Business activity and sales started to pick up across the capital in February, after a return to national lockdown measures led to a slump in output at the start of the year.
Moreover, with the successful vaccine roll-out driving business confidence, employment was broadly stable after an 11-month sequence of decline, according to the headline NatWest London PMI Business Activity Index.
The seasonally adjusted index that measures the month-on-month change in the combined output of the region’s manufacturing and service sectors – rose above the 50.0 no-change mark to 52.1 in February, up from 44.9 in January, to signal the fastest rise in private sector activity since last September.
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Stuart Johnstone, Managing Director, London & South East, Corporate & Commercial Banking, said: “London economic conditions rallied in February, with business activity and sales rising while employment stabilised after a 11-month run of job shedding. The upturn in output partially offset the decline seen during January, but not fully, suggesting the economy remains slightly depressed following the latest round of national lockdown measures. Cost pressures meanwhile rose as the impact of accelerating goods price inflation fed through to the services sector.
"With the roadmap out of lockdown published by the government in late-February, hopes of a summer rebound in spending could fuel further job creation and investment in the coming months."
Key findings from the report are:
Output and new orders rise after lockdown-led slump
Employment stable as vaccine roll-out lifts business sentiment
Input cost inflation accelerates but output charges fall
The latest survey data also signalled a first monthly increase in new business inflows across London for five months in February. The rise was often linked to an upturn in client confidence and the starting of new projects. Whilst only marginal, the increase contrasted with a slight fall in sales at the 海角视频 level. In fact, London and Yorkshire & Humber were the only regions to see growth in new business.
Meanwhile, confidence towards the next 12 months of business activity in London remained elevated, as firms mentioned hopes of a strong recovery once restrictions are eased. Over 64% of respondents expect output to grow, against 10% predicting a decline. Despite slipping to a three-month low, the degree of optimism remained stronger than the 海角视频 average.
Job numbers in London were largely unchanged in February, after having decreased in each of the prior 11 months. Rising sales, new projects and expectations of strong future growth drove hiring activity, according to respondents. However, this was offset by redundancies at companies seeing a drop in sales due to COVID-19 and Brexit. London largely reflected the 海角视频-wide trend which registered only a fractional decline in employment since January.
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Outstanding work levels continued to fall midway through the first quarter, extending the current run of contraction that began last October. Moreover, the rate of decline accelerated and was the fastest for eight months. Firms that saw a reduction in backlogs often mentioned a lack of new orders to replace completed work.
Input prices continued their inflationary trend at the start of 2021, as latest data signalled a sharp uptick in cost pressures during February. The rate of inflation quickened from the previous month but was slower than the national average. Panellists mainly reported higher transportation charges due to COVID-19-related supply disruption, whilst some mentioned greater transaction fees linked to Brexit.
Despite the rise in input prices, London firms continued to moderate their selling charges in the second month of 2021. That said, the rate of decline was only modest and little-changed since January. By contrast, the 海角视频 saw a third successive monthly rise in output charges, and the fastest for a year.
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