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Weekly Economic Update: 24th July 2009

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The quarterly fall was worse than expected by most forecasting groups who on ... Worryingly there does not appear to be any clear growth in other internationally ... – PowerPoint PPT presentation

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Title: Weekly Economic Update: 24th July 2009


1
Weekly Economic Update 24th July 2009
  • Initial GDP estimates for 2009 Q2 indicate that
    total output fell by 0.8 on the quarter. This
    follows the record 2.4 fall in Q1 and is the
    fifth quarterly contraction in GDP, bringing the
    annual decline to 5.6. The quarterly fall was
    worse than expected by most forecasting groups
    who on average expected a 0.3 dip, however
    despite the higher than expected fall, the data
    clearly indicates a reduction in the rate of
    decline and the beginning of the end of the
    recession. Within the figures manufacturing
    output fell 0.3 and services fell 0.6.
  • Total retail sales were up 2.95 on a year ago
    according to ONS figures for June, with food
    sales in particular rising fast in response to
    good weather over the past few weeks.
  • Public sector finances figures for June show that
    the current budget deficit is 9.9Bn and net
    public sector borrowing is 13.0Bn, total net
    debt is at 798.8Bn around 56 of total GDP.
  • CEU recently commissioned Oxford Economics to
    examine the potential impacts of the UKs
    deteriorating fiscal position on government
    spending in Yorkshire and Humber. The report
    shows that public spending is set to grow by 0.7
    between 2010-2013 per year, much lower than the
    4 annual growth over the last 10 years, and
    gross investment spending is likely to fall by 9
    per year as the government begins to pay down its
    debt.
  • The report highlights that the region receives
    around 8.1 of total identifiable UK public
    expenditure, less than the regions population
    would warrant with average spending per head
    being 95 of the UK average. This apparent
    disparity could form an important argument for
    shifting the distribution of spending between the
    regions in future, particularly given spending
    per head in Scotland, Wales and Northern Ireland
    has been 16, 11 and 22 higher than the UK
    average in the last year.
  • Based on occurrences in previous recessions,
    Oxford economics anticipate that spending cuts
    will fall hardest on capital intensive sectors
    including transport, housing, and defence. Major
    defence projects are already becoming the subject
    of debate in parliament with a new strategic
    defence review likely. Other areas that may see
    cuts are economic affairs and cultural and
    recreational spending.

2
Jobs Database
The jobs database tracks planned and confirmed
press announcements of job losses and gains
throughout the region on a weekly basis.
  • There were 18 job announcements in the last week
    (16th 22nd July). The YH economy continues to
    shed jobs with this weeks announcement totalling
    356 confirmed job losses and 46 confirmed job
    gains, or 310 net confirmed job losses for the
    week. Job creation has been at very low levels
    for the past three months with fewer than 200 job
    gains reported per month, whilst job losses have
    fluctuated from 1,000 - 2,000 each month, and
    these figures indicate a further worsening in the
    labour market in the future.
  • Job Losses
  • Lloyds Banking Group Halifax - One hundred and
    fifty jobs lost at HBOS in Halifax. Around 60 of
    the lost jobs are among contractors and agency
    staff.
  • Lloyds Banking Group Leeds - Lloyds are to cut
    180 staff in Leeds. The redundancies will be
    split between information technology support
    staff, insurance, marketing, finance and services
    staff with Scottish Widows and Clerical and
    Medical.
  • Coldwater Shellfish - The future of Grimsby
    scampi processor Coldwater Shellfish is under
    threat, with 26 jobs at risk.
  • Job Gains
  • Hitachi - Hitachi are in talks with Sheffield
    council to bring a train manufacturing contract
    to the city. The building of 1,400 trains would
    initially create 200 jobs and then rise to 500
    jobs.
  • Marks and Spencer - A new Marks Spencer Simply
    Food store opens on the 29 July creating 120 jobs
    in Birstall.
  • Science City York - Science City York has
    secured a 1.3m investment from Europe to help
    create 160 jobs over the next three years.

3
Jobs Database
  • For the month of July publicised confirmed net
    job gains have totalled -207 so far.
  • Since the beginning of 2009 net cumulative job
    gains have totalled -4,894.
  • The Unemployment rate in Yorkshire and Humber is
    currently at 8.8, representing 232,000 people.
  • The YH unemployment rate rose 1.4 on the last
    quarter or by 41,000 people.
  • The UK Unemployment rate is at 7.6 representing
    2.38 million people.

4
Jobs Database
  • Since 2009 the sectors that have seen the most
    publicised losses in Yorkshire and Humber are
    Manufacturing of Basic Metals, Financial
    Services, Retail, Construction, and the
    Manufacturing of Food.
  • The sectors that have seen the most publicised
    gains are Construction, Retail, Hotels and
    Restaurants, Public Administration and Health and
    Social Work.
  • Construction and Retail have both seen job losses
    increase from the halt in house building and its
    associate activities by firms like Persimmon and
    SIG, and retail firms have clearly been hit by
    the reduction in consumer confidence and
    spending, but both these domestic sectors have a
    naturally high turnover as indicated by the high
    rates of job creation, and current high losses
    are likely to be temporary rather than
    representative of a permanent structural
    shrinkage in the sectors size, although declining
    consumer spending may hurt the retail sector.
  • The loss of jobs in Manufacturing of basic metals
    and other forms of manufacturing is more
    concerning, job losses here are not being
    replaced by job gains and these losses indicate a
    lack competitiveness in international markets
    with companies like Corus and Outokumpu shedding
    large numbers of jobs in steel making.
  • Worryingly there does not appear to be any clear
    growth in other internationally competitive
    sectors to offset these losses, with most job
    creation coming from domestic industries
    including the public sector.
  • To counter this trend BIS has launched a new
    industrial policy vision called New Industries
    New Jobs which seeks to identify, support and
    promote new sectors of industrial growth in
    Britains economy. Initial work has identified
    Low Carbon, Life Sciences, Composites, Plastic
    Electronics and Digital and Advanced
    Manufacturing as key sectors for future growth.
  • http//www.berr.gov.uk/files/file51023.pdf

5
Yorkshire 50
The Yorkshire 50 is a financial index that tracks
the performance of the 50 largest Yorkshire and
Humber registered companies by market
capitalisation.
  • The financial markets have had a very positive
    week following a string of positive profit
    announcements.
  • The FTSE 100 has risen consistently since the
    13th of July indicating a significant improvement
    in investor confidence, although the worse than
    expected GDP figures for 2009 q2 released today
    seem to have put an end to this positive run.
  • Despite the recent rally the index remains down
    around 30 on pre-recession levels in early 2008.
  • The Y50 grew 4.9, the FTSE100 grew 4.3 and the
    FTSE 250 4.4 between the 17th and 24th July.
  • The best performing sectors in the Y50 over the
    week were Transport, Construction and
    Manufacturing.
  • The has risen 12 against the and 10
    against the Euro since the beginning of the year.

6
Yorkshire 50
Percentage Change in Stock Price 17th 24th July
Biggest Gains and Losses.
7
Company News
Jarvis Shares in the rail company have bounced
rising 85 in the last week. The companies shares
had deflated following high profile loss of
contracts, but after significant restructuring
including large scale redundancies the company
has posted full-year results in line with its
expectations and its prospects beyond 2009 - 10
appear much more promising given its leading
position in the UK rail industry which is
forecast to expand greatly from increases in rail
infrastructure spending. Morrisons The
Bradford-based company has raised its full year
profit forecasts thanks to better than expected
sales. Analysts raised their profit forecast for
the year ending January 2010 to 729m from 659m.
Morrisons aims to open another 10 stores this
year and create 5,000 new jobs. Instore The
Huddersfield based Poundstrecher brand owner has
seen improved sales of gardening and outdoor
living ranges thanks to the recent warm weather,
but stated margins have come under pressure as
the group strives to maintain its edge as the
discount sector becomes even more competitive
from main stream brands looking to attract credit
crunch consumers.
8
Latest Releases
A summary of the latest data releases from ONS,
CEU and other sources. Other ONS releases are
available at www.statistics.gov.uk/release. CEU
data and research is available at
www.yorkshire-forward.com/ceu.
The future of public sector investment Risks to
Yorkshire and Humber A report by Oxford Economics
examining the key risks to Yorkshire and Humber
from the deterioration in public sector
finances. http//yfi/yfi/Documents/DocumentViewFil
e.aspx?pDocumentId6446 Public Sector Finances
June 2009 This monthly report on Government
income, borrowing and expenditure is one of the
key economic indicators produced by
ONS. http//www.statistics.gov.uk/StatBase/Product
.asp?vlnk805 Retail sales June 2009 The Retail
Sales Index is a key monthly economic indicator
that describes the value and volume of sales as
reported by UK retailers. The index offers the
most comprehensive picture available of
developments on the UK high street, gathering
data from approximately 5,000 businesses, of all
sizes, each month. http//www.statistics.gov.uk/St
atBase/Product.asp?vlnk870 Index of Services
May 2009 The Index of Services shows the monthly
movements in gross value added for the service
industries. Service industries overall account
for around 74 per cent of UK Gross Domestic
Product (GDP), and include private sector and
government services. http//www.statistics.gov.uk/
StatBase/Product.asp?vlnk9333 Gross Domestic
Product (GDP) preliminary estimates Q2 2009 GDP
is a key part of the UK national accounts,
providing a measure of the total economic
activity in the UK. It is often referred to as
one of the main 'summary indicators' of economic
activity, and references to 'growth in the
economy' are quoting the growth in GDP during the
latest quarter. http//www.statistics.gov.uk/stat
base/Product.asp?vlnk406
9
Prepared by Stuart Kielty Duncan Kernohan,
Chief Economist Unit
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