This month continues to be turbulent. Conflict in the Middle East, unstable UK politics and continued stagnation of the economy. Whilst the economy is showing some resilience, prospects for growth remain low and rising global tensions are increasing worries of global shocks to already sensitive energy markets.
- The baseline forecast is for global growth to slow from 3.5 percent in 2022 to 3.0 percent in 2023 and 2.9 percent in 2024.
- Advanced economies are expected to slow, with growth reducing from 2.6 percent in 2022 to 1.5 percent in 2023 and 1.4 percent in 2024 as policy tightening starts to bite.
- The UK Consumer Prices Index (CPI) rose by 4.6% in the 12 months to October 2023, down from 6.7% in the 12 months to September 2023.
- UK core CPI (excluding energy, food, alcohol and tobacco) rose by 5.7% in the 12 months to October 2023, down from 6.1% in September; the CPI goods annual rate fell from 6.2% to 2.9%, while the CPI services annual rate fell from 6.9% to 6.6%.
- The West Midlands Business Activity Index decreased from 50.0 in August 2023 to 49.3 in September 2023, taking the region into negative growth. The decline in business activity was linked to reduced customer orders.
- The number of business births in the WMCA area in Q3 2023 was 3,535. This figure is 7.0% higher than the number of business births in Q3 2022, this is below the UK growth of 14.9%.
- Median annual gross resident earnings for WMCA full-time employees were £32,019 in 2023, which is a 4.5% increase over the £30,646 in 2022. For the UK the increase was 5.8% over the last year to £34,963 in 2023 (meaning the WMCA area had a gap of £2,944).
Inflation
- The Consumer Prices Index (CPI) rose by 4.6% in the 12 months to October 2023, down from 6.7% in the 12 months to September 2023. Core CPI (excluding energy, food, alcohol and tobacco) rose by 5.7% in the 12 months to October 2023, down from 6.1% in September; the CPI goods annual rate fell from 6.2% to 2.9%, while the CPI services annual rate fell from 6.9% to 6.6%.
- However, whilst the CPI inflation rate has fallen this does not mean that prices are falling. A fall in the inflation rate means prices are still rising – but at a slower rate. Thus, if inflation for October 2023 is 4.6%, it means that prices are 4.6% higher than they were last year.
- Producer input prices fell by 2.6% in the year to October 2023, down from a revised fall of 2.1% in the year to September 2023. Producer output (factory gate) prices fell by 0.6% in the year to October 2023, down from a revised increase of 0.2% in the year to September 2023. Inputs of fuel, and outputs of food products provided the largest downward contributions to change in the annual rates of input and output inflation, respectively.
- Cases of Skimp and Shrinkflation continue to rise, which will likely mean a permanent reduction in product sizes or quality.
Business Activity
- The value of goods imports decreased by £2.9 billion (6.2%) in September 2023, with falls in imports from both EU and non-EU countries. The fall in imports was mainly the result of lower imports of machinery and transport equipment from the EU and reduced fuel imports from non-EU countries.
- The value of goods exports decreased by £0.9 billion (2.9%) because of falls in exports to both EU and non-EU countries.
- In August 2023 27% of trading UK single-site businesses reported a decrease in turnover compared with the previous month, broadly stable with August 2022 (26%).
- 7% of responding West Midlands businesses reported as exporting within the last 12 months, 3.4% reported to exporting over 12 months ago. While 48.9% of West Midlands businesses reported to have never exported and do not have the goods or services suitable for export.
- 4% of responding West Midlands businesses reported global supply chain disruption in September 2023. While 61.9% reported no disruption.
- Insolvencies have increased 10% last month from the same period last year. With the UK likely to see the highest number of companies going insolvent, since the financial crash in 2008, by the end of the year.
- The West Midlands Business Activity Index decreased from 50.0 in August 2023 to 49.3 in September 2023, going into negative growth. The decline in business activity was linked to reduced customer orders. The UK Business Activity Index decreased from 48.6 in August 2023 to 48.5 in September 2023.
- Out of the 12 UK regions, the West Midlands was the third highest for business activity in September 2023.
- The West Midlands Future Business Activity Index decreased slightly from 78.5 in August 2023 to 78.4 in September 2023, but was still among the highest levels seen since January 2022. Optimism in firms was linked to expectations of new business gains, demand would strengthen, planned investment (people and systems) and efficiency gains. Out of the 12 UK regions, the West Midlands was the highest for Future Business Activity in September 2023.
- 8% of responding West Midlands businesses expect the main concern for business in November 2023 will be falling demand of goods and services.
- The number of business births in the WMCA area in Q3 2023 was 3,535. This figure is 7.0% higher than the number of business births in Q3 2022, this is below the UK growth of 14.9%.
Labour market
- Overall, for the WMCA area, the economic activity rate was 74.8% in the year ending June 2023, an increase of 0.7 percentage points (pp) since the year ending June 2022. The UK economic activity rate was 78.5% and increased at a slower rate of 0.1pp.
- There were 124,880 claimants in the WMCA area in September 2023. Since August 2023, there has been an increase of 1.5% (+1,805), while the UK increased by 0.9%. When compared to September 2022, claimants have increased by 4.0% (+4,835), with the UK increasing by 2.2%.
- Overall, for the WMCA the number of claimants as a proportion of residents aged 16-64 years old was 6.8% compared to 3.7% for the UK in September 2023.
- In the WMCA area there were approximately 1.3m jobs in 2022. Since 2021, jobs in the WMCA increased by 1.6% (+21,000) and nationally there was a 2.4% increase.
- Median annual gross resident earnings for WMCA full-time employees were £32,019 in 2023, which is a 4.5% increase over the £30,646 in 2022. For the UK the increase was 5.8% over the last year to £34,963 in 2023 (meaning the WMCA area had a gap of £2,944).
Read the West Midlands Economic Impact Monitor in full.
This blog was written by Alice Pugh, Policy and Data Analyst, City-REDI WMREDI, University of Birmingham.
Disclaimer:
The views expressed in this analysis post are those of the authors and not necessarily those of City-REDI, WMREDI or the University of Birmingham.