the third quarter.

However, while the current picture remained one of an economy showing overall

resilience in the face of concerns about the outlook, the subdued level of business optimism suggests it’s likely that growth will at least remain modest and could easily weaken in coming months.

Firms’ prospects for the coming year have slipped to a level which has previously

been indicative of the economy stalling or even contracting, having taken a lurch downward since the general election, largely reflecting heightened uncertainty about the economic outlook and Brexit process”.

Source: IHS Markit, Markit/CIPS, UK Services PMI, 3 August 2017.

Report on Jobs: July - Staff appointments increase at fastest rate for over two years as candidate availability drops

Key points

“Permanent placements growth reaches 27-month record Temp billings increase at the fastest rate for nearly two-and-a-half years

Marked decline in staff availability contributes to further increases in pay ”


Kevin Green, REC Chief Executive says: “The jobs market continues to

confound expectations with both permanent and temporary placements growing at the fastest rate for over two years. Starting salaries are also still rising, so for workers who want to boost their earnings now is a good time to consider moving

job.

It's clear that employers are having to work even harder to fill jobs as vacancies rise and candidate availability shrinks. UK employment remains at an all-time high and looks set to keep improving. The parts of the economy most reliant on

European workers are under even more pressure as many EU workers return home. Employers are not just struggling to hire the brightest and the best but

also people to fill roles such as chefs, drivers and warehouse workers. London in particular is feeling the Brexit effect. Hiring is still growing but at a

much slower rate compared with every other region of the UK. Financial services, a crucial part of the London labour market, are not hiring in their usual

quantity as the uncertainty caused by Brexit makes them hesitant. We can’t ignore the importance of our relationship with the EU to employers. If

we want to keep our jobs market successful and vibrant, we must make it easier, not harder, for employers to access the people they need”.

Source: IHS Markit, Report on Jobs, 8 August 2017. Lloyds Business Barometer: August - business confidence falls to one-

year low

Key points “Overall business confidence fell 13 points to a one-year low of 17%

Economic optimism fell by 12 points to 5%, the lowest level since June

2016

Confidence in business prospects decreased by 14 points to 29%, lowest

level for 3 months

Firms’ intentions to hire stayed positive, edging up by 2 points to 27%”

Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, commented: “The August report shows that overall business confidence has

fallen to the lowest level for 12 months, with sentiment weakest among consumer-facing firms. While confidence overall is now just under the long term average, firms’ hiring plans remain robust”.

Source: Lloyds Business Barometer, 31 August 2017.

4.10 Consumer Surveys and barometers

Household Finance Index: August - UK household finances remain under pressure

Key points “UK household budgets continue to deteriorate sharply during August


Elevated inflationary pressures contrasted with subdued pay growth

Concerns about job security were the least widespread since the end of

2015”

Sam Teague, economist at IHS Markit, which compiles the survey, said: “Despite easing slightly since the three-year peak previously recorded, UK

households continued to face a sharp budget squeeze in August, driven by sustained inflation and weak pay growth.

Households continued to report a greater need for unsecured borrowing to bridge the gap between pay growth and inflation. The sharp drop in the number

of people expecting a Bank of England base rate rise in the near future provides an indication that households expect lending conditions to remain accommodative.

On the bright side, receding concerns about job security were recorded in

August, suggesting that labour market conditions have continued to improve this summer”.

Source: IHS Markit Economics, Household Finance Index, 21 August 2017.

House Price Sentiment Index: August - House price sentiment ticks up

Key findings

“Households across the UK perceive that the value of their home rose over the last month

The perceived rate of house price growth was higher than in July

Respondents in ten of the 11 regions said the value of their home rose over the course of the month

Households in all regions expect the value of their home to increase over the next 12 months, according to the future HPSI

The future HPSI reading rose slightly in August, with households in the South East and East of England the most confident about price growth”

Oliver Knight, an Associate in Knight Frank’s Residential Research team,

said: “Despite a slight pick-up in both current and future house price sentiment in August, the HPSI still remains subdued across all regions when compared with

its peak in April 2014. This is consistent with wider housing market indicators, all of which point to a continued slowdown in house price growth.

Indeed, the housing market is characterised by constrained activity at present, as uncertainty over the country’s economic path and the burden of property

taxes at the top end of the market weigh on transactions. However, low mortgage rates and a lack of homes coming onto the market for sale are underpinning pricing”.

Alex Gill, economist at IHS Markit, said: “House price sentiment in the UK

edged-up for the second successive month in August, with the strongest perceived rise evident in commuter belt areas such as the South East and the East of England. Nonetheless, sentiment remained subdued relative to the last

four years of data.


Household expectations about future property price rises also strengthened, but

remained well below the levels seen throughout 2014-2015. In line with the trend for current prices, sentiment regarding future house price growth weakened in the capital, perhaps indicative of affordability constraints and

London’s greater exposure to Brexit uncertainty, although Londoners are still expecting prices to rise over the next 12 months.

The slight rebound in household confidence regarding house price growth can, at least in part, be attributed to expectations that interest rates will stay low for

longer. This follows the release of weaker than expected inflation data which adds to the argument that the Bank of England will be more focused on

stimulating economic growth than curbing inflation”. Source: IHS Markit Economics/Frank Knight, House Price Sentiment Index,

August 2017.

GfK Consumer Confidence Index - August: up two points “GfK’s long-running Consumer Confidence Index increased by two points to -10 in August. All five measures saw an increase“.

Joe Staton, Head of Market Dynamics at GfK, says: “UK Consumer Confidence rebounded to -10 this month after the score of -12 we reported in

July that matched 2016’s post-Brexit low. We’re seeing an uptick in August among consumers when reviewing their personal financial situation for both the past and next 12 months, as well as a slight improvement in views about the

general economic situation of the country as a whole. These figures must be seen against the backdrop of better news on inflation, public finances, jobs and

growth prospects as the UK economy displays some signs of stability after a volatile start to the year. However, the Index has a lot of ground to regain to get back to black. So is this month’s rise significant? Or could we simply be

witnessing a dead-cat-bounce over the dog-days of summer?”

Details below.

Table 4.1: Confidence Measure Aug

2016

July

2017

Aug

2017

Monthly

change

Yearly

change

Overall Index Score -7 -2 -10 -8 -3

Personal Financial situation

(last 12 months) 0 -2 2 4 2

Personal Financial situation

(Next 12 months) 4 2 5 3 1

General Economic situation

(Last 12 months) -23 -31 -30 1 -7

General Economic situation

(Next 12 months) -22 -28 -27 1 -5

Major purchase 7 -1 0 1 -7


Trends over the last year are shown below.

Fig 4.18: Index trends

[CCB – Consumer Confidence Barometer]. ‘Research carried out by GfK on behalf of the European Commission’.

Source: GfK NOP Limited, Press Release, 30 August 2017.


5 International

5.1 EU Data releases – monthly Industrial producer prices: June 2017 compared with June 2016

“In June 2017, compared with June 2016, industrial producer prices rose by 2.6% in the EU28.

Annual: The largest increases in industrial producer prices were recorded in Belgium (+6.4%), Cyprus (+5.7%), the United Kingdom (+4.7%) and Poland

(+3.7%), while a price decrease was observed in Luxembourg (-3.2%)”.

Source: Eurostat News Release, 124/2017 - 2 August 2017. Retail Trade: June 2017 compared with June 2016

“In June 2017 compared with June 2016 the calendar adjusted retail sales index increased by 3.1%.

Annual: Among Member States for which data are available, the highest increases in the total retail trade volume were registered in Slovenia (+10.2%),

Croatia (+8.2%) and Slovakia (+8.1%), while a decrease was observed in Luxembourg (-25.8%)”.

Source: Eurostat News Release, 125/2017 - 3 August 2017.

Industrial Production: June 2017 compared with June 2016 “In June 2017 compared with June 2016, industrial production increased by

2.9% in the EU28. Annual: Among Member States for which data are available, the highest

increases in industrial production were registered in Estonia (+14.5%), Romania (+11.5%) and Sweden (+8.9%). Decreases were observed in Ireland (-8.1%)

and Malta (-1.3%)”. Source: Eurostat News Release, 126/2017 - 14 August 2017.

Construction: June 2017 compared with June 2016

“In June 2017 compared with June 2016, production in construction increased by 3.6% in the EU28.

Annual: Among Member States for which data are available, the highest increases in production in construction were recorded in Hungary (+27.2%),

Slovenia (+21.2%), Sweden (+17.3%) and Poland (+13.4%). Decreases were observed in Romania (-6.3%) and Slovakia (-0.5%)”.


Annual inflation: July 2017 “European Union annual inflation was 1.5% in July 2017, stable compared to

June 2017. A year earlier the rate was 0.2%. The lowest annual rates were registered in Ireland (-0.2%), Cyprus (-0.1%), Bulgaria and Finland (both 0.6%). The highest annual rates were recorded in Lithuania (4.1%), Estonia

(3.9%), Latvia and the United Kingdom (both 2.6%). Compared with June 2017,


annual inflation fell in four Member States, remained stable in eight and rose in

sixteen”.


Unemployment: June 2017 “The EU28 unemployment rate was 7.7% in June 2017, stable compared to May

2017 and down from 8.6% in June 2016. This remains the lowest rate recorded in the EU28 since December 2008.

Eurostat estimates that 18.725 million men and women in the EU28, were unemployed in June 2017. Compared with May 2017, the number of persons

unemployed decreased by 183 000 in the EU28. Compared with June 2016, unemployment fell by 2.368 million in the EU28.

Member States: Among the Member States, the lowest unemployment rates in June 2017 were recorded in the Czech Republic (2,9%), Germany (3.8%) and

Malta (4.1%). The highest unemployment rates were observed in Greece (21.7% in April 2017) and Spain (17.1%). Compared with a year ago, the unemployment rate fell in all Member States for which data is comparable over

time, except Estonia which showed an increase (from 6.5% in May 2016 to 6.9% in May 2017). The largest decreases were registered in Spain (from 19.9% to

17.1%) and Croatia (from 13.3% to 10.6%). In June 2017, the unemployment rate in the United States was 4.4%, up from

4.3% in May 2017 but down from 4.9% in June 2016”.

Source: Eurostat News Release, 121/2017 – 31 July 2017.

Unemployment: July 2017 “The EU28 unemployment rate was 7.7% in July 2017, stable compared to June

2017 and down from 8.5% in July 2016. This remains the lowest rate recorded in the EU28 since December 2008.

Eurostat estimates that 18.916 million men and women in the EU28, were unemployed in July 2017. Compared with June 2017, the number of persons

unemployed increased by 93 000 in the EU28. Compared with July 2016, unemployment fell by 1.928 million in the EU28.

Member States: Among the Member States, the lowest unemployment rates in July 2017 were recorded in the Czech Republic (2.9%), Germany (3.7%) and

Malta (4.1%). The highest unemployment rates were observed in Greece (21.7% in May 2017) and Spain (17.1%). Compared with a year ago, the

unemployment rate fell in all Member States for which data is comparable over time, except Finland where it remained stable. The largest decreases were registered in Croatia (from 13.2% to 10.6%), Spain (from 19.6% to 17.1%),

Slovakia (from 9.7% to 7.3%) and Cyprus (from 13.0% to 10.8%).

In July 2017, the unemployment rate in the United States was 4.3%, down from 4.4% in June 2017 and from 4.9% in July 2016”.



Employment: June 2017

“The EU28 unemployment rate was 7.7% in June 2017, stable compared to May 2017 and down from 8.6% in June 2016. This remains the lowest rate recorded in the EU28 since December 2008. Eurostat estimates that 18.725 million men

and women in the EU28 were unemployed in June 2017. Compared with May 2017, the number of persons unemployed decreased by 183 000 in the EU28.

Compared with June 2016, unemployment fell by 2.368 million in the EU28.

Member States: Among the Member States, the lowest unemployment rates in June 2017 were recorded in the Czech Republic (2.9%), Germany (3.8%) and

Malta (4.1%). The highest unemployment rates were observed in Greece (21.7% in April 2017) and Spain (17.1%). Compared with a year ago, the

unemployment rate fell in all Member States for which data is comparable over time, except Estonia which showed an increase (from 6.5% in May 2016 to 6.9% in May 2017). The largest decreases were registered in Spain (from 19.9% to

17.1%) and Croatia (from 13.3% to 10.6%).

In June 2017, the unemployment rate in the United States was 4.4%, up from

4.3% in May 2017 but down from 4.9% in June 2016”.

Source: Eurostat News Release, 121/2017 - 31 July 2017.

5.2 Markit Eurozone Composite PMIs Markit Eurozone Composite PMI®– final data, July: Eurozone economic

growth slows at start of third quarter

Key findings:

“Final Eurozone Composite Output Index: 55.7 (Flash: 55.8, June Final: 56.3)

Final Eurozone Services Business Activity Index: 55.4 (Flash: 55.4, June

Final: 55.4)”

Comment: Chris Williamson, Chief Business Economist at IHS Markit

said: “The surveys indicated a slight cooling in the pace of growth in July, but this is still an encouragingly upbeat picture of business conditions. The elevated PMI reading puts the eurozone economy on course for another strong quarter,

the data being historically consistent with a very respectable 0.6% qr/qr increase in GDP.

Of the four largest euro members, only Italy recorded faster growth in July, pushing the PMI into territory consistent with 0.5% quarterly GDP growth. Spain nevertheless continued to record the strongest overall expansion, with the PMI

indicative of 0.9% growth.

The slowdown in Germany meant it registered the weakest increase in activity of

the four largest euro countries for the first time in over 12 years, though the ten-month low PMI reading still points to a 0.4- 0.5% GDP growth rate.

A loss of momentum in France also pushes the PMI down to a level broadly consistent with 0.4- 0.5% growth. While all countries continued to see ongoing robust growth as we move into the second half of 2017, the overall slowing in

the rate of expansion will add a note of caution to ECB policymaking, though the underlying message is likely to be one of guarded optimism about the outlook”.

Source: IHS Markit, Markit Final Eurozone Composite PMI – final data, 3 August 2017.


Markit Flash Eurozone PMI®: August - Manufacturing sector supports

further strong expansion of eurozone economy Key findings

PMI Composite Output Index at 55.8 (55.7 in July). 2-month high.

Services PMI Activity Index at 54.9 (55.4 in July). 7-month low. Manufacturing PMI Output Index at 58.1 (56.5 in July). 2-month high.

Manufacturing PMI at 57.4 (56.6 in July). 2-month high.

Comment Andrew Harker, Associate Director at IHS Markit said: “The latest PMI readings for the eurozone signal a continuation of the recent

strong performance of the currency bloc’s economy. This stabilisation in the rate of expansion is pleasing, following signs of growth easing in recent months. The

survey data over the first two months of the quarter are consistent with only a fractional easing in the rate of growth of GDP from the 0.6% rise in Q2.

There was further evidence of growth cooling in the service sector, where both business activity and new orders rose at the weakest rates since January.

However, this was counterbalanced by further impressive manufacturing data as goods producers were able to secure new export orders at the fastest pace in six-and-a-half years. Stronger order inflows added to capacity pressures, with

manufacturing backlogs increasing to the greatest extent since mid-2006. This bodes well for the labour market as firms will likely look to hire extra staff to

deal with outstanding work. Both input costs and output prices increased at faster rates in August. The rise in

charges was modest and weaker than those seen earlier in the year, however, and will therefore be of little concern to the ECB.

Overall, this is another positive set of numbers for the euro area, which

continues to enjoy its best growth spell for a number of years”. Source: IHS Markit, Markit Flash Eurozone PMI, 23 August 2017.

www.markiteconomics.com/Survey/Page.mvc/PressReleases

5.3 EU Quarterly data Q2 GDP “Seasonally adjusted GDP rose by 0.6% in the EU28 during the second quarter

of 2017, compared with the previous quarter. In the first quarter of 2017, GDP grew by 0.5%. Compared with the same quarter of the previous year, seasonally

adjusted GDP rose by 2.3% in the EU28 in the second quarter of 2017, after +2.1% in the previous quarter.

During the second quarter of 2017, GDP in the United States increased by 0.6% compared with the previous quarter (after +0.3% in the first quarter of 2017)”.


http://www.markiteconomics.com/Survey/Page.mvc/PressReleases


5.4 Global data

Developments in international trade and industrial production: June 2017

“World trade volume increased 0.5% month-on-month (growth was 1.9%

in May, initial estimate 2.0%) and 0.4% in 2017Q2 (1.4% in 2017Q1).

• World trade momentum was 0.4% (non-annualised; 0.7% in May, initial estimate 1.0%).

• World industrial production grew 0.4% month-on-month (0.4% in May, initial estimate 0.1%) and 1.2% in 2017Q2 (0.6% in 2017Q1).

• World industrial production momentum was 1.2% (non-annualised; 1.0% in

May, initial estimate 0.7%)”.

Source: Central Planning Bureau, Netherlands Bureau for Economic Policy

Analysis, CPB Memo, World trade monitor, 25 August 2017.


6 Notes and information

6.1 UK Finance – formerly Council of Mortage Lenders

“This release includes data from High Street banks previously published by the BBA and mortgage market commentary previously published by the

Council of Mortgage Lenders. Figures referred to as ‘High Street Banks’ in this release relate to the UK

activity of 21 institutions across the banking groups of Barclays, HSBC

Bank, Lloyds Banking Group, Royal Bank of Scotland Group, Santander UK, TSB and Virgin Money.

Gross lending estimate is based on activity by all mortgage lenders.

UK Finance is a new trade association which was formed on 1 July 2017 to

represent the finance and banking industry operating in the UK. It represents around 300 firms in the UK providing credit, banking, markets and payment-

related services. The new organisation brings together activities previously carried out by the Asset Based Finance Association, the British Bankers’ Association, the Council of Mortgage Lenders, Financial Fraud Action UK,

Payments UK and the UK Cards Association”.

Source: UK Finance.


Please note text in quotation marks is a direct quote from the source.

Prepared by:

Economic Growth Service.

If you would like this information in another format please contact:

Cornwall Council Level 5, Zone A, Pydar House,

Pydar Street, Truro,

TR1 1XU.

Telephone: 0300 1234 100

Email: [email protected]

www.cornwall.gov.uk

mailto:[email protected]

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Economy Monitoring - Cornwall...Economy Monitoring Monthly Update, August 2017 2 741 were down on the March total of 839, but up 15.1% on the April 2016 figure. In August there were