Despite political and Brexit concerns, London’s economy has proved resilient, with unemployment continuing to fall and job numbers increasing to 5.9 million individuals, the highest on record. Commercial property in the capital has continued to perform well, and business confidence sits above the UK average.
Q1 2018 job numbers increased to 5.9 million – 1.9 per cent higher than the same period in 2017 and the highest on record – compared to negligible growth in the rest of the UK.
Job growth has been steady across much of London’s workforce. The largest increases were in the real estate sector and the creative industries, both of which grew by 7 per cent in Q1 2018 compared to the previous year, bucking a previous downward trend. These were two of only three sectors where there is little upwards pressure on pay – median hourly pay fell 2.8 and 2 per cent respectively, in the year to mid-2017.
Meanwhile, the number of London-based civil service jobs also grew by 7 per cent, with the Department for Exiting the European Union (+162 per cent) and the Cabinet Office (+95 per cent) enjoying the largest proportional increases. While job growth in the finance and insurance sector has stalled since the same time last year, jobs in the transport industry have declined for the second successive year, with a fall of 4 per cent in Q1 2018, but annual pay growth was strong at 5.4 per cent growth for each.
Job growth is predicted to continue, as job vacancies in the capital have reportedly increased by over 14 per cent in the year to Q2 2018. The creative industries have been tipped to grow their workforce further in future years, creating 900,000 new jobs nationally by 2030. And while London is the most productive region in the UK and an engine of job growth, research has found that average productivity levels have barely risen in the last decade, with many new jobs created in low-pay and low-productivity sectors.
Unemployment in London has continued to fall, close to a record low of 255,000 unemployed people in Q1 2018 – or 5.1 per cent of the 16-64 population.
However, productivity in London is reported to have declined by 0.5 per cent on the previous quarter, and new entrants to the job market have seen a 7 per cent fall in their wages – after accounting for inflation – since the 2009 financial crisis.
Concerns are also mounting over the growing number of Londoners affected by in-work poverty, with many living in London earning below the UK average per annum after housing costs are taken into account.
Central London’s commercial property market continues to perform well, despite political and Brexit concerns. Q2 2018 active demand remained high at over 9,500 square feet, while take-up was over 2,700 square feet, both significantly above long-term averages.
International investment into the City has accelerated, particularly from South East Asia, proving its continued international appeal. But the nature of demand continues to change, with smaller start-ups and scale-ups driving demand for smaller, more flexible office space.
Purchasing managers’ indices (PMIs) measure business activity by surveying companies on output, new orders, employment and prices; a score above 50 shows an increase in activity from one month to the next. The higher the score, the quicker this expansion.
The NatWest/HIS Markit PMI shows London businesses had a promising second quarter, recovering from a sluggish first three months of the year, with readings averaging 54.9 (marginally higher than the English average of 54.3). London’s June reading was the highest it has been since October last year, and was the third best performing UK region, largely due to relatively low price inflation.
Over 4.7 million international visitors came to the capital in the final three months of last year, a noticeable 5.7 per cent fall compared to 2016. The average visitor spent 5.8 nights in the capital, marginally lower than the UK figure of 7.3, and spent 4 per cent more than Q4 last year, at nearly £700.
The combined spend of visitors reached over £3.2bn, equating to 60 per cent of all tourist spending in the UK, although this was two per cent lower than last year, in contrast to three months of large increases after the cost of buying sterling dropped.
Research has also found London attracts nearly 2 million day trips per year, in addition to over 1 million day trippers who go on to elsewhere in the country (although visitors to London are less likely than other regions to take such day trips).