Hampshire business dashboard - March 2018

30 50 70 Falling Rising UK: 53.7 South East: 53.3

New Orders (53.3)

Dec-17

Commentary

The volume of New Orders (a leading indicator of short-term growth) in the South East improved in December 2017 compared with the previous month. The New Orders index in the South East reached a rate of 53.3 in December compared with a rate of 52.2 in November (50.0 separates growth from contraction).

30 50 70 Falling Rising UK: 54.5 South East: 54.1

Output (54.1)

Feb-17

Commentary

Business Activity or Output growth at private sector firms in the South East reached a two-month high in February. The level of business activity or output at private sector firms in the South East rose to 54.1 in February, from 53.2 in January (50.0 separates growth from contraction). Business activity growth in the South East was comparable to London. Similarly business activity in the UK increased to 54.5 in February, a two-month high. The final estimate of economic growth for the fourth quarter of last year showed that the UK economy expanded by 0.4%, unrevised from the earlier estimate. The fall in construction output was smaller than previously thought and growth in business investment was revised upwards, from no growth, to 0.3% growth. On the expenditure side, the household spending was unrevised but the annual rate was revised downwards to 1.7%, the lowest growth in household spending since 2011. If sustained over the quarter this level of business activity points to a quarterly growth of around 0.35% in the South East. Following the adverse weather conditions in March economic growth in the UK is expected to slow in the first quarter but economic growth in the first quarter tends to be on average much slower than in the final quarter of the year.

30 50 70 Falling Rising UK: 52.3 South East: 49.8

Employment (49.8)

7.8

Commentary

Job creation at private sector firms in the South East was broadly flat in December 2017 compared with the previous month. The PMI index for employment came in at 49.8 in December (50.0 separates growth from contraction).

Business confidence A bar chart showing Business confidence in the South East and the UK 1 0.5 0 -0.5 -1 UK: South East:

25.7

Business confidence

20.9

Modinat7th

Business confidence in the South East and the UK improved slightly in the first quarter of this year. Business sentiment index in the UK improved slightly, from -3.4 in Q4 2017 to -1 in Q1 2018 but business sentiment remains in negative territory. Similarly the South East index also improved, from -5 in Q4 2017 to -2.5 in Q1 2018 below the UK average. The highest level of business sentiment is found in the ICT sector but property saw the largest fall in confidence in the first quarter.

Business Investment A bar chart showing Business Investment in the South East and the UK 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 South East: 0.8 South East UK: 0 South East: 0.8

5.?

Business Investment

2017 Q4

Commentary Mod

In the fourth quarter of last year, business investment was estimated to have increased by 0.3% (revised upwards from no growth) according to the Office for National Statistics (ONS). Quarterly growth in business investment was faster than previously thought but nevertheless slower than in the previous quarter. Despite the sluggish growth in the final quarter of the year, the 2017 annual rate of growth in business investment was 2.4%, compared to a decrease of 0.5% in 2016.

Consumer Confidence A bar chart showing Consumer Confidence in the South East and the UK 10 5 0 -5 -10 -15 -20 UK UK: -10 South East: 0

-10

Consumer Confidence

% net balance - Feburary 2018

Commentary

Following the fall in sentiment in February, consumer confidence remains heavily subdued. Consumer sentiment is reflected in subdued retail sales spending. Retail sales volumes increased in February but the increase in February followed two consecutive monthly declines in retail sales. Despite the growth in February, the outlook for retail sales over the short-term remains muted as reflected in the increase in savings index and the fall in consumer confidence. Nevertheless, relatively strong wage growth is expected to outstrip inflation later this year which should bring relief to households and support consumer sentiment, spending and growth.

House Price Inflation A bar chart showing House Price Inflation in the Hampshire and the UK 5 4 3 2 1 0 Hampshire: 4.9 Hampshire UK UK: 4.9 Hampshire: 4.9

4.9%

House Price Inflation

% net balance - Feburary 2018

Commentary

Monthly growth in house prices in Hampshire on average increased by 0.2% in January compared with a small decrease of -0.1% in December. Annual growth in Hampshire eased to 4.9% in January, from 5.4% in December. Monthly growth in house prices in the UK was on average decreased by -0.3% in January from an increase by 0.2% seen in the previous month, annual growth eased from 5% in December to 4.9% in January.

Input prices - (costs) A bar chart showing Input prices - (costs) in the South East and the UK 70 60 50 40 30 20 10 0 South East: 66.2 South East UK UK: 63.8 South East: 66.2

66.2

Input prices - (costs)

Dec-17

Commentary

Input (factory) price inflation in the South East increased at the sharpest pace in three months in December 2017. The South East index reached 66.2 in December from 56.3 in the previous month. Prices in the UK remained broadly unchanged.

CPI inflation A bar chart showing CPI inflation in the South East and the UK 3 2.5 2 1.5 1 0.5 0 South East: 2.5 South East UK UK: 2.7 South East: 2.5

2.3

CPI inflation

Feb-18

Commentary

Input (factory) price inflation in the South East increased at the sharpest pace in three months in December 2017. The South East index reached 66.2 in December from 56.3 in the previous month. Prices in the UK remained broadly unchanged.

Unemployment A bar chart showing Unemployment in the Hampshire and the UK 3 2.5 2 1.5 1 0.5 0 Hampshire: 1 Hampshire UK UK: 2.1 Hampshire: 1

7,835

Unemployment

JSA+UC - February 2018

Commentary

The number of unemployed claimants (claimant count JSA + universal credit) in the Hampshire County Council area increased by 400 additional claimants to 7,835 and the unemployment rate not adjusted for seasonal factors increased slightly to 1% in February.

Youth unemployment A bar chart showing Youth unemployment in the Hampshire and the UK 3 2.5 2 1.5 1 0.5 0 Hampshire: 1.2 Hampshire UK UK: 2.3 Hampshire: 1.2

1,565

Youth unemployment

Youth Claimant count JSA+UC - February 2018

Commentary

The number of young unemployed claimants (JSA+UC) in the Hampshire County Council area increased by 95 additional claimants to 1,565 and the youth unemployment rate increased marginally to 1.2% in February.

Employment A bar chart showing Employment in the Hampshire and the UK 90 80 70 60 50 40 30 20 10 0 Hampshire: 81.1 Hampshire UK UK: 74.4 Hampshire: 81.1

665,500

Employment

October 2016 - September 2017

Commentary

In the year to September 2017 compared to the previous year (year to September 2016) the number of people in employment in the Hampshire County Council area increased by about 13,400 to 665,500 and the rate increased by about 1.7 percentage points to 81.1%. The strong rise in total employment was driven by employees in employment (firms recruiting staff) working full-time. Faster growth in employment was held back by a decrease in self-employment. The employment rate in Hampshire was well above the UK average (74.4%) and slightly higher than the rate seen in Hampshire in the year to June 2017 (80.7%). Hampshire now has the second highest employment rate in the South East.

Bar chart colours

  • Red
    Worse score or absolute number than in the previous month/survey
  • Amber
    Similar score / number
  • Green
    Better score or absolute number than in the previous survey

Border Colour

Shows ‘overall’ conditions:

  • Red conditions are currently difficult
  • Amber unemployment only
    (no change in the unemployment rate)
  • Green conditions have improved

Thresholds for change to green (red)

Business confidence, consumer confidence, investment: conditions have been improving (deteriorating) over the past three months

Unemployment rate: lower (higher) rate than three months ago.

Input prices: low (high) prices relative to long-trend average

CPI inflation: inflation below (above) Bank of England target

House prices:

  • Green-annual rate inside the long run 95% confidence interval
  • Amber –rate within the 95%-99% interval
  • Red –rate at either above 99% or below 95%

Purchasing Managers’ Index (PMI) scores

  • Less than 50 – falling activity compared to previous month
  • 50 – no change on previous month
  • More than 50 – rising activity compared to previous month

Used for: Business Activity, New orders, Employment, Input Prices

Net balance

Determined by subtracting the percentage of companies reporting decreases in a factor from the percentage of companies reporting increases.

  • Less than 0 – more firms reporting decreases than increases
  • 0 – similar numbers of firms reporting decreases and increases
  • More than 0 – more firms reporting increases than decreases
  • % - expected to make higher capital investment / reported higher wages / costs

Leading Indicators

  • consumer confidence
  • business confidence
  • new capital investment
  • new orders
  • input prices

Sources

  • Business Confidence
    Institute of Chartered Account. (ICAEW)
  • New capital investment,
    Department for Business Innovation & Skills (BIS)
  • House prices
    Land Registry
  • Consumer Confidence
    GfK NOP
  • Employment, Unemployment, Inflation
    ONS
  • Business activity, orders, employment, input prices
    Markit / Lloyds PMI

Notes

Unemployment (rate, 16-64), youth unemployment (16-24), are not adjusted for seasonal factors.

PMI (output/business activity, new orders, employment) – private sector only (1).

Change in employment – annual change, updated quarterly.

For further information see  MBD summary report and monthly Economy & Business Snapshot and Labour Market  Updates for Hampshire.