The Warwickshire Outlook - strong growth for UK manufacturing
FTSE 100 at all-time high
On Tuesday 24 February 2015, the FTSE 100 (a share index of the 100 companies listed on the London Stock Market with the highest market capitalisation) reached its highest ever level at 6959, breaking through the previous high of 6930 recorded fifteen years ago, back in December 1999. The previous high in 1999 was driven by the strong interest in technology firms, now often known as the “dot com bubble”. Clearly it has been a long time since the stock market has been operating at these levels, and a lot has changed since then. Interestingly, only 49 companies on the FTSE 100 have survived since 1999. The bursting of the dot com bubble in 2000-2001 led to the loss of many technology firms (including Marconi), and the financial crash which started in 2007 also cleared out a number of companies. Indeed, back in 1999, there were 11 banks on the FTSE 100 – today there are only five and the sector’s share on the market has decreased markedly. Some companies have disappeared due to mergers or takeovers (such as Abbey National and ICI which were household names back in 1999), while other big names such as Schweppes, British Airways and Natwest are now part of much bigger firms.
Manufacturing activity picks up again
The UK manufacturing sector seems to have started the New Year strongly, after a concerning lull towards the end of 2014. Official figures on the performance of the national economy last year, recently published by the Office for National Statistics, showed that output from the manufacturing sector was flat (-0.1%) in the final quarter of 2014, largely as a result of the slowdown in both the Eurozone and global economy. However, recent surveys produced by the CBI and the manufacturers organisation EEF suggest a strengthening of the order books and the majority of manufacturing companies confident about future growth activity. The much regarded Markits/CIPS UK Manufacturing PMI (Purchase Managers Index), have just been released and confirmed this uplift in activity – with the score for February standing at 54.1 (any score above 50 highlights growth, a score below shows contraction). This is up from 53.1 in January. The growth has largely been driven by domestic demand as the travails in the Eurozone continue and the strong pound is affecting export activity, and the lower oil prices reducing costs for manufacturers. However, this most recent Manufacturing PMI report has also highlighted the risk that this growth may run out of steam towards the end of year, with concerns raised around the lack of business investment activity. This echoes official data released at the end of February which showed business investment spending falling at the fastest rate for six years in 2014.
Small increase in Job Seeker Allowance Claimants
Historically, Warwickshire has seen a considerable decline in the number of JSA claimants over the past five years; an estimated 69% fall in total. This is also true for the past 6 months, where JSA claimants in the region have reduced from 4,620 in July 2014 to 3,632 in January 2015; a 21% decrease. However, the number has increased slightly from December, up from 3,459 to 3632 (+5%), although this is a common movement at this time of year due to the end of Christmas related employment.
In general, there are a higher number of short-term claimants relative to long-term claimants, which suggests economic recovery. January saw JSA claimants for over 6 months overtake those claiming for over 12 months by approximately 400. With long-term claimants currently below 1,000, the gap between short-term claimants and long-term claimants has diminished significantly over time.