Tees Valley
Quarterly Economic
Review
March 2016
An up to date analysis of economic, business
and labour market trends across the Tees Valley
1
Contents
Context
Economic background
Productivity
- Tees Valley productivity (a)
- Sectoral GVA per employee (a)
Business growth
- Regional business activity (m)
- Tees Valley enterprises (m)
Trade
- Regional trade in goods (q)
- Port traffic (q)
Employment & skills
- Headline labour market (q&m)
- Participation of older workers (q)
- Ageing workforce (q)
- Job vacancies (q)
Innovation
- Product and Service Innovation (a)
- Broadband infrastructure (a)
Key points summary
Further information
Notes: (a) = data released annually, (q) = data released quarterly, (m) = data released monthly
Underlined blue text is hyperlinked
Context
• Tees Valley Unlimited (TVU), as the Local Enterprise Partnership
(LEP) for Tees Valley, is tasked by Government to drive economic
development in the local area.
• The key local economic framework document, the Tees Valley Strategic
Economic Plan (SEP), initially developed following consultation with
stakeholders, residents and the public and private sectors, is presently
undergoing a wide-ranging review to ensure it reflects both the changing
and evolving needs of Tees Valley and the main priorities of the LEP and
the new Tees Valley Combined Authority.
• Five key economic themes will continue to underpin the newly revised
SEP (due to be published in July). These themes are Business growth,
Employment & Skills, Productivity, Trade and Innovation. The Tees Valley
Quarterly Economic Review will regularly examine each of these topic
areas through analysis of the most appropriate, timely and robust metrics
available.
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Key points summary
• World economic climate remains challenging in the medium-term
• Increased global economic uncertainty impacting negatively on regional
business output growth
• New Tees Valley enterprise growth up on the year
• Lower rates of economic inactivity giving employment levels a fresh boost
• Increasing participation rates amongst older workers combined with
increasing numbers of older people leading to an ageing workforce
• Vacancies up across most occupation groups
• Robust levels of Tees Valley productivity underpinned by high value production
and manufacturing sectors
• North East England continues to run a trade in goods surplus with most of the
major regions of the world
• High proportion of Tees Valley firms introducing product or service innovation
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Economic background
Flat-lining global growth rates expected to
continue over the medium-term
World GDP growth unchanged in 2015
Contributions to calendar-year growth in UK-weighted world GDP(a)
Key points
• Global economic growth was estimated to be
around 2.2% for the four quarters to 2015 Q3.
Sources/notes: Bank of England
Inflation Report February 2016
Lower EME growth in 2015
offset by higher advanced
economies growth
• Previously robust levels of net private sector capital flows into
emerging market economies (EMEs) have slowed sharply since 2013,
reflecting and influencing future EME growth prospects. Indeed, early
indications point to a net capital outflow from EMEs in 2015 (particularly
from China) – the first net outflow from EMEs since 1988.
• The latest OECD economic forecasts – summarised below – show a
continuation of the trends observed in 2015 with relatively slower
EME growth and increased downside risks to the global economy
around financial market volatility.
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Source: OECD Global Interim Economic Outlook, February 2016
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Regional business activity
Global economic uncertainly impacting
negatively on output growth
Purchasing Managers Index® Business Activity (Output) Index, UK and North East
Key points
UK
Rising
North East
Falling
Methodology
• Business activity in the region, whilst
showing greater monthly variation than
nationally, broadly mirrored UK trends in
the 18 months to mid-2015. However,
since June and particularly postSeptember, the North East has
consistently recorded weaker output
growth than the UK average.
• The latest PMI® reports that whilst
marginally improved on January, business
activity in the region grew only slowly in
February.
• Nationally, February saw output growth
fall to its lowest rate in over two years.
Firms highlighted increased uncertainty
surrounding the global economy as an
influencing factor.
• Each month Markit compile the Lloyds Bank Regional Purchasing Managers’ Index® (PMI®) from responses to questionnaires sent to
over 1,200 UK private sector manufacturing and service companies. The index is calculated from the percentage of respondents
reporting an improvement, no change or decline on the previous month. Indices above 50 signal an improvement, 50 no change and
below 50 a decline. The greater the divergence from 50, the greater the rate of change.
Sources/notes: Markit, Lloyds Bank Regional Purchasing Managers’ Index® (PMI®)
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Tees Valley enterprises
New business growth is running above 2015
rates so far in 2016
New company registrations per month in Tees Valley
• Companies House publish a
database containing data on all live
companies every month.
• For each company, the database contains
details of the company’s registered address.
Tax year ends
on 5 April
• Based on the postcode of the registered address, we have
analysed ‘active’ companies located within the Tees Valley.
However, the registered address may not be same as the
address of operation – the company may be registered at
the home address of the owner or at the address of
lawyers. Larger companies may have operations in the
Tees Valley but be registered at a central address
elsewhere.
• In Tees Valley there were 19,028 active enterprises registered at Companies
House at the end of February 2016 – up from 18,763 at the start of the year.
• All districts have seen significant numbers of new companies registering at
Companies House. The first two months of 2016 saw a total of 610 new
enterprises register in Tees Valley – 8% up on the 566 observed over the same
two months of 2015.
Further TVU analysis of business
statistics is available here
Cumulative new
company
Cumulative
new
registrations,
company
2016
registrations,
2015
A district breakdown of this total is shown here.
Source: Companies House and TVU
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Headline labour market
Employment boosted by renewed fall in
economic inactivity
• The latest Tees Valley employment rate stood at 68.5%, up by 0.5% on the previous period (Jul’14-Jun’15). This
compared to the UK rate of 73.2% and represents an employment ‘gap’ of 19,500 – that is the number of additional
Tees Valley residents who would need to be in employment in order to match the present UK employment rate.
• The headline ILO (International Labour Organisation) unemployment rate is now 8.4%, down by 0.1% on the previous
period (Jul’14-Jun’15). The UK rate fell by 0.2% to stand at 5.5%.
• There are around 10,700 more Tees Valley residents economically inactive than would be the case if the area could match the present
national economic inactivity rate.
• Of the economically inactive population the four main components are looking after home/family (around 26,200 and up 2,200 on the
year), students (23,900 up 600), long-term sick (23,300 down 3,200) and retired (16,700 and down 300 on the year).
Indicator
Latest period
Tees Valley
United Kingdom
Level
Rate
(%)
Change
on year
(level)
Change
on qtr
(level)
Level
(000s)
Rate
(%)
Change
on year
(000s)
Change
on qtr
(000s)
Employment*
Oct’14-Sep’15
292,600
68.5
5,800
2,700
30,935
73.2
584
152
ILO Unemployment**
Oct’14-Sep’15
26,800
8.4
-5,300
-200
1,784
5.5
-330
-70
Economically active***
Oct’14-Sep’15
311,900
75.0
-900
2,100
31,556
77.5
206
72
104,300
25.0
1,600
-1,600
9,142
22.5
-114
-48
80,900
23,300
77.6
22.4
1,700
-200
-1,600
-100
6,952
2,190
76.0
24.0
-16
-98
-39
-10
15,705
3.8
-293
846
661
1.6
-197
19
Economically inactive***
Of which:
• Doesn’t want a job
• Wants a job
Claimant unemployment*
Oct’14-Sep’15
Feb 2016
Sources/notes: ONS, NOMIS, APS. *Numbers aged 16+ and rate of working age population between 16-64. **Numbers aged 16+ and rate of economically active. ***Numbers aged 16-64 and rate of working age
population between 16-64.
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Participation of older workers
Increases in the Tees Valley labour pool are
being driven by workers aged 50 and over
Proportion of economically active population aged 50+
Key points
• The age profile of the Tees Valley
workforce is becoming older and older.
• Almost 3 in 10 of economically active workers i.e. those
employed or actively seeking work, are now aged 50 or over.
• Pre-recession, the Tees Valley had a relatively ‘young’
workforce compared to the UK but since 2008/09 the
proportion of the economically active population aged 50+ in
the Tees Valley has broadly matched national rates.
Economically active population, Tees Valley
Key points
• The Tees Valley economically active population increased from 306,200
a decade ago to reach 319,300 by Oct’14-Sep’15.
• The number of economically active residents aged under 50 has fallen
from 234,900 ten years ago to 224,900 now – a decrease of 10,000
workers.
• The number of Tees Valley workers aged 50+ either employed or
looking for work has increased by almost one third in the past decade –
up by 23,100 from 71,300 to 94,400.
Sources/notes: ONS, APS
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Ageing workforce
Whilst overall employment is back to pre-recession
levels the workforce age profile is now older
Change in employment since Oct’04-Sep’05, Tees Valley
Full-time aged 50+
Part-time aged 50+
Part-time aged under 50
Full-time aged under 50
Employment status by age,
Tees Valley, Oct’14-Sep’15
Full-time
Part-time
No.
No.
%
Under 50
152,100
50,000
25
50+
60,600
28,700
32
• Older workers tend to work fewer hours than
younger workers. Part-time employment makes
up almost one third of employment for older
workers. This compares to just one quarter of
under 50’s employment
Key points
• The recession of 2008/09 saw the beginning of a significant shift in the
make up of the Tees Valley workforce
• Whilst the balance of full-time and part-time employment is now similar,
there are now roughly 20,000 additional workers aged 50+ together with
20,000 fewer workers aged under 50 as compared to pre-recession
The ageing workforce profile is being driven by:
• On-going increases in the State Retirement Age linked to
associated increases in labour market participation of
older people
• Demographic change with increasing numbers of older
people combined with lower numbers of younger people
Sources/notes: ONS, APS
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Job Vacancies
The number of reported job vacancies grew
across the majority of occupations during 2015
Tees Valley Job Vacancies
Key points
• Data is drawn from the
commercial ‘Labour Insights’
product. This searches the
internet for job adverts and
consequently only jobs advertised
via the internet are reported.
• Reported job vacancies in the Tees Valley
increased by 19% in 2015 compared with 2014.
Numbers were up by 4,495 on the year, reaching
28,637 in 2015.
Vacancies by occupation
• In numerical terms the largest increase was seen in the Caring Personal
Service Occupation group (up 539). Jobs in this group include care
workers and nursing assistants. Health Professionals saw the second
highest increase (up 442) with Nursing and Midwifery Professionals
accounting for 390 of the increase. Transport and Mobile Machine Drivers
also rose strongly within which Road Transport Drivers, such as LGV, van
and taxi drivers, accounted for an annual increase of 344 vacancies.
• Other job roles seeing significant increases (each up over 100) included
professional IT occupations, teachers, sales jobs, welfare/housing
professionals, construction jobs and business/finance professionals.
Sources/notes: Labour Insights and TVU
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Tees Valley productivity
Productivity in Tees Valley is the second highest
in Northern England
Labour productivity measures, Tees Valley and UK, 2014
2014
estimates
GVA (£m)
GVA per
head (£)
GVA per
head index
GVA per
filled job* (£)
GVA per filled
job index*
GVA per hour
worked (£)
GVA per hour
worked index
UK
1,618,346
24,616
100
48,823
100
31.0
100
12,342
18,525
75.3
43,017
88.1
28.3
91.3
Tees Valley
Labour productivity indices, Tees Valley, 2005 to 2014 (UK = 100)
GVA per hour worked
GVA per filled job
GVA per head
Source/notes:
ONS. *indicates
2013 estimates.
Key points
• ONS’s preferred measure of productivity is Gross Value Added
(GVA) per hour worked. This measure removes employment rate,
economic inactivity, demographic and commuting considerations
with GVA per head and work pattern issues with GVA per job.
• The Tees Valley economy was worth £12.3bn in 2014. In terms of
GVA per head of resident population this equated to £18,525 or
just over ¾ of the UK rate. The GVA directly resulting from each
Tees Valley job was £43k in 2013, far closer to the UK average at
88.1%. Finally, the average hourly GVA generated by a Tees Valley
worker in 2014 was £28.30, closer again to the UK average with
91.3%.
• The Tees Valley has the second highest level of GVA per hour
worked of any LEP area in Northern England behind Cheshire &
Warrington.
• Over the past decade underlying Tees Valley productivity growth in
terms of GVA per hour worked has broadly matched UK average
growth rates, remaining steady at between 90% and 92% of UK
GVA per hour worked between 2005 and 2014.
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Sectoral GVA per employee
The Tees Valley has high concentrations of high
value Production and Manufacturing sectors
Production sector
GVA per employee
(£ p.a.) - RHS
Total production sector
Other production
Manufacturing
Proportion of total GVA(%)
Proportion of total GVA contributed by the Production sector with
Production sector productivity rate, 2014
Key points –
sector shares
• The Production sector
makes up a larger proportion of
the Tees Valley economy than it does in
many other parts of the country.
• Over one fifth of total Tees Valley GVA is
accounted for by the Production sector
(£2.50bn), within which Manufacturing
contributes £1.79bn or 14.5% of total Tees
Valley GVA.
• Other production industries covering
Mining & Quarrying, Electricity and Water,
contributed £712m or 5.8% of total Tees
Valley GVA in 2014.
• With 5.8%, Other production in Tees Valley
accounts for the third largest share of total
LEP GVA in England. Only Coventry &
Warwickshire and Leicester &
Leicestershire LEPs score higher with 6.0%.
Key points – productivity
• Production sector productivity, measured in terms of GVA per employee, stood at £86,000 in 2014, well above the LEP average of
£76,800 and other major LEP geographies such as Leeds, Manchester and Birmingham.
• Additionally, both Manufacturing and Other production productivity rates are higher in the Tees Valley than nationally and for Leeds,
Manchester and Birmingham. In 2014, Tees Valley Manufacturing GVA per employee was £71,900 (All LEPs average £69,300) with
Other production productivity at £169,300 (All LEPs average £136,000).
Sources/notes: ONS, GVA, BRES, TVU. Other production is defined as SIC codes B, D and E
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Regional trade in goods
North East the only English region to run a trade in
goods surplus with both EU and Non-EU countries
Net trade in goods, EU and Non-EU countries, 2015, £millions
North East trade in goods
• 2015 saw the region again run a trade in
goods surplus. Total exports were £12.14bn
comprising of £7.00bn to the EU and £5.14bn
to non-EU countries.
• The EU accounted for around 58% of North East goods
exports in 2015, proportionally second only to the South
West (64%) and well above the UK average of 48%.
• North East imports totalled £8.73bn with EU imports of
£5.17bn and non-EU £3.56bn.
Trade deficit
Trade surplus
North East exports, imports and net trade in goods,
2015, £millions
NE trade in goods surplus with all parts
of the world except Asia & Oceania
• The North East ran a trade in goods surplus of £3.41bn in 2015. The
region’s trade surplus with the EU (£1.83bn) was the highest of any part
of the UK.
• There was also a North East trade surplus of £1.58bn with non-EU
countries comprising of £962m with the Rest of Europe, £460m with
North America and £761m with ‘Other’ parts of the world (including
Latin America, Africa and the Middle East).
• The only part of world where the North East ran a trade deficit in 2015
was Asia & Oceania with £605m.
Sources/notes: HMRC Regional Trade Statistics
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Port traffic
Teesport became the largest UK port in terms of
outward tonnage in 2014
Teesport traffic by tonnage, 2013 and 2014
Key points
• Teesport total outward
traffic in 2014 of 21.6m tonnes,
the highest of any port in the UK
and up from 19.3m tonnes in 2013.
• Total inward traffic in 2014 of 17.9m tonnes,
down from 18.4m tonnes in 2013.
Proportion of total tonnage by cargo
type, Teesport and UK, 2014
Note that these estimates
are pre-SSI closure
Key points – 2014 cargo type
• Liquid bulk, largely comprised of crude oil outward traffic, made up over half of cargo
traffic tonnage through Teesport in 2014. This compared to just 38.2% across UK ports
as a whole.
• Dry bulk and other general cargo (largely coal and ore inward traffic) also saw relatively
high levels of traffic, 37.9% of Teesport tonnage compared to 29.1% nationally.
Teesport
(%)
UK major
ports (%)
Liquid bulk
52.8
38.2
Dry bulk and
Other general
cargo
37.9
29.1
Lo-Lo (lift-on liftoff) containers
5.1
12.5
Ro-Ro (roll-on
roll-off)
4.2
20.2
100.0
100.0
Total
Sources/notes : DfT Port Statistics
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Product and Service Innovation
Tees Valley ranks highly for innovation
Enterprises introducing either a new or significantly improved product or service during the
three year period 2010 to 2012
York and North Yorkshire
Key points
• The ability to successfully introduce
new or improved products and
services is a key aspect of firms’
innovation capability. Previous
research studies have strongly linked
London
new product innovation to both
growth and productivity
Greater Manchester
improvements. The higher the metric
the more firms in any locality are
engaging with innovation with its
Leeds
potential growth and productivity
benefits.
• The Tees Valley has the fourth highest
proportion of businesses undertaking
product and service innovation in the
country.
Northern Ireland
Tees Valley
Oxfordshire
Sources/notes:
Benchmarking Local
Innovation, The innovation
geography of the UK, UK
Innovation Survey 2013,
Enterprise Research
Council
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Broadband infrastructure
Tees Valley well served by broadband
Broadband infrastructure, 2014 (Source: OFCOM)
Key points
• The LEP areas with the highest
broadband access and speed also have
the highest proportionate take up of the
fastest line speeds.
• In 2014, 89% of Tees Valley business premises had Superfast
Broadband availability – matching London’s rate and behind
only Greater Manchester and The Black Country (both at 91%).
• In terms of average download speeds, Tees Valley was the
highest in England at 31 Mbit/s. This contrasts sharply with
Cumbria’s rate of 12 Mbit/s.
• Tees Valley also had the highest take-up of the fastest line
speeds with 44.3% of premises above 30 Mbit/s.
Take-up of lines by speed, % split, 2014
<2
Mbit/s
2 – 10
Mbit/s
10 – 30
Mbit/s
> 30
Mbit/s
Lowest
2.6
26.1
22.7
8.8
Highest
11.7
50.5
36.2
44.3
LEP average
6.4
36.3
28.8
28.5
Tees Valley
5.9
26.1
23.8
44.3
Sources/notes: Mapping Local Comparative Advantages in Innovation, BIS, July 2015
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Further information
Web links and data sources
Tees Valley Unlimited – Tees Valley Statistics
•
Provides detailed economic, labour market, skills and
demographic reports, including upcoming and recently
published:
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–
–
–
–
–
–
–
–
•
Quarterly Apprenticeship Vacancies
Tees Valley Job Vacancies 2015
Tees Valley Economic Assessment 2015
Tees Valley Business Survey 2015
Analysis of Apprenticeship starts
Monthly Claimant Count unemployment
Population projections to 2032
Tees Valley GVA estimates 2014
Enterprise births and deaths 2014
Tees Valley Interactive Area Profile with detailed current
and historic data on the economy and labour market by
ward, output area and district (including 2011 Census data)
Bank of England Quarterly Inflation report
HMRC Regional Trade Statistics
ONS, NOMIS Labour Market Profiles
Tees Valley
Darlington
Hartlepool
Middlesbrough
Redcar & Cleveland
Stockton-on-Tees
Next edition: June 2016
•
Please contact us if you have any subject areas that
you would like to be considered for inclusion in the
June edition.
For additional information please contact:
Will Haywood
Business & Economic Intelligence Officer
Tel: 01642 524414
Email: [email protected]
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