Welsh growth slows and the country drifts down the rankings, productivity contracts and is the worst in the UK but Welsh unemployment at a record low

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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 Welsh growth has fallen from 1.3% to 0.8%. ESCoE is a partnership of research institutions and the Office for National Statistics (‘ONS’).

This ranked the country tenth (previous ranking sixth) and suggests the Welsh economy has not performed well 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 more mixed. Following its first publication of quarterly GDP estimates for the regions in September 2019, the ONS has now published its third estimate for the nine 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 highlighted that Wales grew by 0.7%, down from 2.6% growth the previous quarter. This placed the country fifth (previous ranking third) 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 better for Wales than the previous quarter. The Welsh economy grew by 0.4% in April to June 2019, following a contraction of 0.6% in January to March 2019.

This placed the country fourth (previous ranking twelfth) out of the twelve UK ‘regions’. Six regions of the UK saw their economies contract as did the UK overall by 0.2%. The WM was the worst performer in Q2 with -1.6% whereas London was the best with +1%.

In this period, Welsh transportation/storage grew by 78.6% but manufacturing and human health/social work fell by 4.3% and 3.3% respectively.

Overall the agriculture and services sectors grew by 3.8% and 2.0% respectively, while the construction and production sectors fell by 6.7% and 3.0%. The agriculture and services sectors have seen steady growth relative to 2017, whilst construction has dipped since Q4 2018 and the production sector has fallen since late 2017.

Productivity

Like most regions of the UK, output per hour in Wales was below the UK average. Productivity in the country was 17.2% under the norm which ranked the ‘region’ last 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 elevated productivity pulls up the UK average so much that all other regions fall below it.

Wales was also last in terms of output per job. The country’s 18.2% 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. Wales was ranked tenth as output per hour contracted by 1.0%. 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 non-manufacturing and agriculture 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 Wales fell by a big 14,000 to 45,000 between October and December; the drop of 0.9% moved the overall rate down to a record low of 2.9%. 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 still had the highest employment rate at 80.1% which compared with 74.4% or 1.5m in employment in Wales; the UK rate was 76.5%.

In December, average earnings in the country increased by £39 to £566 per week. London had the highest average earnings of £805 and the lowest average earnings of £530 were recorded in the NE. Wales was ranked tenth (previous ranking twelfth).

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

Welsh average property price fell by 2% over the month to £165,735; the drop 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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