London's economy has kicked into high gear, with business activity surging to its fastest pace in over a year according to the latest Purchasing Managers' Index data. The capital is leading the UK's economic charge, outpacing the national average and signalling a robust period of growth ahead.
Capital Outperformance
The S&P Global/CIPS UK PMI survey reveals that London's private sector expanded at its quickest rate since May 2023, with the composite index climbing to 55.0 in June – comfortably above the 50.0 threshold that separates growth from contraction. This represents a significant acceleration from May's reading of 52.5 and marks the eighth consecutive month of expansion.
"London is clearly leading the charge in the UK's economic recovery," noted Chris Williamson, Chief Business Economist at S&P Global Market Intelligence. "The capital's diverse economy and strong services sector are proving to be key drivers of this impressive performance."
Services Sector Strength
The capital's dominant services sector was the primary engine of growth, reporting its strongest expansion in over two years. Businesses cited increased client confidence, new project starts, and successful marketing initiatives as key factors driving the upturn.
Manufacturing also contributed to the positive picture, with factory output rising for the fourth month running, though at a more modest pace than its services counterpart.
Employment and Confidence Soar
The improved business environment is translating into job creation, with employment levels rising for the sixth consecutive month. Companies reported taking on additional staff to handle increased workloads and support expansion plans.
Business optimism reached its highest level since February 2022, with firms expressing confidence in the sustainability of the current growth trajectory. Many companies are planning for further expansion and increased investment in the coming months.
National Picture
While London leads the way, the national picture also shows positive momentum. The UK PMI rose to 52.8 in June from 52.1 in May, indicating the seventeenth straight month of private sector output growth across the country.
The data suggests the UK economy is maintaining steady growth as we move into the second half of the year, with London positioned as the primary growth engine driving national performance.
