How is our economy changing?

People who know me know that I am a sucker for time series graphs. They say so much more than just the plain data. Bearing that in mind…the ONS recently released latest figures on nominal GVA for each Local Enterprise Partnership area – and helpfully split the data up into broad Industrial categories – hence the graph below. I am keen to understand the changes in our economy. We get so much headline news that sometimes – we miss what is happening/what has happened.

GBSLEPGVA

Now this graph doesn’t show this but 2014 showed a marked slow down in GVA growth in the Birmingham area – with it rising only …compared to a a growth in 2013 of .

However what the graph does show is the significant rebound in the health of the Manufacturing sector. After a long period of decline up to 2009 – it has increased by 43% to 2014. This is a remarkable turnaround and very important for the area because this sector exports from the region significantly and supports a number of jobs in other sectors. (Take a look at the WMEF website and in particular this paper for a deeper explanation of this)

What is equally clear however is Greater Birmingham and Solihull area is still hugely dependent on the mainly public sector funded public administration, education and health sector. This is still the largest ‘sector’ in terms of GVA – it suffered a slight fall as austerity began to bite post 2010 – and may do again with the new round of austerity  post 2015 – but it is likely to remain a hugely important sector.

The second largest ‘sector’ of wholesale, retail, transportation and accommodation has shown steady growth and may well become the most significant sector as time progresses. This is partly based on the continued renaissance of Birmingham City centre encouraging more shopping and other visits. But also must be partly related to the strength of the logistics sector around Birmingham and the capturing of some internet delivery warehouses – such as the Amazon Warehouse at Rugely. If sufficient resource is invested in growing Birmingham’s tourism offer this sector should see real growth.

It is interesting to note that despite the hype around the increasing presence of Deutsche Bank in the city – the finance sector has been in slow decline since the recession. This sector is in full flow of disruptive technology – as we move more and more to a cashless society many bank branches are being shut. A small microcosm of this is happening in Moseley where I live – where shortly the last of three banks will close leaving the centre without a physical bank presence. Oh well more restaurants! 🙂 So it will be interesting to see how the move of the HSBC UK retail headquarters to the city will impact. It should reverse the downward trend but for how long as there is still a lot of disruption to come. Much of its impact may be felt in other parts of the service sector – as it starts to buy services locally rather than from London.

The other interesting aspect is the role the Information and Communication sector. There has been much discussion about the health of the ICT/Tech sector – and the recent Tech Nation Report showed Birmingham to have growing turnover, employment and GVA. See my post on this- here. This is not however shown here – perhaps because firstly this sector definition includes old and new media and old is almost certainly in decline. The move to a weekly Birmingham Post edition is evidence of that. Secondly as well the ICT/Tech sector spreads into other SIC classifications – and is particularly hard to track down. Thirdly there is the argument put forward by Anatole Kaletsky that the statisticians are under reporting the economic output of these sectors. An interesting and short read – here . So I tend on balance to believe the rosier picture painted by TechNation!

And last but not least it is really interesting to look at the ‘arts’ sector. This whilst small in relative terms has seen real growth latterly – with a 55% increase in GVA from 2009. This like manufacturing is an important sector because of its export potential –  as it helps to draw visitors into the city bringing spending with them.

Overall these figures throw up more questions than answers. Should we support manufacturing – yes – although in terms of direct employment – numbers are forecast to decline – but in terms of employment in related service sectors – this would be beneficial. There is a real discussion on currently on the fourth industrial revolution – and how manufacturing is becoming more digital – so many jobs may occur in the city’s ICT companies. There are other policy discussions that do not show in these stats – like for instance the investment in the Life Sciences sector and any impact is hidden because of the lack of granularity of the data. These stats however also show the importance of the public sector; of the city as a retailing and logistics location and the growing importance of the arts. An interesting delve!

 

 

 

 

 

 

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