Unemployment in Worcestershire - March 2012

Unemployment in the County (on the claimant count) fell last month, more or less reversing the increase in February and mirroring the national and regional falls – in the headline rate at least; the national claimant count increased by 3,600 to 1.61M, the highest level since October 2009.

Further information about unemployment and many other economic indicators can be found in the monthly Worcestershire Economic Summary.  National information for this month can be accessed from this BBC website and they also produce a useful graphic (though because of the statistical anomalies in the way the County Council produces it’s percentages compared with the ONS the two sets of figures are not directly comparable).

The unadjusted unemployment total for Worcestershire was 11,364 (4.1%) in March 2012, which is a decrease of 455 (0.1%) JSA claimants from the previous month.  The county rate still compares favourably with the unemployment rates for the West Midlands region (6.9%) and England and Wales (5.8%).  Unemployment also fell in Worcestershire as compared with this time last year (by 170), whereas nationally it has increased by 150,000 on the claimant count and 190,000 on the more widely used headline rate of people available for work.

The district with the highest unemployment rate is Worcester City (5.1%) and the lowest is Malvern Hills, (3.0%).  In terms of urban centres, Kidderminster had the highest unemployment rate at 5.7% and Wythall had the lowest at 2.4%.  The biggest falls in those claiming benefits were in Redditch (down 122) and Worcester (down 115) compared with last month, although Worcester was still 140 higher than a year ago compared with a fall of 104 in Redditch.  Wyre Forest saw a fall of 39 claimants last month but is still 177 higher than this time last year.  The opening of the new ASDA store in Worcester with 350 new jobs may have had an impact on the figures, though many of the staff have been employed for some time training in readiness for the store opening.  

The male unemployment rate in Worcestershire is 5.0%, compared to the female rate of 2.9%.  Both the male and the female unemployment rates fell by 0.2 percentage points compared to February 2012.

Against the headline drop in claimants, there has been a worrying growth in the numbers out of work for six and 12 months or more.  For those unemployed for more than six months the figure has increased by 2.2 % to 38.7% between February and March and the figure for more than 12 months has increased by 1.8 % to 18.1% over the same period.  Nationally, Liam Byrne, the Opposition spokesman, said that the numbers who are long-term unemployed is up 50% on a year ago.  In Worcestershire the six month claimant rate was around 11% and the 12 month rate 27% in March 2011.

Youth unemployment showed a slight improvement compared with last month with 3,450 people aged 18-24 claiming JSA benefit compared to 3,600 in February and 3,350 March last year. Of these in March 2012, there were 3,080 people aged 18-24 that had been claiming for up to one year, which is 7.4% of the 18-24 population and a decrease of 0.5% compared to February 2012.  This is still marginally higher than the England average.  The ward with the highest proportion of unemployed young people continues to be Oldington and Foley Park in Kidderminster at 17.4%, which is the same rate as last month and in March last year.  As I have previously observed, the ten wards listed in the County with the highest youth unemployment changes slightly from month to month but they always remain the same group of areas which figure in other indices of deprivation. More generally, the trend in the County shows that the overall percentage of claimants aged 18-24 claiming for over 12 months started to increase more rapidly, from around 2% of all claimants aged 18-24 in October 2009 to 8.6% in June 2010,from which point it started to fall. However towards the end of 2011 the figures started to rise again and the current figure in March 2012 stands at 10.6%.  

The number of vacancies in Worcestershire was 3,802 in March 2012. This is 14.4% lower than in February 2012 but 24.5% higher than in March last year.  There is continuing controversy about part-time working and ‘under-employment, where people are doing part-time jobs because they can’t get full-time work even though that is what they want.  (Under-employment can also refer to people working at a level below their qualifications but that isn’t included in the claims and counter claims here).  Nationally, the ONS says the number of people having to settle for part-time work because they can't find full-time jobs has risen 89,000 to 1.4 million, its highest level since records began in 1992. This was criticised by Brendan Barber, the TUC general secretary, who said, “a record [number of people] are now stuck in involuntary part-time work."  The Government see it as a trend in people, especially women with children, coming back into the work-place.

We continue to be fortunate with our unemployment rate in Worcestershire (never forgetting the difficulties it represents for each person that is unemployed) compared with some other parts of the country including many parts of the West Midlands not far from us.  Humber, and the North West.   As the BBC graphic I referred to earlier shows, the two constituencies with the highest unemployment rate in the country are in the West Midlands: Birmingham Ladywood (12.4%) and Birmingham Hodge Hill (10.6%) and the fourth highest is also in Birmingham (Sparkbrook at 9.6%).  The national headline figure is 2.65 million people out of work, down by 35,000 in the quarter to February, giving a jobless rate of 8.3 per cent.  For whatever reason, it seems difficult to obtain figures on this basis for Worcestershire, but it is hoped that the figures in this summary are useful.

Many U.S. immigrants' children seek American dream abroad

Following on from my previous posts about more rapid growth outside the developed economies, the following caught my eye (from Daily Digest: Sojourners' - a US Christian pressure group - summary of today's top news stories):

In growing numbers, experts say, highly educated children of immigrants to the United States are uprooting themselves and moving to their ancestral countries. They are embracing homelands that their parents once spurned but that are now economic powers.  (New York Times)

It seems many now see opportunites in entreprenuerial, rapidly-growing developing countries that are not so apparent in more more established economies.

Making Money Around the World

In my last post about what I learnt at a CCLA seminar I said that, in suggesting that better returns were to be obtained from overseas growth funds, the point was made that it depends on where the money is made, not where the company is quoted on the stock exchange or where its headquarters are.  The bigger returns, and faster economic growth, are in fast developing countries, not the developed world of the UK, Europe and the US.

I found this article on the BBC website, which begins with looking at the controversy about Amazon not paying any corporation tax in the UK despite their substantial sales because their European headquarters are in Luxemburg, but it goes on to describe how multi-national/trans-national companies operate around the globe and use transfer pricing to minimise liabilities and move profits to the lowest tax jurisdictions.  Some of that may make analysing companies' activities for investment (let alone tax) purposes more difficult, but the article gives a useful insight into the activities of some of our household and other names that operate around the world and is a reminder that sometimes we in our locality are a very small part of a much bigger picture.  

What Future for the UK?

Yesterday I was able to go to a CCLA (Churches, Charities and Local Authorities) Investment Seminar as our Diocesan Secretary and a member of the Diocesan Resources Board were unable to go and kindly passed the invitation onto me.

As the name suggests the CCLA invests funds on behalf of a wide variety of trustees of charitable and similar bodies.  The seminar was intended to help trustees to better understand the variety of options available to them in the current complex economic environment.  It was an interesting insight for me to look at stock market, bond market and other investment areas in contrast to my more normal habitat of thinking about the effects of the policies of various organisations on their employees or about the policies that might influence economic growth and regeneration in the county and region where I work.

I was particularly struck by the views expressed about the UK as a place to invest, which I will come to later, but it was also interesting to see how the investment policies of charitable trustees might differ from many of those who influence the way our investment markets work.  Although charities might need to hold money for relatively short periods to bring forward for a particular project, in many cases they are there for the long haul.  Because of this, they are more interested in a reliable income stream, and fluctuations in the capital value of assets is less important as they are unlikely to want, or in many cases to be able, to crystallise the asset.  I think, for example of our Diocesan Resources Board, where the contribution of investments to the total income of the diocese needs to be regular and reliable to enable the work of the diocese (including the payment of clergy) to be funded.  (I have no role in decisions in this area but I imagine this to be the case).  This means a longer view, with enough growth to counter inflation, but where income is important, will be very different to many investors where capital appreciation is the main objective.  It flies contrary to all those executive remuneration policies where big bonuses are payable for ‘enhancing shareholder value’.

However, the thing I most want to focus on is what was said about where one might want to invest.  In the current environment it seems that equities (shares) are seen as potentially offering good returns with, in many cases good dividends for income and sufficient capital growth to offer a long-term defence against inflation.  The really interesting question, though, is in which shares, or more precisely where, one might want to invest.  To quote from one of the PowerPoint slides: ‘Income is growing faster outside the UK’.  It then showed regional dividend yields and growth rates:

                                                Current Yield                      Annualised 5 year dividend growth

                                                                %                                                            %

UK                                                          3.2                                                          -1.2

US                                                          1.9                                                          1.6

Europe                                                 3.5                                                          1.0

Japan                                                    2.3                                                          4.4

Asia Pacific (ex Japan)                  2.8                                                          7.7

What this shows is a reflection of the forecast economic growth rates for various parts of the globe, for example by 2016, with the Euro area at 1.7%, UK2.7%, US 3.4%, Central/Eastern Europe and Latin America 3.9%, Middle East and North Africa, and Sub-Saharan Africa 5.1%, and developing Asia (including China and India) 8.6%.

The conclusion in choosing your investment fund is that the developed world, including the UK is not a good prospect.  One might wish to choose a global equity income fund (though interestingly, CCLA’s fund still has about 60% of its assets allocated in the UK, Europe and North America).  However, the key point is that one should look at where the profits are made, not where the company is based.  The company might, therefore, be listed on the London Stock Exchange but the key question is how much of its profits are made in those places that are growing quickly – which are not UK, Europe or North America.

Now, of course, it is one thing to analyse this dispassionately when choosing where to invest for the best return.  It is another question when the implication (or more) is that there is not going to be much growth for us here in this country.  That raises some serious questions when we talk about economic development, regeneration and jobs here in Worcestershire and in the rest of the UK. Especially when one reckons that outside London and the South-east, which have continued to grow economically in recent times, that effectively means the rest of us have been enduring our own local recession – the more so for those declining parts of the Midlands and the North.

We were told that when one takes into account currency movements that will reflect the declining economic strength of the developed world and the growing strength of the rest, we will see relative declines in our standards of living.  I guess the question then is does a relative decline matter, if in absolute terms we are still pretty well off?  Within that, though, there is a distribution question, for, as we know, when there is pressure on living standards people feel it much more keenly that when there is growth.

We can crunch the numbers (and it is important that we do) but what does this mean for real people who are affected by these changes?  We rejoice for those in parts of the world where they may be moving out of poverty (if the rewards are properly shared) but what kind of reappraisal of priorities might this suggest for those who may be affected in the reverse direction?