Survey data suggests solid growth in Manchester economy

THE economy of Greater Manchester is beginning to accelerate, as a result of strong service sector performance and revived activity in construction.

A survey of more than 500 members by Greater Manchester Chamber of Commerce, covering the three months to September 330 predicts a better than expected forecast for GDP growth in the year as a whole, to 1.5% rising (from a previously estimated figure of 1.2%) with projected growth of around 2.5% for 2014.

Christian Spence, head of business intelligence at the Chamber, told TheBusinessDesk.com that data suggests the local economy is seeing a balanced recovery with consistent growth across all sectors.

“The strong increase in growth seen this quarter is very much driven by the service and construction sectors and is supported by other survey and official data. Within the QES, construction output is at its highest since Q2 2010 when we started monitoring the sector separately.

“There are other indicators now suggesting that private house building is accelerating at its quickest rate for 10 years and Greater Manchester has the potential to capture the benefits of this. Service sector expansion is relatively broad a based with business, financial and professional services driving the increase in growth though digital and even retail (though more from the city centre than well-spread) is looking firmer.

“Confidence is up, inflation worries look weak and employment intentions are strong. We need to see household incomes improve to ensure the recovery accelerates to trend growth but, for now, it all looks good.”

Analysing the big picture, John Ashcroft, Chamber chief economist John Ashcroft said the survey suggests the outlook for the wider economy is “pretty positive”, with concerns over inflation receding.

On interest rates, he said: “The outlook for monetary policy is very accommodating, with forward guidance suggesting the Monetary Policy Committee will be reluctant to increase rates until the recovery is well proven. This will underpin investment plans which will be brought back to the board table as the order books improve. 

“Overall the prospects for growth into the second half of the year and into next look good. If there is one concern, it is that they may look too good. The UK is on track for faster growth than the major trading partners of USA and Europe.”

If growth is too fast-paced he fears there would be a “significant” impact on the trade deficit, sparking an early rise in interest rates.