London's economy on the up
LONDON'S economy stepped up a gear last month, signalling that the capital is beginning to take the recent interest rate rises in its stride.
After several months of slowing growth, new-found confidence led to a pick-up in orders and the fastest pace of job creation for 10 months. Previous surveys had shown the capital bearing the brunt of borrowing-cost increases.
The findings come in the latest Royal Bank of Scotland London poll, based on the CIPS/Reuters national purchasing managers' index. The survey's headline business activity index registered 57.7 in July, an improvement on the previous month's 57.2. A reading above 50 indicates expansion. The figure for the UK in July was 57.6, indicating that growth in London was similar to the national average.
'New clients entering the marketplace and existing clients sanctioning new spending and signing-off on previously deferred orders led to July's expansion in new business,' the report says.
Stuart Porteous, senior economist at RBS, said: 'Business confidence is rising and companies are taking on more staff. London is highly geared to the UK and global economies and the global economic outlook is the strongest it's been for some time. The fundamentals for further growth look very strong.'
Despite the optimism, firms' profit margins are being squeezed by higher oil prices and the inability to pass on extra costs to customers via higher prices. Input price inflation in London, although strong, was less acute than nationally.
