If we want to get a sense of the make up of a local economy, the place that we might naturally start will be to look at which are the biggest industries or occupations in that area. However, one of the problems with this approach is that, by and large, the biggest industries and occupations in most areas tend to be fairly similar. For example, when looking at industries, most areas will have high employment in sectors such as hospital activities; primary and secondary education; restaurants and mobile food service activities; and so on. As for occupations, the biggest of these in most regions will tend to be things like sales and retail assistants; cleaners and domestics; nurses; and kitchen and catering assistants.
These industries and occupations are obviously all very important to each region, but they don’t really tell us what is unique about a particular area. In order to find this out, our Analyst tool has a function called Location Quotient (LQ). This is essentially a measure of industry or occupation specialisation, and it measure how concentrated it is in a particular area when compared to the rest of the country. Great Britain acts as a benchmark, with an LQ score of 1.0 for each industry or occupation, so any sector or job that has an LQ greater than one therefore has a higher concentration in the region than the national average.
However, one of the issues with LQ is that it often throws up industries and occupation which, whilst highly concentrated in an area, do not actually employ huge numbers of people. For example, the industry with the biggest LQ in East Hampshire is the manufacture of magnetic and optical media, which has a huge LQ of 302.83. However, there are only 43 people employed in this sector, and so although it is clearly very concentrated in the area, it is a fairly minor part of the East Hampshire economy in terms of numbers employed.
So on the one hand, sheer job numbers are not always very helpful in telling us what is unique about a local economy. And on the other hand LQ, which is designed to tell us what is niche about a local economy, is not always helpful in that it can throw up some very low employing industries or occupations.
But what if we were to combine the two? Looking at two LEP regions — Buckinghamshire Thames Valley, and Cornwall and the Isles of Scilly — we have done the following:
- Firstly we ranked the industries in terms of job numbers
- Secondly, we ranked them according to LQ
- Finally, we added these two numbers together for each industry to give a new ranking
What this gives us is a list of industries that make up a significant percentage of their local area in terms of numbers employed, but which are all also fairly niche sectors in the region. Below are the Top 10, first for Buckinghamshire Thames Valley and then for Cornwall, with the blue bars representing the industry’s share of jobs in each region, and the dots representing its LQ:
As you can see, this exercise throws up some big differences between the regions. Amongst other things, Buckinghamshire has a significant number of wholesale industries, whilst Cornwall has — as you would probably have expected — a significant number of tourism-related sectors.
We’ve done the same exercise, but this time looking at occupations. Once again, the blue bars represent each occupation’s share of jobs in each region, with the dots representing its LQ:
Whether or not this particular exercise of double ranking industries and occupations in terms of job numbers and then LQ is something you would want to use, there is a much broader point to all this. Our dataset contains over 20 million data points, and there are no end of different variables as to how the data can be viewed. But by getting a little creative, you can find new and interesting ways of looking at what is big in your local economy, or what is driving your local economy, or what is unique about your local economy. A little inventiveness plus a lot of data can produce some fascinating results.