There was a marked easing in the downturn in business activity across the capital last month, as the economy picked up and lockdown restrictions loosened.
Natwest’s London Business Activity Index – which monitors the combined output of London’s manufacturing and service sectors – rose from 30.3 in May to 46.2 in June. Anything below 50 indicates a contraction.
New business fell at a softer, but still sharp, rate as the economy started to show signs of normality, while both the export climate index and business optimism improved.
The level of optimism for activity in a year’s time lifted after a modest May and downbeat outlook in the prior two months. Firms giving a positive outlook largely pointed to an easing of lockdown measures and signs of stabilising demand from overseas. However, some cautioned an increase in activity could be curbed by a second wave of infection.
However the employment stats made for gloomier reading as firms made additional job cuts on the back of a fall in activity and new business.
Notably, London saw one of the fastest drops in payroll numbers across the country, outpaced only by the North East.
Natwest data shows private sector demand in the capital remained in contraction at the end of the second quarter, stretching the coronavirus-induced decline to four months.
Businesses continued to note falling input prices, again extending the current run of decline that began in April. However the cost reduction was softer with businesses highlighting the furlough scheme, temporary salary cuts and lower transport costs as key reasons.