Economic bulletin

We are ambitious for the economy of Staffordshire, our businesses, and people. The impacts of global events continue to be felt on the local, national, and global economies and cannot be ignored. However, the county council, Government, and our partners, will continue to support Staffordshire’s residents and businesses through challenging times, ensuring we are well-placed to deliver a more resilient, more dynamic and more productive local economy.

Our ambitious Economic Strategy is our roadmap to delivering our ambitions for the Staffordshire economy, where our existing business are helped to grow, new businesses are established and thrive, our residents have the skills needed to access the jobs of the future and our towns across the county are supported to be places we can all be proud of.

To effectively achieve our Economic Strategy priorities and deliver our long-term vision for our economy we need robust ongoing analysis and evidence of the latest economic picture, ensuring that we are aware of any challenges that may arise. The monthly Economic Bulletin forms a key part of our live evidence base.

Latest edition

Edition 31 (1.67 MB)

Welcome to the latest edition of the Staffordshire & Stoke-on-Trent Economic Bulletin produced by our Economy, Skills and Insight Teams, which provides the timeliest analysis of official Government data, national intelligence and local insights on the state of the local economy.

Alongside information on the Claimant Count and Job Vacancies that will be a part of every Bulletin, this month’s issue also provides more detailed youth claimant count analysis and updated ward level analysis of the claimant count to help identify areas which are being impacted the hardest by unemployment and a reliance on work-related benefits across Staffordshire & Stoke-on-Trent and where there may be a greater need for support. We also provide analysis of the latest business insolvency data to further understand how businesses are faring during the current economic climate.

We hope you find the Bulletin useful and welcome your comments and suggestions on further information you would like to see included in future editions. If you do have any feedback please send your comments to Darren Farmer, Economy & Skills Analyst at darren.farmer@staffordshire.gov.uk.

Stay Safe,

Darryl Eyers

Director for Economy, Infrastructure and Skills, Staffordshire County Council

Key messages from edition 31

Local Picture

In Staffordshire having seen improvement in the local economy and labour market following the COVID pandemic, we are now continuing to face challenges as a result of the energy and cost-of-living crisis with unemployment, youth unemployment and dependency on work-related benefits continuing to increase.
We continue to hear of local businesses struggling to remain profitable due to a wide range of factors including high energy prices, rising interest rates, increasing wage levels and lower consumer demand. However, we are starting to see small signs of positive improvement with turnover starting to pick up in some businesses and price inflation for some goods and services starting to ease, although it is too early to know if this is the start of a longer-term change in conditions.
Overall, inflation still remains a concern following the unexpected rise in February but is expected to fall quickly this year. It is positive news that the UK avoided a recession at the end of last year and the Bank of England are more positive about the future. However, economic recovery remains fragile with the war in Ukraine continuing to overshadow the world economy, generating high uncertainty. It remains clear that we will need to continue to support our communities and businesses through these challenging times.
Looking at the local data in more details, following long-term declines in the claimant count approaching pre-pandemic levels, the number of work-related benefit claimants in Staffordshire has continued to rise this month with a further increase of 550 to a total of 15,000 claimants.
The claimant rate for Staffordshire increased from 2.7% to 2.8%. However, the rate in Staffordshire continues to be one of the lowest rates in the West Midlands and is far lower than the average for the region 4.8% and also lower than the average for England at 3.7% of the working age population.
In terms of job vacancies, Staffordshire saw a 12% decrease in the number of available job vacancies between January and February to a total of 19,300, which remains higher than the number of work-related benefit claimants. Stoke-on-Trent saw a 7% decline in vacancies to a total of 8,100 which is just below the number of claimants. As reported in last month’s briefing, this will be largely reflective of comparison with the significant rise in job vacancies seen in January following the Christmas lull in the number of job adverts being posted, but it also clearly shows that overall recruitment demand remains strong with new job postings higher than a year before and pre-pandemic levels.#
Considering the top 20 job vacancy occupations in Stoke-on-Trent and Staffordshire, demand for roles in social care including ‘care workers and home carers’ remain by far the strongest of all occupations. This is followed by high demand for ‘administrative occupations’, ‘nurses’, ‘sales related occupations’ and ‘customer service occupations’.
There continue to be reports of labour and skills shortages with not enough skilled workers to fill the vacant jobs, especially in social care (both adults and children), nurses, sales and customer service, logistics including storage occupations and van and LGV drivers, hospitality such as kitchen and catering assistants and chefs, engineering, digital/IT roles such as programmers, and teaching assistants.
This has the potential to slow down economic growth and limit business survival unless the labour shortage and skills gap is quickly and effectively addressed, clearly employment support organisations, skills providers and the Government’s Plan for Jobs including the Restart schemes and new Skills Bootcamps have a vital role in upskilling and reskilling jobseekers into areas of demand and preventing them becoming long-term unemployed. While Government and business sectors have a key role in ensuring that jobs in areas of demand are attracting workers with good pay and terms and conditions to help prevent labour shortages.
It is clear that there continue to be a very high number of jobs available in the local economy and the need now is to ensure that there is a strong local labour pool with skilled workers able to fill these roles to support business recovery/survival and improve their own prosperity through better pay. The national and local support which is in place to support those that have been unfortunate enough to lose their jobs is vital in both reskilling and upskilling as well as enabling them to access the opportunities available. Also encouraging those that have become economically inactive due to COVID will further help to address labour shortages and skills gaps.
Staffordshire County Council’s new Job Brokerage Service is designed to do exactly this by matching local people, employers and training providers to fill jobs and provide people with the jobs and careers they need.
There are also clear emerging opportunities for job creation in digital (including online retail and e-commerce) and the green economy (including retrofitting homes to improve energy efficiency, electric cars e.g., Jaguar Land Rover and hydrogen e.g., JCB).
We will also look to build on our existing strengths including engineering and advanced manufacturing through the adoption of AI, Automation and Machine Learning, construction to achieve Government house building targets and build major new infrastructure projects such as HS2 and West Midlands Freight Interchange, and advanced logistics with the ecommerce and online retail boom such as the recent announcement of ASOS’s decision to build a £90million distribution centre creating 2,000 jobs close to Cannock and Tamworth were jobs will be very much needed and Pets At Home in Stafford.

Local Initiatives

Staffordshire and Stoke-on-Trent businesses that have been turned down by other lenders can now apply to the Staffordshire and Stoke-on-Trent Business Loan Fund, supporting businesses to grow through affordable, unsecured loans from £10,000 to £50,000.
Applications for Staffordshire Means Back to Business Scheme business loans and grants remain open to small businesses in Staffordshire, including the Get Started and Grow Scheme.
Alongside this there is support available through the Growth Hub and we have our start-up schemes and the Staffordshire Jobs and Careers brokerage service.
The Staffordshire Business and Enterprise Network (SBEN) continues to support local businesses with the transition to Net Zero.
The County Council has been lobbying Government around the A50/A500 Growth Corridor.
An additional £30m is to be invested in maintaining and improving Staffordshire highways over the next two years.
Development of plots at i54 South Staffordshire underway.
To ensure residents have access to the support needed to find employment there are several employment and skills programmes which they can access including the Restart Scheme and skills bootcamps.

National Context

The Chancellor, Jeremy Hunt deliver his first Budget, with a clear focus on prompting those who have left their jobs to return to the workforce and boosting business investment.
The main announcements centred around:
- Energy and the Green Economy including the extension of the Energy Price Guarantee and £20bn over next two decades on low-carbon energy projects, with a focus on carbon capture and storage.
- Employment, Economic Activity and Skills including childcare support, keeping people in work and supporting people out-of-work back into the workforce.
- Corporation tax, Investment Zones and tax breaks including increased corporation tax, investment support and investment zones, and simplification of international trade paperwork.

Cost of Living Crisis, Inflation and the War in Ukraine

Positively, Ofgem has reduced the energy price cap from £4,279 to £3,280 from 1 April reflecting the fall in wholesale energy prices and in further good news for households the Government will extend the Energy Price Guarantee for another three months keeping the cap on bills at £2,500 until the end of June.
There was a surprise rise in inflation in February with the rate increasing to 10.4 per cent in the year to February from 10.1 per cent in January.
To help control inflation the Bank of England has raised interest rates for an 11^th consecutive time, from 4% to 4.25%, with the Bank stating that the UK was no longer heading into an immediate recession and that it was “much more hopeful” for the UK economy.
The real value of pay continues to fall, where after adjusting for rising prices, real terms pay fell by 3.2% year-on-year for total pay and by 2.4% for regular pay.
Although there have been ongoing strikes taking place over recent weeks including teachers, university lecturers, civil servants, junior doctors, London Underground drivers and BBC journalists, there are some encouraging signs that at least some of these may be close to a conclusion.

Economy

The economy rebounded to grow by 0.3 per cent in January, which reaffirmed that the UK avoided recession at the end of last year. However, the Office for Budget Responsibility (OBR) expects the economy to slightly shrink this year by 0.2 per cent and moderate growth over the next three years, with the war in Ukraine continuing to overshadow the world economy, generating high uncertainty.
To boost economic growth the budget announced almost £1 billion in extra funding as part of a range of measures to boost business investment in the regions, with the Chancellor making the pledge to create 12 new investment zones.
The Government’s Levelling Up department is set to spend 25 per cent — or nearly £2.5 billion — less on regeneration projects this year than planned blaming housing market turmoil and delays in delivery.
The Birmingham to Crewe leg of high-speed railway HS2 will be delayed by two years to cut costs.

Business Conditions

Lingering business issues including high energy costs, increased commodity costs, wage pressures and supply-chain constraints and persistent labour market challenges are causing continuing weakened structural business conditions and confidence.
Positively the latest results from the ONS Business Insights and Conditions Survey (BICS) suggest business conditions remain challenging, but estimates show small signs of positive improvement for some measures; examples include, a smaller proportion of businesses reporting lower turnover and reporting higher prices for goods or services bought, however, it is too early to know if this is the start of a longer-term change in conditions.
Positively, Britain’s manufacturers are seeing a rebound in activity in the first quarter of the year as the domestic and global markets have improved, easing fears of a significant recession for industry this year.
However, some businesses continue to struggle. In February 2023 there were a total of 1,783 company insolvencies in England and Wales, 17% higher than in the same month in the previous year (1,518 in February 2022), and 33% higher than the number registered three years previously (pre-pandemic; 1,345 in February 2020). The main concern with company and individual insolvencies are associated issues such as mental health and homelessness.
Visitors to the UK’s leading attractions are still down almost 25 per cent compared to before the pandemic, as a result of COVID-19, energy prices and the wider financial crisis.

Labour Market

The budget had a clear focus on the workforce and addressing ongoing labour shortages, with funding for childcare help, new health checks for those on out-of-work benefits and strengthened job support for those looking for work. While there is also the relaxation of immigration rules to ease labour shortages in key sectors such as construction and further skills bootcamps funding.
The UK employment rate was estimated at 75.7% in November 2022 to January 2023, 0.1 percentage points higher than the previous three-month period. Employment remains 234,000 below pre-pandemic levels.
Payrolled employees estimates for February 2023 shows another monthly increase, up 98,000 on the revised January 2023 figures, to 30.0 million.
The unemployment rate for November 2022 to January 2023 was largely unchanged on the quarter at 3.7%. Unemployment is 112,000 down on pre-pandemic levels.
The economic inactivity rate decreased by 0.2 percentage points on the quarter, to 21.3% in November 2022 to January 2023. Those economically inactive are 488,000 above pre-pandemic levels.
In December 2022 to February 2023, the estimated number of vacancies fell by 51,000 on the quarter to 1,124,000, falling for the eighth consecutive period and reflects uncertainty across industries, as survey respondents continue to cite economic pressures as a factor in holding back on recruitment. However, vacancies remain high where in December 2022 to February 2023, total vacancies were down by 162,000 from the level of a year ago but remained 328,000 above their pre-pandemic January to March 2020 levels.
In December 2022, workforce jobs rose by 211,000 on the quarter to a new record high of 36.4 million, with 6 of the 20 industry sectors at record high levels.
There are continuing report of social care recruitment difficulties with an estimated 165,000 vacancies in adult social care nationally, an increase of 52 per cent in a year and more than in the whole of the NHS.

Conclusion

In conclusion, unfortunately we continue to see the impact of the energy and cost-of-living crisis on businesses both locally and nationally, with trade and profitability both suffering. However, whilst we clearly remain in challenging times, there are some positive signs with inflation expected to ease this year and return to the Bank of England target of 2% early in 2024. This easing of inflation will be aided by increasingly more economically inactive young people returning to the workforce helping labour and skills supply to better match areas of high demand in the economy. Overall, it looks like we may avoid a further recession.
In Staffordshire we have a confident, diverse and robust economy, demonstrated by the improvement and recovery witnessed since the last lockdown due to Covid.As the ongoing global and national socio-economic challenges persist it remains vital that local partners work together to support local businesses and residents. We continue to deliver the Staffordshire Means Back to Business Programme which has helped hundreds of Staffordshire businesses transition to new business models including diversification, digitisation and greenification to improve their viability and sustainability.
We continue to support residents into work and help businesses address ongoing labour shortages and skills gaps to aid survival and growth. A key part of this being the recently established Staffordshire County Council Job Brokerage Service which is designed to match local people, employers and training providers to fill jobs and provide people with the jobs and careers they need.
Alongside this the Government’s ‘Plan for Jobs’ schemes such as Restart, and Skills Bootcamps have an important role to play in ensuring that local residents have the skills and training needed within the local economy to support increased growth, productivity, and prosperity. Reskilling and upskilling residents from declining sectors into priority growth areas of the economy such as digital, green, advanced manufacturing, advanced logistics, construction, and health and social care where they can access better paid jobs will be key.