Overview of the Midlands (via Midlands Engine Economic Observatory)
UK GDP grew 1.8% in May but was still 24.5% below its level in February, before the plunge in economic output when the pandemic struck.
Manufacturing and house building indicated some signs of recovery as some businesses saw staff return to work during May, but whilst retail sales rose, it was mostly confined to online shopping, due to restrictions on non-essential retail still being in place.
The Office for Budget Responsibility (OBR) said the economy was on course to shrink by 12.4% in 2020, with borrowing set to rise to a peacetime high.
The fiscal watchdog warned that the economy would not get back to its pre-crisis size until the end of 2022, while unemployment was likely to rise to a record 12% by the end of this year, falling back to 10.1% in 2021.
The latest figures from the survey of the Purchasing Managers Index for the Business Activity Index shows a substantial change in a positive direction.
The Business Activity Index for the WM was 50.4 in June 2020 (UK = 47.7) compared to 27.9 in May.
Similarly, the EM reported a figure of 50.4 in June 2020 compared to 32.6 in May.
This signals a rise back to similar levels reported in May 2019 – 50.7 in the West Midlands and 49.6 for the East Midlands.
Across the 12 regions, the East and West Midlands regions were the only 2 regions in the UK who saw an increase in business activity in June.
Across the Midlands Engine area, 1,404,100 workers were furloughed in June 2020, this is an increase of 208,400 (17.4%) of workers compared to May 2020.
Across the Midlands region, the highest sector for the number of workers furloughed in June 2020 was in retail sector at 20.9% (307,900) which is above the national average of 20.1%.
In June 2020 there were 416,605 claimants aged 16 years and over in the Midlands Engine.
This has decreased by 3,975 claimants since May 2020 (-0.9%, UK -1.3%). However, there are 195,065 (+88.0%, UK +107.0%) more claimants when compared to March 2020.
The number of claimants as a percentage of residents aged 16 years old over was 5.0% in June (UK 4.9%).
In June 2020 there were 86,510 claimants aged 16-24 years old in the Midlands Engine. This has increased by 2,365 claimants since May 2020 (+2.8%, UK +3.6%).
There are 42,315 (+95.7%, UK +116.0%) more youth claimants when compared to March 2020. The number of claimants as a percentage of residents aged 16–24 years old was7.4% in June (UK7.3%).
Regional analysis from Wave 7 of the Business Impact of Coronavirus Survey shows that 45% of trading businesses in the West Midlands and 43% of East Midlands businesses reported their turnover had decreased by at least 20% (UK 44%).
However, 17% of trading businesses in the West Midlands and 19% for the East Midlands reported that their turnover was unaffected (21% for the UK) and 10% reported their turnover had increased by at least 20% in the West Midlands, whilst the figure was nearly 11% for the East Midlands, above the UK average(8%).
There were 242 Foreign Direct Investment (FDI) projects across the Midlands in April 2019- March 20 (pre-Covid-19), this is an increase of 8.0% (+18 projects) compared to 2018-19.
The UK increased by 3.9% (+70 projects), from 1,782 in 2018-19 to 1,852 in 2019-20.