London businesses hardest hit in latest PMI figures as employment falls

William Turvill
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London's Economic Boom Continues
Lloyds found employment in the capital fell in July, ending a 38-month period of expansion (Source: Getty)

London businesses were harder hit after the EU referendum result than those in any other UK regions, a newly released index has revealed.

The Lloyds Bank Regional Purchasing Managers’ Index (PMI) also found employment in the capital fell in July, ending a 38-month period of expansion.

“The local economy felt a significant downturn following the EU referendum result, and uncertainty had a huge impact on activity and new business in July,” Paul Evans, regional director for London at Lloyds Bank Commercial Banking, said.

Read more: Manufacturing stutters forward in the Eurozone

“The capital was hit harder than any other UK region and, unsurprisingly, firms responded to the worsening environment by reducing their workforces.

“We hope to see business conditions improve in the capital in the coming months, but there is still work to do to instill confidence as post-referendum uncertainty remains.”

Lloyds’ London PMI registered 44.4 in July, down from 48.4 in June, the steepest drop in activity across all 12 UK regions. A reading below 50 indicates contraction.

The Lloyds economic healthcheck is based on responses from manufacturers and services businesses about the value of goods and services produced during July compared with the previous month.

Read more: UK manufacturing PMI sinks even lower after EU referendum

Last week, figures from Markit and the Recruitment and Employment Confederation (REC) showed the number of people in permanent work fell by its sharpest amount since the recession in July.

Pay rises also ground to a halt and the rise in temporary workers stuttered in the first full month after the referendum.

This report also found London had suffered the biggest regional slowdown.