In Q2 2019 the WM economy reverses and plummets down the UK rankings but regional productivity grows above the UK average and WM earnings now ranked fifth

Reading Time: 3 minutes

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 WM’s growth has dropped from 1% to 0.8%. ESCoE is a partnership of research institutions and the Office for National Statistics (‘ONS’).

This ranked the WM ninth (previous ranking also ninth) and suggests the region has maintained its position 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 much worse. Following its first publication of quarterly GDP estimates for the regions in September 2019, the ONS has now published its third estimate for the WM 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 WM economy contracted by 0.6%, down from 2.3% growth the previous quarter. This placed the WM eleventh (previous ranking fourth) 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’ (including the WM) in the UK to suffer a decline.

In the same report, there was no surprise that the ONS’s figures also highlighted that the standalone quarter to June 2019 was also poorer for the region than the previous quarter. The WM economy contracted by 1.6% in April to June 2019, following growth of 0.2% in January to March 2019.

This placed the WM eleventh (previous ranking seventh) 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, the WM’s finance sector grew 6.9% but human health/social work activities and administrative/support service activities fell by 3.4% and 4.8%.

In general all sectors in the region shrank, with production, construction, services and agriculture sectors all falling by 2.6%, 1.8%, 1.3% and 0.6% respectively. Despite falling this quarter, the WM has shown strong growth in the construction sector relative to 2017. Agriculture and services have remained relatively steady since 2017, and production has fallen since the beginning of 2018.

Productivity

Like most regions of the UK, output per hour in the WM was below the UK average in 2018 according to ONS figures. Productivity in the WM was 10.4% below average which ranked the region seventh in the UK.

Two regions had productivity above the UK average, 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 WM moved up the rankings slightly to sixth in terms of output per job. This means that on average workers in the WM worked longer hours for each job compared with the UK average. The region’s 10.9% 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 WM was ranked fourth as output per hour grew by 1.6%. 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 accommodation/service activities was better than expected but transportation/storage 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 11,000 to 131,000 between October and December; the uplift of 0.3% took the rate to 4.4%, the third highest in the UK. 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.

The South West had the highest employment rate at 80.1% which compared with 75.5% in the WM, where 2.8m are employed; the UK rate was 76.5%.

In December, average earnings in the WM increased by £4 to £595 per week. London had the highest average earnings of £805 and the lowest average earnings of £530 were recorded in the NE. The WM was ranked fifth (previous ranking seventh).

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 WM’s average property price decreased by 0.4% over the month to £201,343, the drop took the annual increase to 1.4%. In comparison, UK prices increased by 0.3% to £234,742 during September, an annual growth rate of 2.2%.

Leave a Comment

Your e-mail address will not be published. Required fields are marked *