EPMR: Economic and Property Market Review - Expo edition 2012, October 2012

Report Summary:

Recent Chartered Institute of Purchasing and Supply survey data suggests that economic growth was weak in Q2 but that, contrary to ONS figures, output did not contract. The survey also shows a marked improvement in August following a poor July. This suggests that ONS data will show positive output growth in Q3, helped by Olympic visitor event payments which are counted by ONS as all occuring in Q3.

Employment data shows an accelerating surge in growth in 2012, which is very hard to reconcile with an official recession in output terms! In fact, over the latest three month period (May – July) employment increased by 236,000. This is the second strongest three month growth in the last 20 years, which is astonishing and good news for the property sector. However, only 43% of this growth was in full time jobs, 57% was in part-time jobs and 22% of total growth was self-employment.

The downside to strong employment growth when output growth is weak is that productivity falls, which is bad news for international competitiveness. Recent data shows that in 2011, on an output per worker basis, UK productivity was 20 percentage points lower than the other G7 nations. Since 2007, the last year before the recession started, growth of UK output per hour and per worker has been much weaker than in the US, Japan and Canada, but broadly similar to other major European economies. In the first half of 2012 UK productivity appears to have weakened further.

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