London’s economy showed its resilience, weathering the political storm during the third quarter of this year, but the tightening labour market continued to trouble businesses trying to recruit.
Sales and orders both domestically and for export reached their highest levels on balance in at least a year, whilst business investment and cashflow indicators saw the biggest increase since the start of 2016.
Part of that business investment included spend on training, as a quarter of the capital’s firms turned to upskilling existing staff, indicating that businesses are acting in order to counter a labour market that is approaching record levels of employment. Almost a third of businesses reported coming under increased pressure from employees to raise wages in the last 3 months.
The analysis comes from London Chamber of Commerce and Industry’s ‘Capital 500’ –London’s biggest and most representative business survey. Headline findings from Q3 in London show:
- Export orders are at their highest point on balance since Q2 2017, with 22% of businesses reporting increased orders (up from 21% in Q2)
- Export sales are up for 23% of businesses (up from 21% in Q2)
- Domestic orders are up for 18% of businesses (up from 16% in Q2)
- Domestic sales are up for 22% of businesses (up from 20% in Q2)
- 15% of businesses increased investment in plant and equipment (up from 11% in Q2), whilst 17% increased investment in training (up from 11% in Q2)
- 24% of businesses reported increased cashflow (up from 23% in Q2)
- 83% of businesses did not try to recruit during the quarter (up from 82% in Q2)
- Of those who tried to recruit, over half (56%) encountered difficulties recruiting (down from 61% in Q2)
- A quarter (24%) of businesses said that they have trained existing staff in order to acquire new skills for their business (up from 23% in Q2)
- 31% of businesses reported coming under increased pressure from employees to raise wages (up from 23% in Q2)
Sean McKee, Director of Policy and Public Affairs at London Chamber of Commerce and Industry, said:
“For the second consecutive quarter the London economy has returned results that are better than some would expect, given the ongoing political turmoil and uncertainty of Brexit.
The performance is testament to the resilience of London’s firms. However, some of the increased business investment may be as part of Brexit preparation spending, rather than the underlying strength of the economy. Time will tell.
One thing that is certain is that a restricted labour market, at near record employment levels, continues to pose challenges to the capital’s firms. Investment in training increased as businesses continued to turn to upskilling existing employees in order to close skills gaps that they are struggling to fill via recruitment. Consequently, an increasing amount of businesses came under pressure to raise wages.
The capital’s continued recruitment challenge will leave businesses ever more mindful that the wrong post-Brexit immigration system would make the situation even worse. LCCI continue to call for devolution of immigration decision-making to a London level.”
The full report can be found here.
Notes to Editor:
ComRes surveyed a total of 505 London business leaders online between 31 July and 12 September 2019. All data were weighted to be representative of all London businesses by company size and broad industry sector. ComRes is a member of the British Polling Council and abides by its rules. Full data tables are available at www.comresglobal.com.
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