A slight increase in growth shifts the region off the bottom of the national rankings, SW productivity contracts but regional employment still the best in the UK

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For the 12 months ended December 2019, a nowcast published by the Economic Statistic Centre of Excellence (‘ESCoE’) on a rolling 4 quarter basis, has estimated that the SW’s growth has uplifted from 0.4% to 0.6%. ESCoE is a partnership of research institutions and the Office for National Statistics (‘ONS’).

This ranked the SW eleventh (previous ranking twelfth) and suggests the region has marginally improved relative to the other eleven parts of the UK. Over the same period UK growth was 1.4%; growth in London (ranked first) was 3.3%; and growth in the East Midlands (ranked twelfth) was 0.1%.

The latest official ONS figures for an earlier period are better. Following its first publication of quarterly GDP estimates for the regions in September 2019, the ONS has now published its third estimate for the SW the other eight English regions, and Wales. GDP figures have been available for the UK since the 1940s, for Scotland since 2002 and Northern Ireland since 2013.

These stats are for the period six months before the ESCoE estimates shown above and compare GDP in the quarter ended June 2019 with the same quarter a year earlier. These more volatile figures showed the SW economy grew by 0.6%, down from 1% growth the previous quarter. This placed the SW seventh (previous ranking tenth) out of the twelve UK ‘regions.’

London topped the table with growth of 4.5% whilst UK growth over the same period was 1.4%. The NW was the worst performer and contracted by 0.7%, one of three ‘regions’ in the UK to suffer a decline.

In the same report, the ONS’s figures highlighted that the standalone quarter to June 2019 was much worse for the region than the previous quarter. The SW economy contracted by 0.6% in April to June 2019, following growth of 0.9% in January to March 2019.

This placed the SW eighth (previous ranking second) out of the twelve UK ‘regions’. Six regions of the UK saw their economies contract as did the UK overall by 0.2%.

In this period, finance and administrative/support service activities both grew by 3.4% and 3.5% respectively but education and manufacturing fell by 4.4% and 2.3%.

In general all sectors in the SW fell, with construction, production, agriculture and services falling 2.3%, 2.2%, 1.3% and 0.2% respectively. Growth in the last two years in the services sector has remained stable relative to 2017 but the construction sector has fallen steadily since Quarter 4 (Oct to Dec) 2017.

Productivity

Like most regions of the UK, output per hour in the SW was below the UK average. Productivity in the SW was 9.8% under the norm which ranked the region sixth in the UK.

Two regions had productivity above the UK average in 2018, London +31.6% and the South East +9.1%. These regions record high levels of hours worked and their high productivity pulls up the UK average so much that all other regions fall below it. Wales was furthest off the average at -17.2%.

The SW moved down the rankings to eighth in terms of output per job. This means that on average workers in the SW worked shorter hours for each job compared with the UK average. The region’s 14.5% below the UK average compared with London at 40.5% above.

In terms of growth in output per hour, six regions of the UK expanded. The SW was ranked eighth as output per hour contracted by 0.7%. At 2.3% growth was fastest in Scotland and the biggest contraction was in Yorkshire and the Humber at 2.5%. UK growth was 0.5%.

Sectorally, productivity in administrative/support services was better than expected but arts/entertainment/recreation disappointed.

On average, in 2018 the UK economy produced about £35 of value for each hour worked, with finance and insurance top at c£69 per hour compared with accommodation and service activities productivity at c£17 per hour.

Labour

More data from the ONS showed unemployment in the region increased by 5,000 to 80,000 between October and December; the uplift of 0.2% took the rate to 2.8%. Northern Ireland had the lowest rate of 2.4%, with the UK rate at 3.8%. The highest rate was 6.1% which was recorded in the North East.

Despite a drop of 62,000 the South West still had the highest employment rate at 80.1% or 2.8m in employment; the UK rate was 76.5%.

In December, average earnings in the SW fell by £13 to £582 per week. London had the highest average earnings of £805 and the lowest average earnings of £530 were recorded in the NE. The SW was ranked seventh (previous ranking fifth).

In the UK overall, average earnings grew by 2.9% or by 1.4% after inflation. After adjusting for inflation, regular pay is now at its highest level since 2000, whereas total pay (which includes bonuses) is still 3.7% below its peak in February 2008.

Housing

The SW’s average property price increased by 1.3% over the month to £262,286, the uplift took the annual increase to 2.2%. In comparison, UK prices increased by 0.3% to £234,742 during September, an annual growth rate of 2.2%.

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