London economy showing slowest growth since EU referendum

PMI index shows

Business activity growth in London slowed to an 11-month low in June, experiencing the sharpest loss of momentum in the UK, according to the latest Lloyds Bank Regional Purchasing Managers’ Index.

The London PMI, which is based on responses from manufacturers and services businesses about the amount of goods and services produced, registered 52.2 in June, down from 55.7 in May and is the lowest reading since the EU referendum. Slow growth was partly due to a weaker increase in new orders since February.

Businesses also faced a sharp rise in input costs driven by wage inflation and the weak pound, which affected margins. These cost burdens were not passed on to customers, with prices charged for goods and services stayed broadly unchanged as businesses aimed to stay competitive.

Despite this, June saw more jobs being created in the capital. The number of new roles opening in the market has remained steady throughout the second quarter. 

Paul Evans, regional director for London at Lloyds Bank Commercial Banking, said: “June has been a difficult month for London firms. Economic and political uncertainty has seen business activity growth fall back to the lowest level since the aftermath of the referendum.

“While cost pressures are squeezing margins, it’s encouraging to see firms’ commitment to job creation, which signals expectations of future growth. Although businesses are keeping their prices low to remain competitive, as consumer confidence grows these are likely to rise.”

 

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