The latest monthly economic outlook provides a view of the main economic measures of change, as well as news from the region about key industries and sectors. The official end of the recession is to be welcomed, but the long road to recover will not be smooth. Recovery will be slow due to weaker (although recovering) rates of demand and other underlying business factors such as lower profit margins.
The UK recession ended in the 4th quarter of 2009. Official Final estimates from the UK quarterly national accounts indicate that economic output (GVA) increased by 0.3 per cent in the fourth quarter of 2009. The latest UK economic output performance figures reinforce the view that recovery will be slow. HM Treasury’s average of independent forecasters suggests a 1.3 per cent rate of economic growth in the UK in 2010.
Profit margins remain under pressure. Despite signs of increased orders and workloads in December 2009, cost increases are pressurising margins, as businesses cannot increase prices in the current market environment.
Although more credit is available to businesses, there is less demand for business loans.Net business lending increased in the UK in November 2009, for the first time since January 2009. Credit availability to the corporate sector has also increased. However, there has been weaker demand for business loans.
Unemployment continues to be stable, but many are choosing not to actively participate in the labour market. Unemployment continues at stable rate of 6.5 per cent. The East of England’s unemployment rate was 6.5 per cent for the three month period between October and December 2009, and remains largely unchanged since Q2 2009.
There was a spike in redundancies in January.Notifications of redundancies and jobs at risk increased in January to more than 2,000 after stabilising at just over 1,000 per month since May 2009. This could reflect seasonal factors and three very large redundancy/jobs-at-risk announcements.
It has been a tough year for the agricultural sector.The UK agriculture sector has experienced an 18 month recession. Lower yields and increased input costs have made 2009 a challenging year for the region’s agricultural sector.
Housing market interest has increased, and there was an increase in the supply of housing on the market for sale in December 2009.
Contact Glenn Athey Insighteast@eeda.org.uk