London's Economy Today - Issue 238 - June 2022

The overview

• Interest rates rise as do fears of stagflation
• London made the smallest call on public finances during the pandemic
• London flight numbers increase despite staff shortages

Economic indicators

• In May, the sentiment of London’s PMI business activity index decreased but remained strongly positive with the business activity PMI index for London private firms at 61.3 in April moving down to to 56.5 in May. The Purchasing Managers’ Index (PMI) survey shows the monthly business trends at private sector firms. Index readings above 50 suggest a month-on-month increase in activity on average across firms, while readings below 50 indicate a decrease.
• In June, net expectations for house prices for the next three months remained positive if worsening according to surveyors with the net balance of house prices expectations in London at 19 in May, lower than the balance of 22 in April. The net balance index measures the proportion of property surveyors reporting a rise in prices minus those reporting a decline.
• Consumer confidence in London remained negative, and worsened, in June with the consumer confidence index in London at -23 down from -20 in May. 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: Macroeconomic scenarios for London's economy post COVID-19

• This publication includes three core scenario paths for London’s output and jobs until 2030. It complements the in-depth forecast in London’s Economic Outlook, which provides the central scenario.
• Risks remain clearly tilted to the downside. Despite the rapid economic recovery from the pandemic shown in 2021 data, high inflation and risks to household incomes are now set to drag on aggregate demand.
• Perhaps the key question for scenario planning is how well households absorb this shock. The persistence of inflation, the path for wages and monetary policy responses are other key risks.
• In all scenarios, London’s output is expected to have recovered to the pre-pandemic level of output by the end of last year. The employment recovery is projected to be slower, with job numbers reaching pre-crisis levels only in mid-2023 in the central scenario.

London’s Economy Today data on the Datastore

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