London's Economy Today - Issue 229 - September 2021

The overview

• UK furlough scheme ends today
• Mounting concerns about rising prices
• Warnings about ongoing labour shortages

Economic indicators

• In August, the sentiment of London’s PMI new business activity index remained positive for the seventh consecutive month with the PMI new business index in London rising slightly from 55.1 in July compared with 55.3 in August. An index reading above 50.0 indicates an increase in new orders on average across firms from the previous month.
• In August, expectations for house prices for the next three months remained positive according to surveyors with the net balance of house prices expectations at 17 in August in London, up on the figure for July of 11. The net balance index measures the proportion of property surveyors reporting a rise in prices minus those reporting a decline.
• Consumer confidence in London decreased significantly in September with the consumer confidence index in London at -7, down from 13 in August. The GfK index of consumer confidence reflects people’s views on their financial position and the general economy over the past year and in the next 12 months. A score above zero suggests positive opinions; a score below zero indicates negative sentiment.

London's Economy Today supplement: COVID-19: London macroeconomic scenarios (August update)

GLA Economics published its latest macroeconomic scenarios based forecast for London at the end of August. The two outcome variables of interest in the scenarios are ‘real Gross Value Added’ (GVA) and ‘workforce jobs’ (WFJ), which are being projected over the medium-term (to the end of 2023).

• Under the gradual return to economic growth scenario, London’s real GVA is expected to grow quite strongly by 6.5% this year after the easing of lockdown restrictions. The economic recovery will continue next year (6.0%) before slowing in 2023 (2.9%).
• In terms of employment (workforce jobs), the impact of the recovery will take longer to be felt. Employment will continue to fall this year (-0.2%), with modest growth expected in 2022 (2.0%) and in 2023 (1.5%).
• Looking at the alternative scenarios, the impact of the pandemic on output could see GVA grow by a relatively more modest 5.7% this year under the slow recovery scenario and growth can vary from 4.0% to 6.6% next year across scenarios. In terms of jobs, under the fast recovery scenario there is a very slight increase in jobs this year (by 0.0% (0.03% to two decimal places)) and modest falls for the other scenarios before stronger jobs growth in 2022 at up to 2.4%, and stabilisation in 2023 at growth of around 1.5% across scenarios.

London’s Economy Today data on the Datastore

• The main economic indicators for London are available to download from the Datastore.