Growth easing, unemployment at a 50 year low, and the value of innovation in uncertain times
Discover key economic and financial metrics, and what to look out for in the week ahead.
2 minutes to read
Here we look at the leading indicators in the world of economics. Download the dashboard for in-depth analysis into commodities, trade, equities and more.
Recession ahead?
UK GDP grew by 0.8% q-q in Q1 2022, slowing from 1.3% growth in Q4 2021 and missing expectations of 1.0%. The Bank of England has warned that the UK economy may be headed for a recession this year, while equity markets have placed a 70% chance of the US economy falling into a recession in the near term. Moderating economic prospects have resulted in $10 trillion of outflows from US equity markets this year, with the S&P 500 down 16% YTD and experiencing its worst weekly losing streak since June 2011. Despite the gloomy outlook, current economic data points are more upbeat, showing services and manufacturing PMIs for both the UK and US firmly in expansionary territory.
UK unemployment down to a 50-year low
Unemployment contracted to 3.7% in Q1 2022, its lowest level since 1974 and for the first time in history, there are fewer unemployed people than job vacancies. A strong labour market may play into the hands of the employee, which could mean that hybrid working solutions may become more desirable. We could therefore expect to see occupiers seeking office space that is underpinned by flexible lease structures, which permits flexible configuration for occupiers to “rightsize” in sync with the business cycle.
Innovation a source of growth in uncertain times
While economic messages are currently in conflict, our research is clear that innovation-led locations outperform during times of uncertainty – a factor which bodes well for the UK’s South East office markets over the year ahead. Our historic data shows that from the TMT sector alone there were c.900 office occupier leasing transactions or c.15 million sq ft of office take-up between 2002 and 2021, while life sciences companies accounted for 583,375 sq ft or 18% of total of take-up across the region in 2021. Looking ahead, demand for the life sciences sector shows no signs of slowing, and to keep up with this growing demand, we expect Oxford and Cambridge to record c.5 million sq ft of development over next five years. Read more on the South East in our latest M25 report.
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