Economic performance remains strong, with higher job numbers and lower unemployment, as well as stable demand for commercial property and business activity levels. However, European migration to London (as measured by National Insurance number registrations) continues to fall, reflected by reports of skills shortages in some sectors.
In the second quarter of 2018, workforce jobs continued to increase to a total of 5.92 million – the highest jobs number since this time series started in 1996. There was an increase of 1.5 per cent on Q2 2017 – a slightly lower rate of growth than last quarter. However, this compares favourably to the rest of the UK, where job numbers grew by just 0.5 per cent over the year.Overall, the rate of job growth in London was faster in the ten years since the 2008 crash than in the ten years leading up to it.
Looking at sector breakdown, the real estate sector and the creative industries grew the most, at 17 per cent and 24 per cent respectively compared to the previous year. However, the quarterly increase in overall job numbers is entirely attributed to self-employment, as employee jobs fell by 11,000 while self-employed jobs increased by 24,000 between Q1 and Q2 2018. The number of self-employed jobs increased by 5 per cent year-on-year to June 2018 (to a total of 820,000, or 14 per cent of all jobs), while employee jobs increased by 1 per cent over the same period.
Unemployment in London continued to fall, to 4.7 per cent of the 16-64 aged population in July 2018, down from 5.2 per cent on the year previously. Though unemployment remains slightly higher than the UK average (4 per cent), the fall in unemployment continues to be steeper in London than the UK as a whole.
However, this needs to be balanced against an assessment of wages and earnings, which indicates that – despite overall growth in gross earnings – wages have fallen in real terms for those towards the lower earnings end. While London has median hourly pay rates 34 per cent higher than the UK, in certain sectors (manufacturing, wholesale and retail, administration, food and accommodation) the difference is negligible.
In the third quarter of 2018, Central London’s property market maintained levels of demand, despite political and economic uncertainty. Take up of offices increased to 3.4 million square feet, with a corresponding decline in vacancy rates. Active demand was slightly lower than the previous quarter, but there were still enquiries for over 9.3 million square feet of 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 the expansion.
The NatWest / HIS Marit PMI shows London business activity stood at 54.3 in September 2018. The positive number indicates an expansion, but the index is unchanged on the average of the past 12 months, and almost on par with the UK as a whole.
National Insurance number registrations
National Insurance number (NINo) registrations by foreign nationals coming to London continue to fall, with 51,717 registrations in Q2 2018, a 12 per cent decline on the previous quarter. This is a result of fewer registrations by residents of European Union member states, declining 22 per cent on the year to Q2 2018. This continues a long-term downward trend in EU registrations, with a 36 per cent decline since Q2 2016, and a 50 per cent fall since 2014. Registrations from non-EU residents remained steady, but there continue to be fewer registrations from non-EU residents than EU.