06 Jul Jon Cartu Claims UK car sales weakest since 1971; construction growing again…
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Car sales are a decent barometer of economic conditions – showing whether people are happy to make big purchases, and whether firms are confident enough to expand their fleets.
The latest industry data, due at 9am, are likely to show that sales picked up in June after a drastic slump in April and May during the downturn. However, sales are still much weaker than a year ago, as Covid-19 pushed the UK into a painful recession.
Preliminary data from the Society of Motor Manufacturers and Traders show that sales fell by a third in June, compared with a year ago. Roughly 145,000 units were registered last month, according to Reuters, down from 223,421 in June 2019.
That’s quite a tumble, showing that demand remains weak even though forecourts are now open for business again. With millions of people working from home, and millions more still furloughed, demand for a new motor is clearly still weak.
But it would also be an improvement on the 90% tumble in May, when a mere 20,000 cars were registered. In April, sales virtually evaporated with just 4,321 changing hands as the nation hunkered down.
As Reuters points out, the auto industry is still struggling:
Not all British car factories have reopened and many are operating at reduced capacity as manufacturers try to balance demand and supply.
While car showrooms were allowed to reopen from June 1 in England, dealers in Wales and Scotland had to wait until June 22 and June 29 respectively.
The big picture is that UK car sales have fallen roughly 50% in the first five months of this year, with diesel worst hit. We get the full report from the SMMT at 9am.
Also coming up today
New Construction PMI surveys from the UK and the eurozone will show how Europe’s builders coped with social distancing restrictions and supply shortages.
The latest eurozone sales figures may also show that spending picked up in May, as shops reopened.
Global markets are expected to rally today, as the battle between optimism over better-than-expected economic data, and concern over the surge in coronavirus infections continues.
Britain’s FTSE 100 is being called up around 80 points, or 1.4%, at 6240, which would recover all Friday’s losses.
Shares in Asia have already rallied, even though Covid-19 cases have hit a record high in India, with global cases near 11.5m.
David Madden of CMC Markets explains:
According to the WHO, on 4 July over 212,000 new Covid-19 cases were registered – a daily record. The US, Brazil and India were the largest contributors to the tally. The US’s reading on Saturday was over 53,000, which was a retreat from Friday’s level of more than 57,000. Some hard hit US states such as Florida are experiencing a drop-off in the rate of new cases, which is probably down to a pausing of the reopening of its economy. As of yesterday, 34 states saw an increase in new cases on the week.
Stocks in mainland China and Hong Kong are showing impressive gains. There has been a jump in trading volumes in China, and European equity benchmarks are tipped to open higher as a result.
- 9am BST: UK new car sales for June
- 9am BST: Eurozone construction PMI for June
- 9.30am BST: UK construction PMI for June – expected to rise from 28.9 to 47, showing a small contraction
- 10am BST: Eurozone retail sales for May – expected to jump 15% month-on-month
- 2.45pm BST: US services PMI for June – expected to rise to