Fears grow that region faces marked slowdown

after a relatively robust start to 2011, the latest business indicators suggest that growth is starting to stall in Greater Manchester.
Coupled with rising global oil prices, international uncertainty over the impact of the Japanese earthquake and the increase in the Eurozone interest rate, research by New Economy, which aims to create economic growth and prosperity for Greater Manchester, suggests that the prospect of a prolonged slowdown has markedly increased.

Leading indicators suggest that business conditions are already worsening in the region.

The proportion of businesses classified as high risk is now 37.1 per cent (35,000 businesses), up from 33.8 per cent in March 2010.

Simultaneously, the number of business deals has fallen over the year by a third to just nine in February.

Greater Manchester Chamber of Commerce’s quarterly economic survey shows that domestic sales and orders remain low and that employment growth in the next quarter is expected to be limited in both the service and manufacturing sectors.

Exports remain steady for all sectors and, more positively, around two-fifths of employers are still expecting to recruit.

The housing market is still weakening with Greater Manchester seeing a fall in the average house price over the last year and consecutive falls in house prices have now been experienced in each of the last four months.

The number of sales has also dipped, highlighting a continued reluctance to purchase houses at the current market price and indicating a loss of confidence as individuals become concerned about future employment prospects.

However, Greater Manchester’s housing market performed more strongly over the month than national and regional averages.

A more positive picture was reported from the labour market where the apparent worsening of the business environment has yet to feed through.

However, there are still some positive signs for business in Manchester.

Construction orders rose by 1.3 per cent on the year, outperforming the North-West and national levels by a considerable margin.

John Holden, deputy director of research at New Economy, said: “Our analysis suggests that the steam may be running out of the recovery and we may be heading to a period where the economy moves between no growth, low growth and possibly negative growth for an extended period.”

Baron Frankal, director of economics at New Economy said: “Clearly if this month’s business figures are the start of a trend it is worrying.

“The designation of Manchester Airport City as an enterprise zone may encourage the growth of new businesses and create new jobs which will boost the economy for years to come.

“We will need to stick to a course of action that will help promote growth and prosperity in Greater Manchester.”