City growth brings boost for jobs

LONDON'S economy started the year in great shape, with business booming and firms hiring new staff.

Although easing slightly from the extremely rapid pace of expansion seen towards the end of last year, growth in business activity in the capital outstripped the national average for the seventh month in a row.

The upbeat findings come in the latest Royal Bank of Scotland London poll, based on the national CIPS/Reuters Purchasing Managers' Report.

Its headline business activity index was 60.5 in January, down from December's 61.4 but well above the 50 'no change' level.

The national figure was 59.2, also indicating strong growth, but at a slightly slower pace than London's.

'Strengthening demand was reported in both the manufacturing and service sectors as improved business confidence contributed to increased client spending,' the report said.

In order to cope with the heavier workload, firms - primarily in services - took on more staff for the fourth month running.

A report last week from eFinancial-Careers showed that, after slashing headcounts for more than two years, the vast majority of City firms plan to recruit over the next three months.

But despite better trading conditions, firms lowered their prices in a bid to stay competitive. Companies also offered discounts to attract new business.

RBS senior economist Stuart Porteous said: 'The London economy started 2004 in the same positive vein as it ended 2003. The volume of new business continues to surge, resulting in a brighter outlook for the economy and a more buoyant labour market - 2004 looks like it will be a very strong year for London.'