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Monthly Economic Update – April 2010 SUMMARY OF ECONOMIC CONDITIONS April has been another month of consolidation with a general picture of cautious optimism in the Northwest economy. This is supported by the PMI which again reported a very positive business activity figure of 60, the third successive month output in the region has significantly outperformed the UK. Anecdotal evidence suggests that improved operating conditions, higher consumer confidence and restocking have all contributed to the strong figures. The biomedical and energy and environmental technologies (EETS) sectors were the industries most positive about current conditions. Bio medical report their industry is non-cyclical in nature; EETS is a significant area of opportunity and is receiving significant public and private investment. Amongst other clusters to report improved conditions are automotive, digital and creative (DCI), chemicals, food and call centres. Supporting the picture from the PMI, improved conditions and increased consumer confidence are helping these sectors to grow. Unemployment increased by 11,000 in the last quarter to stand at 290,000 in February 2010. Part of this has been attributed to the bad weather which hindered people’s ability to find new work. Job Seekers Allowance (JSA) decreased by 5,000 in March, following a 6,000 fall in February. Youth unemployment is starting to fall, although the number of under 24’s who have been claiming for over 12 months continues to increase. This is particularly an issue in Greater Manchester. Firms are reporting positive intentions over recruitment which may help the region’s labour market. A significant downside risk is public sector employment, which is close to 1m in the region, approximately a third of all jobs. KEY CHALLENGES AND HOTSPOTS A number of sectors report a pick up in mergers and acquisitions (M&A) activity, specifically biomedical and DCI. This could represent a challenge to the region if decision making is taken out of the Northwest. There also appears to be a pickup in restructuring, which could result in business closures and job losses in the future. The PMI has reported that input costs are starting to increase. At the moment this is not being reported from the Northwest cluster organisations.. BUSINESS SPECIFIC INTELLIGENCE / INFORMATION ON KEY QUESTIONS Firms in the Northwest are cautious about investment, while there still remains uncertainty in the economy, companies are reluctant to invest. There are some signs of improved intentions; Leyland trucks, in partnership with NWDA, are investing significantly in training. The aim is to show the workforce how they can reduce costs, which will improve efficiency. The training also aims to improve quality. A number of other sectors report that investment is starting to pick up, mainly to take advantage of new opportunities. Large scale investment is being facilitated by either NWDA Research Team, Renaissance House, Warrington Website: www.nwriu.co.uk

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large companies working in partnership with suppliers (British Gas is one example) or by the public sector. EETS welcome the news about the green bank. This should create jobs and increase investment in the sector. The advanced and flexible materials cluster suggested volcanic ash restricted trade, although no other businesses mentioned this as a problem.

NWDA Research Team, Renaissance House, Warrington Website: www.nwriu.co.uk

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