This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at https://www.theguardian.com/business/live/2018/jan/05/uk-car-sales-brexit-us-unemployment-stock-markets-business-live

The article has changed 18 times. There is an RSS feed of changes available.

Version 6 Version 7
UK car industry demands Brexit clarity after biggest sales fall since 2009 - business live UK car industry demands Brexit clarity after biggest sales fall since 2009 - business live
(35 minutes later)
Here’s our financial editor, Nils Pratley, on the idea that markets are in a melt-up phase:
Over in the City, the FTSE 100 index has climbed to new heights.
It just hit 7727 points for the first time, up 0.4% or 31 points today, as the global stock market rally continues to bubble away.
Markets have been surging in recent weeks, and there is plenty of talk that shares will keep rising as markets ‘melt-up’.
Rupert Harrison of asset manager BlackRock (and former top official in the UK Treasury), told Bloomberg TV that “there are very good reasons to be positive”
Harrisons says:
Since coming back from New Year, the phrase I’ve heard most is ‘melt up’.
There’s been a strong start to the year, and there are good reasons for that - the data is staying barn-stormingly strong.
There doesn’t seem to be any sign of the reversion to the mean that people had been looking out for.
On top of that, you’ve got tax cuts in the US juicing the prospects for earnings and also potentially boosting the Capex cycle we are in.
But, Harrison also cautions that there are some potential risks, including:
Everyone is ‘bought in’ to the idea that global growth will continue, so any slowdown could alarm investors..
Trade policy: Donald Trump must soon decide whether to take action against China over the alleged dumping of cheap metals and solar panels.
I was a guest host on @bsurveillance earlier with @flacqua and @tomkeene talking about bullish markets, the global economy and political risks, especially US trade policy https://t.co/vRXKBPbu7m
The US president is up early, and wasted no time in tweeting about the bull market:The US president is up early, and wasted no time in tweeting about the bull market:
Dow goes from 18,589 on November 9, 2016, to 25,075 today, for a new all-time Record. Jumped 1000 points in last 5 weeks, Record fastest 1000 point move in history. This is all about the Make America Great Again agenda! Jobs, Jobs, Jobs. Six trillion dollars in value created!Dow goes from 18,589 on November 9, 2016, to 25,075 today, for a new all-time Record. Jumped 1000 points in last 5 weeks, Record fastest 1000 point move in history. This is all about the Make America Great Again agenda! Jobs, Jobs, Jobs. Six trillion dollars in value created!
But as one City expert has already pointed out, each 1,000 point gain is less impressive than the last one.....But as one City expert has already pointed out, each 1,000 point gain is less impressive than the last one.....
CNBC banging on about the fastest ever 1,000 point Dow rise in history. Obviously, by definition also the smallest percentage 1,000 point rise in history at only 4.17%. #marketsasshowbiz #lowqualityCNBC banging on about the fastest ever 1,000 point Dow rise in history. Obviously, by definition also the smallest percentage 1,000 point rise in history at only 4.17%. #marketsasshowbiz #lowquality
While diesel sales slumped by 17% last year, sales of alternatively-fuelled vehicles jumped by almost 35% as more people bought electric cars.While diesel sales slumped by 17% last year, sales of alternatively-fuelled vehicles jumped by almost 35% as more people bought electric cars.
This shows that consumers are keen to drive less polluting vehicles, argues Greenpeace UK’s clean air campaigner Paul Morozzo.This shows that consumers are keen to drive less polluting vehicles, argues Greenpeace UK’s clean air campaigner Paul Morozzo.
He says:He says:
“Sales of diesel cars are falling but sales of EVs and hybrids are growing at double-digit rates. Consumers are sending a clear message to the car industry that it’s time to move on from polluting diesel and the industry should listen to it.“Sales of diesel cars are falling but sales of EVs and hybrids are growing at double-digit rates. Consumers are sending a clear message to the car industry that it’s time to move on from polluting diesel and the industry should listen to it.
Diesel cars have been fuelling a major air pollution crisis that has made our cities’ air toxic and harmful to breathe. EVs and hybrids are better for both air quality and the climate. If the UK car industry fails to invest in the technologies that consumers want then they’ll be left behind in the race for this trillion-dollar market.”Diesel cars have been fuelling a major air pollution crisis that has made our cities’ air toxic and harmful to breathe. EVs and hybrids are better for both air quality and the climate. If the UK car industry fails to invest in the technologies that consumers want then they’ll be left behind in the race for this trillion-dollar market.”
This charts hows how the market changed last year:This charts hows how the market changed last year:
Back to cars, and Ana Nicholls of the Economist Intelligence Unit, has identified several reasons for the drop in sales last year:Back to cars, and Ana Nicholls of the Economist Intelligence Unit, has identified several reasons for the drop in sales last year:
Most people who can afford a new car have bought one recently, and pent-up demand from the auto market crash during the financial crisis is now completely sated. The average age of cars on the road is now less than eight years, so there’s little replacement demand.Most people who can afford a new car have bought one recently, and pent-up demand from the auto market crash during the financial crisis is now completely sated. The average age of cars on the road is now less than eight years, so there’s little replacement demand.
Consumer confidence is faltering: with incomes nearly stagnant and the outlook uncertain because of Brexit people are becoming less keen to take out credit.Consumer confidence is faltering: with incomes nearly stagnant and the outlook uncertain because of Brexit people are becoming less keen to take out credit.
November’s rise in interest rates didn’t help, raising many people’s mortgage payments and making the financing deals from dealers less attractiveNovember’s rise in interest rates didn’t help, raising many people’s mortgage payments and making the financing deals from dealers less attractive
A drop in PPI claims has also cut the number of people with one-off lump sums to spend.A drop in PPI claims has also cut the number of people with one-off lump sums to spend.
The sharp slump in diesel sales, after the VW scandal exposed concerns about NOx emissions. With the London congestion charge now higher, and the vehicle excise duty due to rise for the most polluting diesels, buyers are edging away rapidly. In the longer term there will be a shift towards electric cars, but at the moment sales (though fast-growing) are too low to make up the difference.The sharp slump in diesel sales, after the VW scandal exposed concerns about NOx emissions. With the London congestion charge now higher, and the vehicle excise duty due to rise for the most polluting diesels, buyers are edging away rapidly. In the longer term there will be a shift towards electric cars, but at the moment sales (though fast-growing) are too low to make up the difference.
The latest inflation figures from the eurozone are out -- and they show that prices are rising more slowly than expected.The latest inflation figures from the eurozone are out -- and they show that prices are rising more slowly than expected.
Despite the European Central Bank’s huge money-printing operation, eurozone inflation probably only rose by 1.4% per year in December, down from 1.5% in November.Despite the European Central Bank’s huge money-printing operation, eurozone inflation probably only rose by 1.4% per year in December, down from 1.5% in November.
Energy prices were up 3% year-on-year, down from 4.7% in November, while food, alcohol and tobacco inflation dipped to 2.1% from 2.2%.Energy prices were up 3% year-on-year, down from 4.7% in November, while food, alcohol and tobacco inflation dipped to 2.1% from 2.2%.
This seems to vindicate the ECB’s decision to press on with its monetary stimulus -- which has been a factor behind the rise in stock markets recently.This seems to vindicate the ECB’s decision to press on with its monetary stimulus -- which has been a factor behind the rise in stock markets recently.
Eurozone Inflation slows to 1.4% DEC y/y vs. 1.5% in NOV - Draghi has no reason to go hawkishEurozone Inflation slows to 1.4% DEC y/y vs. 1.5% in NOV - Draghi has no reason to go hawkish
Guardian Business has launched a daily email.Guardian Business has launched a daily email.
Besides the key news headlines that you’d expect, there’s an at-a-glance agenda of the day’s main events, insightful opinion pieces and a quality feature to sink your teeth into each day.Besides the key news headlines that you’d expect, there’s an at-a-glance agenda of the day’s main events, insightful opinion pieces and a quality feature to sink your teeth into each day.
For your morning shot of financial news, sign up here:For your morning shot of financial news, sign up here:
Breaking away from the car sales figures.... we have good news for the UK economy.Breaking away from the car sales figures.... we have good news for the UK economy.
UK productivity (basically how much each worker actually produces) jumped by 0.9% in the third quarter of last year, new figures show.UK productivity (basically how much each worker actually produces) jumped by 0.9% in the third quarter of last year, new figures show.
That’s the largest increase in productivity since April-June 2011, and may show that future growth will stronger than previously expected.That’s the largest increase in productivity since April-June 2011, and may show that future growth will stronger than previously expected.
Labour productivity grew in both the services and manufacturing industries, according to the Office for National Statistics.Labour productivity grew in both the services and manufacturing industries, according to the Office for National Statistics.
This looks like good news for the UK government. Last autumn, the independent Office for National Statistics slashed its forecast for productivity growth, having concluded that it would not recover to its levels before the financial crisis. Weak productivity leads to slower economy growth, smaller tax receipts and higher government borrowing.This looks like good news for the UK government. Last autumn, the independent Office for National Statistics slashed its forecast for productivity growth, having concluded that it would not recover to its levels before the financial crisis. Weak productivity leads to slower economy growth, smaller tax receipts and higher government borrowing.
But.... UK productivity has still taken a severe knock over the last decade, and basically flat-lined since the financial crisis.But.... UK productivity has still taken a severe knock over the last decade, and basically flat-lined since the financial crisis.
UK labour productivity, as measured by output per hour, is estimated to have grown by 0.9% from Q2 2017 to Q3…but… pic.twitter.com/ONhWbEEKNPUK labour productivity, as measured by output per hour, is estimated to have grown by 0.9% from Q2 2017 to Q3…but… pic.twitter.com/ONhWbEEKNP
Biggest rise in productivity Q3 for 6 yrs: encouraging but level wld have been 20% higher if pre-downturn trend continued. Stark blow to prosperity, long way to goBiggest rise in productivity Q3 for 6 yrs: encouraging but level wld have been 20% higher if pre-downturn trend continued. Stark blow to prosperity, long way to go
Unions fear that British car workers could be laid off this year, if sales don’t recover.Unions fear that British car workers could be laid off this year, if sales don’t recover.
Tony Burke, assistant general secretary of Unite, says the UK’s “world class car workers” will be looking to the year ahead with trepidation”, adding:Tony Burke, assistant general secretary of Unite, says the UK’s “world class car workers” will be looking to the year ahead with trepidation”, adding:
“The government has caused confusion and damage with its policy on diesel cars and needs to start listening to the industry and workforce. Diesel engines produced by Unite members in the UK are the cleanest in the world.“The government has caused confusion and damage with its policy on diesel cars and needs to start listening to the industry and workforce. Diesel engines produced by Unite members in the UK are the cleanest in the world.
“Ministers’ botched and badly thought through announcements are causing major damage to the industry. Combined with economic and Brexit uncertainty this risks taking the sheen off the jewel in the UK’s manufacturing crown and the 800,000 high skilled jobs it sustains.“Ministers’ botched and badly thought through announcements are causing major damage to the industry. Combined with economic and Brexit uncertainty this risks taking the sheen off the jewel in the UK’s manufacturing crown and the 800,000 high skilled jobs it sustains.
2018 could be another bad year for the motor industry, if consumer confidence remains subdued.2018 could be another bad year for the motor industry, if consumer confidence remains subdued.
Richard Jones, managing director of motor finance group Black Horse, says the next few months will be crucialRichard Jones, managing director of motor finance group Black Horse, says the next few months will be crucial
“I believe we’ll see new car sales continue to decline in the first quarter of 2018 given that this period in 2017 was so strong. This should help dampen fears of oversupply having a negative impact on used car prices and is positive in the long term by ensuring the new car market is operating from a sustainable position. I would also expect the used car market to continue to perform well.“I believe we’ll see new car sales continue to decline in the first quarter of 2018 given that this period in 2017 was so strong. This should help dampen fears of oversupply having a negative impact on used car prices and is positive in the long term by ensuring the new car market is operating from a sustainable position. I would also expect the used car market to continue to perform well.
“With uncertainties facing the UK economy it’s hard to make a confident forecast for 2018 as a whole. I believe a big test for the industry will come after quarter one when we will see how the underlying UK economy and consumer confidence is influencing car demand.”“With uncertainties facing the UK economy it’s hard to make a confident forecast for 2018 as a whole. I believe a big test for the industry will come after quarter one when we will see how the underlying UK economy and consumer confidence is influencing car demand.”
Brexit is the biggest threat to the UK automobile industry this year, according to a new survey of car dealers from Close Brothers Motor Finance.Brexit is the biggest threat to the UK automobile industry this year, according to a new survey of car dealers from Close Brothers Motor Finance.
More encouragingly, 92% of dealers are confident about business prospects in the market for 2018, up from 63% last year. However, that optimism could wilt if Britain doesn’t agree a Brexit transition deal soon....More encouragingly, 92% of dealers are confident about business prospects in the market for 2018, up from 63% last year. However, that optimism could wilt if Britain doesn’t agree a Brexit transition deal soon....
Worryingly, the drop in diesel car sales seems to have pushed emissions of carbon dioxide up.
That’s a disappointing consequence of consumers shunning diesel motors and buying petrol ones instead, following revelations that diesel cars were pumping more nitrogen oxides into the atmosphere than officially reported.
The SMMT explains:
Carbon tailpipe emissions have risen for the first time since 1997, with new cars averaging 121.04g/km, up 0.8% on 2016. Last year, UK new car CO2 emissions fell for the 19th consecutive year and this is the first year the figure has risen since records began.
The SMMT have just issued a press release, confirming that UK car sales declined in 2017.
Here are the key points:
Overall annual demand falls -5.7% in 2017 – but new car market still third biggest in a decade at over 2.5 million vehicles.
December represents the ninth consecutive month of decline, as registrations for final month of year drop -14.4%.
Appetite for electrified cars reaches record high, with almost 120,000 alternatively fuelled vehicles (AFVs) hitting UK roads – a 34.8% uplift.
Diesel demand declines -17.1%, undermining progress on emissions and CO2 as industry body warns consumers could end up paying more in fuel if they travel high mileages.
There’s a couple of handy charts too:
In contrast to the UK, car sales in Germany actually rose last year.
Auto sales in Europe’s largest economy increased by 2.7% during 2017. However - as in Britain - diesel sales tumbled (by 13%).
Reuters explains:
Pressure is growing on Germany to tackle diesel pollution as dozens of cities including Munich and Stuttgart, where BMW and Daimler are based, could face penalties for allowing nitrogen dioxide (NO2) levels in excess of European Union limits introduced in 2010, the DUH environmental lobby has said.
Newsflash: Britain’s FTSE 100 has hit a fresh intraday record high.
The index of blue-chip companies gained another 12 points, or 0.15% points, to 7708 points, six points above yesterday’s record levels.
Rebecca O’Keeffe, head of investment at interactive investor, says investor optimism is undimmed, for the moment....
European markets continue to make further gains, with the sheer scale of the global rally demonstrating how investors are embracing all things equity and risk related, basking in the euphoria of synchronous global growth. Equity markets, which were already strengthening well in advance of Trump’s $1.5tn tax cut, or indeed a prospective US infrastructure bill that could form the centrepiece of 2018 legislation, show no sign of any stress, with new record highs an almost daily occurrence.
With the party in full swing and implied volatility at such low levels, markets are seemingly immune to any possible downside, but the key risk that might ultimately bring markets down is inflation. A material increase in inflationary pressures would potentially force central banks to tighten rates faster than the market is expecting
Chris Bosworth, Director of Strategy at Close Brothers Motor Finance, believes Brexit anxiety and opposition to diesel cars are the main reason car sales fell last year.
“Today’s figures reflect the impact that anti-diesel messages from the government and ongoing Brexit trade negotiations are having on both business and consumer confidence across the motor industry.
December marks the ninth month of consecutive decrease in new car sales as squeezed consumers are reluctant to purchase big ticket items such as cars and motorcycles.
Alex Buttle, director of car buying comparison website Motorway.co.uk, says diesel’s days are numbered (after the emissions scandal). He wants the government to offer more incentives to shift to electric.
“Quite frankly, 2017 has been a year to forget for the UK car industry.
“You’d have to dig pretty deep to find anything positive to take from the past 12 months which has seen diesel demonised in the media on a weekly basis.
“As sales of new diesels continue to fall, 2017 could well mark the end of one era of motoring and the dawn of a new one, as hybrid and electric sales start to take off. “The destiny of diesel may already be set in stone.
Now the Government needs to stand by its commitment to the future and put its full backing behind AFVs.
“Incentives to encourage consumers to switch to hybrid and electric vehicles need to run alongside the billions of pounds of investment being pumped into the supporting infrastructure.
Bloomberg blames “Brexit’s impact on buyer confidence and lingering skepticism over the emissions performance of diesel cars” for the 5.6% drop in UK car sales last year.
UK car sales suffered their biggest annual slide since the global recession, stunted by #Brexit’s impact on buyer confidence and lingering skepticism over the emissions performance of diesel cars https://t.co/k9MRnr09rA via @_benkatz #tictocnews pic.twitter.com/KBwoINpDZg
The Financial Times agrees that Britain’s car industry needs clarity about the UK’s future relationship with the EU, fast:
You can’t wait until March 2019,” [SMMT chief Mike Hawes] said, when the UK will leave the EU.
“Production is a tap that takes a long time to turn on and off.”
The SMMT said contingency plans could include carmakers investing in additional warehouse capacity to guard against delivery disruptions, or deciding to expand production abroad rather than produce new models in the UK.
Mr Hawes said that even the more limited changes, such as investing in warehouse capacity, were the “thin end of the wedge” because they would impose additional costs on British car manufacturers, making them less competitive and damaging their ability to attract new investment.
It’s official: Britain’s car industry has suffered its biggest drop in sales since the financial crisis.
Sales of new vehicles fell by 5.6% during 2017 - the first annual decline since 2011, and the worst since 2009.
Diesel sales were particularly dire, as my colleague Gwyn Topham explains:
UK car sales declined in 2017 after five years of rapid growth, with the industry blaming government for a collapse in consumer confidence in diesel vehicles.
Total sales for last year were 2.54m new vehicles, a decline of 5.6% on 2016, with diesel sales dropping 17%. Despite the decline, 2017 sales remained near the highest on record.
The Society of Motor Manufacturers and Traders (SMMT), the UK automotive industry’s trade body, has forecast a further 5% to 7% decline in sales in 2018.
Mike Hawes, the SMMT’s chief executive, said 2017 had been a “very volatile year”.
While sales reached a record high in March, by December they were 13.9% down year-on-year, with 152,000 fewer cars sold than in the same month in 2016.
Hawes attributed the drop to a decline in business and consumer confidence in the wider economy and uncertainty over the future of diesel.
Sales of diesel cars dropped by 31% in December, while petrol car sales dropped by 1.6%, after relatively minor tax changes targeting diesel in the November budget.
The SMMT is now urging the UK government to rapidly agree a Brexit transition deal with Brussels.
Otherwise, Hawes warns, carmakers will soon be forced to take tough - and potentially irreversible - decisions.
He says:
“Some investment decisions are overdue … we need clarity [on the terms of a transitional period] by the end of the first quarter.”
[Otherwise] They will have to start implementing contingency plans.”
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
With stock markets at record levels, investors will be looking to today’s US unemployment report for reasons to keep optimistic, and keep buying assets.
The monthly non-farm payroll report is expected to show that America’s economy continued to create jobs in December.
The Wall Street consensus is that around 190,000 new workers were hired across the US last month, down from 228,000 in November. But it’s possible that the NFP could be stronger.
The figures will probably also show that America’s unemployment rate remained at just 4.1%. But economists will be hoping to see evidence that employees are being paid more.
David Madden of CMC Markets explains:
On a month-on-month basis average earnings are tipped to increase by 0.3% and on an annual basis they are forecasted to rise by 2.5%.
The US has been steadily creating new jobs over the past few years, but wage growth has been sluggish. If the US economy wants to step up a gear in terms of economic growth, wage growth and in turn the spending levels will need to tick up.
Also coming up today.
European stock markets are expected to open mixed, after Thursday’s strong session drove the UK FTSE 100 to a new alltime high.
European opening calls update courtesy of CMC MARKETS at 6.37am -FTSE 100 is expected to open 4 points lower at 7691. DAX is expected to open 23 points higher at 13190. CAC 40 is expected to open 2 points higher at 5415.
Last night the US Dow Jones closed over 25,000 points for the first time ever, on hopes that the world economy will remain upbeat this year.
Friday’s Daily Mail City: Wall St rally lifts global markets to record highs #tomorrowspaperstoday pic.twitter.com/KHomaerwk1
Traders will also be watching out for the latest eurozone inflation figures, and new UK car sales figures (of which more in a moment....)
The agenda
9am GMT: UK car sales figures for December
10am GMT: Eurozone flash inflation figures for December
1.30pm GMT: US non-farm payroll unemployment report
3pm GMT: US factory orders