Y&H’s economy grows the second fastest in Q2 2019 but in 2018 the region’s productivity contracted the most in the UK, growth in the region’s house prices a UK outlier

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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 Y&H growth has dropped slightly from 1.3% to 1.1%. ESCoE is a partnership of research institutions and the Office for National Statistics (‘ONS’).

This ranked Y&H sixth (previous ranking seventh) and suggests the region has marginally improved 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 even better. Following its first publication of quarterly GDP estimates for the regions in September 2019, the ONS has now published its third estimate for Y&H, 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 Y&H grew by 0.6%, up from -0.3% the previous quarter. This placed Y&H sixth (previous ranking twelfth) 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, there was no surprise that the ONS’s figures also highlighted that the standalone quarter to June 2019 was also better for the region than the previous quarter. The Y&H economy grew by 0.7% in April to June 2019, following no growth in January to March 2019.

This placed Y&H second (previous ranking eleventh) 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 regional administrative/support services and finance industries grew by 22.7% and 6.4% respectively but Y&H’s construction and education industries fell by 4.4% and 4.3%.

Overall the regional construction, agriculture and production sectors fell by 4.4%, 1.5% and 0.9% respectively while services grew by 1.5% and made the largest positive contribution to Y&H’s growth of 1.14%. Services output has remained moderately flat from its 2016 level until this quarter’s uplift, on the other hand the construction sector has show steady growth from the beginning of 2018 until this quarter’s drop.

Productivity

Like most regions of the UK, output per hour in Y&H was below the UK average in 2018 according to the ONS. Productivity in Y&H was 16.5% under the average which ranked the region eleventh 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%.

Y&H was also ranked eleventh in terms of output per job. The region’s 16.8% 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. Y&H was ranked last as output per hour contracted by 2.5%. At 2.3% growth was fastest in Scotland. UK growth was 0.5%.

In terms of sectors, Y&H’s productivity in accommodation/service activities was better than expected but finance and insurance was 25% less productive in the region than was anticipated.

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/service activities productivity at c£17 per hour.

Labour

More data from the ONS showed unemployment in the region increased by 16,000 to 120,000 between October and December; the uplift of 0.6% took the rate to 4.5%, the second 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 73.3% in Y&H, where 2.6m are employed; the UK rate was 76.5%.

In December, average earnings in Y&H increased by £27 to £577 per week. London had the highest average earnings of £805 and the lowest average earnings of £530 were recorded in the NE. The Y&H was ranked ninth (previous ranking tenth).

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

Y&H’s average property price increased by 1.7% over the month to £168,382, the uplift took the annual increase to 3.9%, the highest in the UK. In comparison, UK prices increased by 0.3% to £234,742 during September, an annual growth rate of 2.2%.

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