Worrying signs for the economy in new figures

Evidence was growing yesterday that the potential ‘worse to come’ for the region’s economy, predicted by the insolvency trade last month, is happening. A sharp rise has been seen in corporate insolvencies inEast Anglia in the third quarter, against a 20pc fall nationally (see analysis below). But whether the figures are a blip or a trend remains unknown.

Today’s unemployment figures could shine some light on how the region’s economy is faring. Last months’ figures saw an eight-month-long sustained fall in unemployment come to an end.

Yesterday, Andrew McTear, ofNorwichbased insolvency firm McTear Williams & Wood, said the East Anglian insolvency figures could be seen as the region coming into line with the national figures after relatively low numbers of insolvencies in the past quarters.

Norfolk’s figure, which saw a rise of 133pc, was partially affected by two groups of companies going into administration in the period, comprising seven companies in total. They were three cinemas, since bought out of administration, and CPC Packaging of King’sLynn, which saw about 95 jobs lost primarily inLynnbut also at the firm’sBristolsite. However, Mr McTear, who has mooted the potential for a double-dip recession, said “If you look at the current GDP figures you would not expect it.”

Throughout the past year the trend has been for manufacturing to be leading growth in the economy, including new work and increased staffing levels. It is thought this has partially been led by exports, helped by the weak pound. Recent figures from UK Trade & Investment saw the East of England region post the biggest rise in exports to EU countries in the 12 months to the end of September, compared to the same 12 months the previous year, at £13.5bn. TheUKas a whole rose 9.4pc, IKTI said. Exports to non-EU countries rose £10.6pc to £8.96bn.

Comparing year-on-year quarter three figures, exports from the eastern region to EU countries slowed compared to theUK. Where firms have increased business, the continued rise in raw materials costs, from the widely reported increase in the prices of cotton and wheat to the cost of glass bottles and paper, is putting pressure on manufacturers.

According to the Lloyds TSB East of England Purchasing Managers’ Index (PMI) this week, input cost inflation accelerated at its fastest in November since May, primarily due to raw materials costs.

The housing market in the East of England is also showing signs of continued slippage. According to the RICS UK Housing Market survey yesterday, the market-slowed and 58pc more chartered surveyors said prices fell rather than rose in November.

“There are signs out there that all is not well,” said Mr McTear. “The big thing is signs of weakness in the housing market. The question is, is it a turning point or a fluctuation” The next quarterly figures will tells us but from our own experience we are much busier on the new work front now than we were in the previous quarters. That is suggesting to us that this is more a turning point than a fluctuation.”

Eastern Daily Press
15 December 2010

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