Home Business NewsBusinessBusiness Growth News Activity growth strengthens amid uptick in new business 

Activity growth strengthens amid uptick in new business 

by LLB Finance Reporter
9th Oct 23 7:26 am

The headline NatWest London PMI Business Activity Index – a seasonally adjusted index that measures the month-on-month change in the combined output of the region’s manufacturing and service sectors – strengthened to a three-month high of 52.4 in September, from 50.4 in August, to signal a moderate expansion of private sector activity.

The improvement came amid a renewed increase in new orders, and was the only upturn out of the 12 monitored UK regions.

Private sector firms based in the capital registered an increase in new work intakes at the end of the third quarter. The overall uplift was only marginal, but followed the first month-on-month decrease in 2023 so far in August. Some companies commented on new client wins, whereas others reported weak demand conditions.

The renewed expansion in new business contrasted with a third straight decline at the national level in September, albeit one that was softer compared to the previous month.

The Future Output Index recorded only a fractional drop in September and continued to signal a solid degree of confidence among London businesses. Just over half of all survey participants forecasted an increase in output for the next 12 months, compared to 14% which predicted a decline. While some firms held concerns about inflation, interest rates and consumer confidence, many were hopeful about the economic outlook and investment strategies.

London private sector companies signalled a reduction in employment for the first time in 2023 during September, amid reports that subdued demand conditions contributed to redundancies and restructuring efforts. While modest, the decline was only the second recorded in just over two-and-a-half years and the quickest since January 2021.

The UK also saw a renewed fall in employment in September, with ten of the 12 monitored regions noting a decline. The reduction was slightly faster than seen in the capital.

The level of outstanding business at London companies dropped for the third successive month in September. The latest fall was moderate but softer than that recorded in August. Where backlogs decreased, firms cited reduced demand pressure and fewer investment projects. However, this was slightly offset by new business wins at some companies.

The latest survey data signalled a notable slowdown in the rate of input cost inflation in the London private sector. Adjusted for seasonal factors, the Input Prices Index registered its largest monthly drop in the year-to-date, falling to the lowest since April 2021. Nevertheless, the overall rise in costs was still sharp, with panellists often citing increased wages and higher material prices.

Despite the slowdown, the pace of inflation across London remained quicker than the UK trend, which also registered a pronounced cooling.

Despite slowing cost pressures, London firms upped their output charges to a greater degree at the end of the third quarter, marking the first acceleration in five months. The rate of inflation was also the quickest out of the 12 regions covered across the UK. Several firms opted to raise their charges due to ongoing inflationary pressures as well as interest rate hikes.

Catherine van Weenen, NatWest London and the South East Regional Board, said, “The London PMI saw a positive swing in September as activity expanded despite contractions being recorded across the rest of the UK. Helped by a renewed (but mild) increase in new business intakes, the rate of activity growth even accelerated to a three-month high, although it remained modest compared to the rates seen earlier in the year.

“There was also some good news regarding price pressures, as input costs rose to the softest degree since April 2021 and a considerably weaker pace than in August.

While many companies reported a further uplift in wages, job numbers were cut for the first time this year amid the subdued outlook for demand and higher interest rates, which should help to curtail pay pressures. That said, a slightly faster rise in output charges shows that firms are not done increasing prices until inflationary risks subside.”

Leave a Comment

You may also like


Sign up to our daily news alerts

[ms-form id=1]