SlideShare ONS Economic Forum Slidepack - 22 July 2024

ONS Economic Forum 22 July 2024

1. ONS Economic Forum Chair – Sumit Dey-Chowdhury @ONSfocus #ONSEconForum slido #24296 Deputy Director Economic and Microdata Insights Office for National Statistics

2. Agenda 09:30am – 09:35am   Welcome and introduction – Sumit Dey-Chowdhury, Deputy Director, Economic and Microdata Insights, Office for National Statistics 09:35am – 09:50am State of the UK economy – Kathryn Keane, Economist, Office for National Statistics 09:50 am – 10:05am Households’ finances and saving – Gabriele Bindi , Assistant Economist, Office for National Statistics 10:05 am – 10:15am   Firm employment dynamics in local economies – Kyle Jones , Assistant Economist, Office for National Statistics 10:15am – 10:25am Questions and answers 10:25am – 10:30am Web and content transformation – Patrick Scott , Office for National Statistics 10:30am Closing remarks – Sumit Dey-Chowdhury, Deputy Director, Economic and Microdata Insights, Office for National Statistics @ONSfocus #ONSEconForum slido #24296

3. State of the UK Economy July 2024 Kathryn Keane Economist Office for National Statistics @ONSfocus #ONSEconForum slido #24296

4. Monthly GDP growth remains positive Source: Office for National Statistics – GDP monthly estimate Sources: IMF, World Economic Outlook @ONSfocus #ONSEconForum slido #24296

5. Leading indicators also suggest optimism Source: S&P Global PMI Source: Office for National Statistics – Business insights and conditions survey @ONSfocus #ONSEconForum slido #24296

6. Inflation back at target but services remain high Source: Office for National Statistics – Consumer Price Inflation Source: Office for National Statistics – Services Producer Price Inflation @ONSfocus #ONSEconForum slido #24296

7. Labour market continues to ease  Sources: ONS – Vacancies and Unemployment Sources: Office for National Statistics – PAYE RTI @ONSfocus #ONSEconForum slido #24296

8. Real pay growth remains positive Source: ONS – Average Weekly Earnings and Consumer Price Index Source: Bank of England – Decision Maker Panel @ONSfocus #ONSEconForum slido #24296

9. Bank rate impacts still working through economy Source: Bank of England Source: Bank of England - Financial Stability Report @ONSfocus #ONSEconForum slido #24296

10. Conclusions The outlook for GDP growth remains positive  Inflation has returned to target, but service prices seem sticky Labour market tightness has eased, and real wages are growing Effects of interest rate rises are still working their way through the economy @ONSfocus #ONSEconForum slido #24296

11. Assistant Economist Office for National Statistics Households’ finances and saving in the UK since 2020 Gabriele Bindi @ONSfocus #ONSEconForum s lido #24296

12. Background Disposable income = consumption + saving ‘Excess’ saving refers to the accumulation of household saving since the pandemic, due to: restrictions on consumer spending opportunities additional government support to disposable incomes Above-trend saving rates There is interest in whether excess savings have been run down @ONSfocus #ONSEconForum slido #24296

13. Estimates of excess saving We use three different approaches to estimate ‘Excess’ saving: Actual vs pre-pandemic saving ratio trend Change in financial assets and liabilit ies Modelled excess saving which are not explained by ‘intertemporal’ or ‘precautionary’ motives ‘Intertemporal’ motive refers to the desire to use savings to move consumption across time ‘Precautionary’ saving reflect the desire to maintain savings as buffer for future uncertain times @ONSfocus #ONSEconForum slido #24296

14. Households’ saving ratio is still above pre-pandemic level Households’ saving ratios and pre-pandemic trend, UK 2017 Q1 to 2024 Q1 Source: UK Economic Accounts and authors’ calculations @ONSfocus #ONSEconForum slido #24296

15. Excess savings initially stored as bank deposits and more recently used to repay loans The difference between actual and trend household saving ratios (percentage points), UK, 2020 Q1 to 2024 Q1 Source: UK Economic Accounts and authors’ calculations @ONSfocus #ONSEconForum slido #24296

16. Excess savings reflect forced saving during the pandemic and other factors The household saving ratio and modelled saving ratio (%), UK, 2017 Q1 to 2024 Q1 Source: UK Economic Accounts and authors’ calculations @ONSfocus #ONSEconForum slido #24296

17. Excess savings reflect forced saving during the pandemic and other factors The change in the saving ratio relative to its rate in 2019 Q4 (percentage points), UK, 2020 Q1 to 2024 Q1 Source: UK Economic Accounts and authors’ calculations @ONSfocus #ONSEconForum slido #24296

18. UK household still reticent to run down accumulated savings The accumulated value of excess savings held by households (as a percentage of annual total resources), UK, 2020 Q1 to 2024 Q1 Source: UK Economic Accounts and authors’ calculations @ONSfocus #ONSEconForum slido #24296

19. Conclusion There is some evidence there are still excess savings that could be run down We estimate the total excess savings accumulated since the start of the pandemic range from 7.9%-18.7% of UK household annual total resources Despite falling to pre-pandemic levels in 2022 Q2, the households’ saving ratio has risen again to above its long-term or modelled trend A range of factors may explain this, including additional uncertainty, the cost-of-living crisis and lower household wealth We will update these provisional findings as and when there are future revisions to the National Accounts @ONSfocus #ONSEconForum slido #24296

20. Assistant Economist Office for National Statistics Firm employment dynamics in local economies Kyle Jones @ONSfocus #ONSEconForum s lido #24296

21. Questions of interest: How do firms add and remove jobs from local areas? How does the rate at which firms are adding jobs vary across space? How has the pace at which firms add and remove jobs changed through time? @ONSfocus #ONSEconForum slido #24296

22. Current ONS outputs around this topic: Enterprise entry, exit and survival (UK business demography) Number of enterprises and employment sites (UK business counts) Employment in firms on the UK’s business register (BRES) Business dynamism (UK trends in business dynamism and productivity) Less however is known about: The entry and exit of employment sites from local areas The jobs being added and removed from local economies. How trends business dynamism seen at the UK level appear in local economies. @ONSfocus #ONSEconForum slido #24296

23. Firms vs employment sites: Supermarket Chain Store (2) Head-Office Warehouse Conglomerate Store (1) Store (3) Store (4) Store (5) Supermarket Sites Enterprise Group Enterprise/Firms Local Unit/Employment Site @ONSfocus #ONSEconForum slido #24296

24. What do we mean by job creation and destruction: In a local context.. Job creation: Jobs added when… Employment sites are initially created Employment sites expand and increase the number of staff they employ between years . Job destruction: Jobs removed when… Employment sites shrink and reduce the number of staff they employ between years. Employment sites are permanently closed Data Source: Interdepartmental Business Register (IDBR) and the Longitudinal Business Database (LBD) @ONSfocus #ONSEconForum slido #24296

25. Jobs being added and removed simultaneously drive changes in net employment Figure 1: Jobs created, and jobs destroyed by channel, UK, 2022 @ONSfocus #ONSEconForum slido #24296

26. What is business dynamism and why is it important? Business dynamism: the rate at which firms enter, grow, shrink, and then exit the market. (As jobs are removed by firms that shrink or close, displaced workers flow to opening or expanding enterprises elsewhere in the economy) Higher dynamism = Higher rate of new businesses flowing in, Higher rate of potentially less profitable/productive business flowing out, R esources more easily able to move across firms, New ideas are more easily able to flourish Business dynamism linked to higher productivity but only where resources are moving from less productive firms to more productive ones. In reality, not all reallocation is productivity enhancing making the relationship less clear cut. @ONSfocus #ONSEconForum slido #24296

27. Areas with high job creation rates also tended to have high job destruction rates Figure 2: Average job creation rate and job destruction rate, international territorial level 3 (ITL3) subregions, 2016 through to 2019 @ONSfocus #ONSEconForum slido #24296

28. Job creation rates and job destruction rates declined in most ITL3 regions Figure 3: Change in job creation rate and job destruction rate, international territorial level 3 (ITL3) subregions, 2004 through to 2007 to 2016 through to 2019 @ONSfocus #ONSEconForum slido #24296

29. Fewer jobs from new employment sites and less jobs removed by closing employment sites Figure 4: Job creation rate and job destruction rate split out by channel, UK, 2004 to 2022 @ONSfocus #ONSEconForum slido #24296

30. Categorising new employment sites: New employment site in a new firm ( startup and entrepreneurial activity) New employment site in an expanding firm (spatial expansion of multi-site firms, such as supermarkets or restaurants opening new locations in addition to their existing locations) @ONSfocus #ONSEconForum slido #24296

31. Fewer jobs were created by firms opening additional employment sites Figure 5: Job creation rate and job destruction rate by channel, UK , 2004 to 2022 @ONSfocus #ONSEconForum slido #24296

32. Jobs added per newly created employment site have remained stable in most industries Figure 6: Change in the average number of jobs created by channel and industry, UK, 2004 through to 2007 to 2016 through to 2019 @ONSfocus #ONSEconForum slido #24296

33. Firms operating nationally or regionally have been opening fewer additional sites over time Figure 7: Number of additional employment sites added by geography of firm, UK, 2005 - 2021 @ONSfocus #ONSEconForum slido #24296

34. In Summary: We present new statistics and analysis on local job creation and destruction between 2004 and 2022 Net employment changes are the function of bigger movements in job creation and destruction The rate at which jobs were being created and destroyed fell in around 87% of ITL3 regions. The fall in the rate at which jobs were being created can mostly be attributed to existing firms opening fewer additional employment sites. We value your feedback on these statistics. Contact us at [email protected] @ONSfocus #ONSEconForum slido #24296

35. Head of content Office for National Statistics ONS website and content improvements Patrick Scott @ONSfocus #ONSEconForum slido #24296

36. “Urgently improve the website so that it meets user requirements more effectively” Prof Denise Lievesley Independent Review of the UK Statistics Authority, 2024                             Higher quality Reduced errors Increased impact @ONSfocus #ONSEconForum s lido #24296

37. What we're doing New website presentation New features and functionality  Improving content Improving user experience and our knowledge of what users need Greater value for users @ONSfocus #ONSEconForum s lido #24296

38. Have your say We're committed to being user-focused We'd like to hear from you Please fill in this survey: https://www.smartsurvey.co.uk/s/KOWTBH/   @ONSfocus #ONSEconForum s lido #24296

39. Closing remarks Sumit Dey-Chowdhury @ONSfocus #ONSEconForum Deputy Director Economic and Microdata Insights Office for National Statistics slido #24296

40. Forthcoming ONS economic analysis 26 July 2024 Understanding skill and qualification suitability in the labour market, UK: July 2024 31 July 2024 The Population and The Economy 6 August 2024 Train tickets and hybrid cars: new data being used to track spending habits 29 August 2024 Labour demand volumes by Standard Occupation Classification (SOC 2020), UK All information on upcoming analysis can be found via the ONS website @ONSfocus #ONSEconForum s lido # 24296

41. Upcoming ONS events Tuesday 17 September 2024 – ONS Local presents: Local economic growth with What Works Growth Monday 22 September 2024 – ONS Economic Forum We will be showcasing the latest economic and social developments including a wide range of analytic topics. Each month we will feature ‘State of the Economy,' providing a stocktake of the latest trends and developments. Registration to open shortly. Further details at:   ons.gov.uk/ economicevents or https://www.eventbrite.co.uk/o/the-office-for-national-statistics-33407052803 @ONSfocus #ONSEconForum slido # 24296

42. Thank you for attending the Economic Forum You can keep up to date on all upcoming events via ons.gov.uk/economicevents   If you would like to ask a question or provide any feedback, please do so via [email protected]