International visitor numbers to London and their average spend increased compared to the same quarter last year, reflecting the impact of the sterling’s depreciation on tourism. Unemployment in the capital has dropped to an historic low of 4.9 per cent, but job growth is slowing and business sentiment remains cautious, though it has recovered since early summer.

Workforce Jobs

Figures for the second quarter of 2017 show the slowest rate of job creation for over five years: the total number of workforce jobs rose by 60,000, or just over one per cent, year-on-year. This rate was also slower than the rate of job creation across the UK.

Public sector jobs have started growing again, having shrunk by almost 100,000 over five years.  Numbers bottomed out at 739,000 in summer 2016, and grew to 744,000 over the following year, perhaps reflecting increased recruitment for social care and central government building up its capacity to deliver Brexit.

Other areas of employment that saw stronger growth over the year were wholesale and retail trade, transport and storage, and professional, scientific and technical activities. Arts, entertainment and recreation, and real estate, on the other hand saw an overall decline in employment.

Unemployment

The number of unemployed people in London fell by around 30,000 in the three months to August, giving an unemployment rate of 4.9 per cent – a historic low, and the largest year-on-year drop since 2015. London’s unemployment rate has long been higher than the UK’s, but the gap is now only 0.6 percentage points, its lowest level. Meanwhile, data reveal that wages have stalled in real terms for many across different sectors in London, exacerbated by the high cost of living in the capital.

NEET

The estimated number of young people (aged 16-24) not in employment, education or training (NEET) fell by nearly 25 per cent from the second quarter of 2016 to the same period this year. This reduced the NEET rate from nearly 12 per cent to nine per cent, with London beginning to show sharper falls than England as a whole. There are concerns about the accuracy and comprehensiveness of these data, but they appear to tell a positive story. That said, the unemployment rate for Londoners aged 16-24 remains nearly 15 per cent, three times as high as it is for the working age population and higher than it is for the UK as a whole, and young Londoners are at much higher risk of job insecurity. Combined with the education figures in this edition of The London Intelligence, this suggests that it is education rather than employment that is reducing London’s NEET rate.

Commercial Property

The data presented here is from JLL’s Q3 Central London Office Market Report. JLL publish quarterly data and analysis covering a range of indicators including vacancy rates, demand, take up and average rent.

Vacancy rates have risen slightly since last summer, but remain steady at just under five per cent, below their long-term average. Rates have tended to be lowest in the West End (compared to Canary Wharf and the City) though have recently converged, with West End rents also down from their early 2016 peak.

Take up of commercial space has risen considerably since last year, unlocking suppressed demand following the EU referendum, though falling levels of active demand (down 15 per cent year-on-year) suggest that some long term uncertainty persists.

PMI

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 Lloyds Bank Regional PMI for London from September 2017 has recovered nearly two points since June, and now stands at 54.1, the same level as the UK-wide indicator, suggesting that London’s businesses have recovered a degree of confidence following the uncertainty around the election. That said, until spring 2016, London’s PMI tended to be higher than the UK’s. The reversal of this situation since then perhaps reflects continuing concerns about the impact of Brexit in London.

International Visits

Over 5.5 million international visitors came to London in the second quarter of 2017, an 11 per cent rise from the same period last year. This followed a strong first quarter, which displayed 16 per cent growth.

Total spending was up by 15 per cent, with an average spend per visitor of just over £625, 3.5 per cent higher year-on-year. Inflation-adjusted spend per visitor has now risen for two consecutive quarters. Q1 was the first rise since mid 2014, probably reflecting the benign impacts for tourism of sterling’s devaluation in recent months.

Foreign Direct Investment

These figures show foreign companies starting new ventures in London with the help of London & Partners, the Mayor of London’s official promotional agency (therefore not a complete picture of total FDI). They record both the number of new ventures, and the number of new jobs created – London & Partners’ activity is particularly focused around ICT, Financial Services, Business Services, Creative Industries and Retail.

A strong third quarter this year led to a rise of 17 per cent in the the number of jobs created in the year to September: 7,053 compared to 6,010 in the year to June. This was coupled with a small drop of 2 per cent in projects completed, from 327 (year to June) to 319 (year to September). Both figures, while a little down on respective figures for the year to September 2016, are above long term trends.