The coronavirus lockdown had a "disastrous" impact on London business activity as the capital's private sector suffered a sharp downturn in activity in April.
The latest NatWest Regional PMI report, which tracks changes in the goods and services sectors, showed decline took hold for a second month in a row as measures to combat Covid-19 continued.
These measures led to a steep fall in new business, while firms made deep cuts to employment amid high spare capacity and a subdued outlook for the capital, the bank said. Efforts to lower expenses also led to the first drop in input costs since 2009.
Under the PMI index, a Business Activity Index reading above 50 is a sign of economic growth.
But for London, that figure plunged to 13.4 in April, eclipsing March's previous record low of 31.5.
Nearly three-quarters of all companies saw output decline amid the country-wide lockdown, with many saying the drop in activity was "stark".
Temporary closures, weak client demand and the furloughing of staff were mentioned in the PMI as key factors to the downturn.
New business volumes across London collapsed at the beginning of the second quarter, with survey data signalling an unprecedented fall in demand due to Covid-19.
Clients were reportedly unwilling to start new projects, while consumer demand was curtailed sharply by lockdown measures. The rate of decline in new orders was broadly similar to the national trend.
As a result, London companies turned to existing orders, leading to a steep reduction in backlogs for the second month running.
Firms still had high spare capacity and consequently reduced job numbers sharply, both in response to weak demand and concerns of a protracted decline in sales. Despite that, some companies chose to furlough staff to maintain workforces for when restrictions are lifted.
Stuart Johnstone, the bank's managing director, London and South East, corporate and commercial banking, said: “The lockdown spanning the full length of April and breadth of the UK had a disastrous impact on London business activity during the month.
"An index reading of 13.4 signalled a downturn far greater than anything seen in the 23 years of PMI survey data, eclipsing the previous series low recorded in March (31.5).
“Nearly three-quarters of respondents saw output fall over the month, yet even this historic figure does not fully describe the shadow cast over the capital from this pandemic.
"Businesses closed due to the lockdown are likely to face a high level of uncertainty regarding their continuity and will hope that consumer spending is rapidly revived when the UK emerges from its hibernation.
“Anecdotal evidence suggests that companies have widely used the government’s furlough scheme.
"Nevertheless, many firms still chose to undertake large-scale redundancies and salary cuts in an effort to sharply lower staff expenses. Subsequently, cost pressures fell for the first time since September 2009.”
For the first time since September 2009, input costs at London companies decreased in April, which NatWest said was largely due to efforts to cut expenses including staff cuts, furloughs, lower purchases and salary reductions.
Firms also highlighted a slump in oil prices that contributed to softer input costs.
