Regional Intelligence Snapshot for Yorkshire and Humber - November 2009

Our Chief Economist’s Unit offers an intelligence snapshot for November in Yorkshire & Humber, highlighting key indicators such as business and household confidence, employment, job creation, cash flow and business performance.

How have businesses been performing?

The September 2009 Business Snapshot Survey highlighted that 29% of firms in the region said their business performance had improved over the past 3 months, while 49% said it had stayed the same – giving a positive net overall balance of +9%, compared to -22% in spring 2009. A net balance of +15% expect it to improve over the next 3 months.

Is business picking up now?

Levels of business activity remain positive (54.5, where scores above 50 are positive) for the fourth successive month since June 2009, according to the September Purchasing Managers’ Index (PMI), which also reports that the level of new orders in the region has picked up, at 57. Turnover expectations for both the manufacturing (67.5) and service sectors (74.5) are positive, according to the Quarter 3 QES.

How about cash flow?

Cash flow still seems to be a major issue, at 42.3 on the Q3 QES. This is an improvement on the low of 30.9 in Q4 2008, but there’s still a long way to go because cash flow was last reported as positive in Q1 2008. This is backed up by the September Snapshot Survey, where a balance of -23% firms reported increased cash in the business.

What about jobs?

Employment is still in negative territory (45.4 on the PMI and 47.5 on the QES), but an improvement on the low of 34.8 from the December 2008 PMI. However, the latest Q3 2009 data from the QES suggests that employment expectations are now positive (52.6, driven mainly by services; corroborated also by the Business Snapshot Survey); however, the figure for manufacturing is 47.3, which is indicative of continuing contraction.

Is unemployment still rising?

Unemployment fell by 0.2% percentage points (PPS)  in the 3 months to August 2009, compared with the previous quarter, to stand at 8.6%; however, this fall is well within the range of sampling error. The seasonally adjusted claimant count stood at 158,900 in September 2009, an increase of 1,700 on August 2009. The rate of increase has slowed since the start of 2009, and increases in the last 4 months have averaged about 2,000.

What’s happening with investment?

Investment intentions are still more or less depressed, according to the QES (less than 50), but data from the Snapshot Survey suggests that overall and specific investment intentions may be positive, with a positive balance of +10% for overall investment intentions. Marketing and sales, and training and retraining are the areas where most investment is intended (balances of +12% and +10%, respectively).

How are households coping?

Households responding to the recent Finance Panel survey in Yorkshire & Humber are slightly more optimistic about the economic climate compared with previous quarters. 87% rated economic conditions as either somewhat poor or very poor, compared with 92% in the January and April surveys. 48% described their experience of the economic situation to be not as bad as reported in the media (39% saying about the same, 13% saying worse).

What challenges lie ahead?

A major challenge at present is the level of employment. In the 3 months to August 2009, the region’s employment rate fell by 0.6 PPS compared with the previous quarter, to stand at 71.1%. Employment stood at 2,403,000 in June-August 2009, a fall of 9,000 on the previous quarter and 64,000 on the same period the previous year. The male employment rate fell by 4 PPS compared with the previous year, while the fall for women was 0.8 PPS. Negative changes in male unemployment since 2007 are particularly apparent in Barnsley, Leeds, Kingston-upon-Hull and North Lincolnshire. Looking ahead 3 months, 74% of respondents to the Household Finance Panel are confident about being in a job; however, there are still 26% who are uncertain or not at all confident.

Are new jobs being created?

During October there were 37 job announcements in the press, amounting to 524 confirmed job gains and 191 confirmed job losses (a net gain of 333 jobs for the month). Major job losses include B Braun Medical, a hi-tech surgical instrument company, which closed its Sheffield factory (with a loss of 75 jobs) and Highseal, a Scunthorpe window company, which has gone into administration with a loss of 60 jobs. Major job gains include the Crucible Theatre, Sheffield, which has created around 100 jobs; Shepcote Business Park, where around 20 businesses are creating 150 jobs; and Systagenix, a wound-management company near Skipton, which is creating 80 jobs.

What about visitor levels?

The latest Yorkshire & Humber Regional Visitor Survey results (for May–August 2009) show that there were more first-time visitors to the region in 2009, at 28% compared with 20% in 2008. Visitor spend is also up for those who paid for their accommodation and stayed overnight. Yorkshire domestic business trips are outperforming national trends: despite a decrease of 13% on last year, the decrease was seen to be higher (at -17%) for the rest of the UK.