‘London is thriving’ — business activity jumps in the capital despite inflationary pressures
London saw the highest rate of business activity in November despite bearing the brunt of inflationary pressures.
According to the Natwest regional PMI, the capital continued to outperform all 11 other UK regions in November with a business activity index of 56.5, rising above the 53.8 recorded in October.
A score of over 50 means activity grew rather than contracted.
Only the West Midlands also saw growth, at 50.6, while the North East fell the furthest to 44.9.
“Firms in London are thriving, with business activity in the capital showing robust growth as we head towards the end of the year,” Sebastian Burnside, Natwest chief economist commented.
“In most other places, output levels are suffering as a consequence of downward pressure on demand from high-interest rates and general customer uncertainty.”
But in London last month, inflationary pressures squeezed input prices upwards. Average prices charged also got pushed up to a seven-month high with the rate of growth “by far the quickest” of any region.
“It makes sense to see London recording the steepest rises in both input costs and output prices, with its economy dominated by the service sector and firms in the capital enjoying greater pricing power due to improving demand,” explained Burnside.
The UK economy is buffering due to the Bank of England’s tightening of monetary policies, although this paused in September.
Recent data indicated that the UK won’t slip into a recession this year, but predictions for next year paint a bleak picture, forecasting minimal improvement.
In November, over half of the monitored regions saw job declines, with Wales, the North East, and the East Midlands experiencing the most significant drops.
Scotland remained the leader in creating jobs, followed by the West Midlands.