LONDON’S businesses outperformed the rest of the UK in May but there are signs staff shortages and inflation are starting to bite, according to a closely-watched business activity index.
Natwest’s monthly tracker of both manufacturing and services suggests London’s businesses continued to expand last month but at the slowest rate since the ‘pingdemic’ last year.
Firms are creating jobs at one of the fastest rates in the survey’s history, though many firms are finding it difficult to fill those vacancies amid a staff shortage.
The UK significantly outperformed the rest of the country in May.
“London remained the strongest-performing region of the UK in May, according to the PMI survey data, yet followed the national trend by moving closer to a “stagflationary” period – characterised by high inflation and low (or negative) growth,” said Catherine van Weenen from the bank.
In a separate national study, accountancy firm BDO warned that the UK businesses’ optimism had fallen to the same level as it was in April of last year, when Covid-19 restrictions remained in place and much of the country was still confined to their homes.
Much of the fall recorded in the firm’s index was attributed to the services sector, which BDO analysts believe is tied to consumer tightening their belts when it comes to non-essential spending.
BDO partner Kaley Crossthwaite said “weakened consumer spending power is undoubtedly weighing heavily on businesses and will continue to curtail growth in the month ahead.”
The Office for National Statistics will this morning release estimates of GDP growth in the UK in April.