Car registrations during 2020 have been the worst in almost 50 years, despite a pick-up in June
- Latest: US service sector returns to growth
- Housebuilders drive construction back to growth
- Car sales down 48.5% so far this year
- Housebuilder shares jump but boohoo hit by Leicester links
- Coronavirus – latest updates
- See all our coronavirus coverage
Time for a recap.
Stock market have posted fresh gains today, as a raft of mildly upbeat data cheered investors.
The @ISM non-manufacturing index surged to 57.1 in June, from 45.4 in May.
Business Activity 66.0 (+25pt)
New Orders 61.6 (+19.7pt)
Employment 43.1 (+11.3pt)
Supplier Deliveries 57
Backlogs 51.9
> Businesses surprised by speed of rebound, but cautious about phase 2 of recovery pic.twitter.com/xqOSkLQTcl
Related: Pret a Manger: full list of stores to close
Related: Boohoo to investigate use of Leicester factory with ‘unacceptable’ conditions
Back in the UK, the number of female CEOs running our largest listed companies has risen back to, er, six.
Yes, six, out of 100 FTSE-100 firms.
Insurance firm Aviva has appointed Amanda Blanc as its chief executive, replacing Maurice Tulloch, who has stepped down to support his family cope with a serious health crisis.
Blanc, who has held several senior positions in the insurance industry, indicated she would slim down Aviva’s portfolio of businesses to rebuild the company into “the leader in our industry again”.
Related: Aviva appoints Amanda Blanc as chief executive
Economists are hailing the pick-up in growth across America’s services company last month, following the April lockdown.
The ISM reported that the NMI for non-manufacturing rose 11.7 points to 57.1, a gain well above expectations and follows two months of contraction. The gain was led by strong #business activity/#production, new #orders, #exports, and inventories. A good report for the #economy. pic.twitter.com/ZLexfkWoyL
A chart-form look at the June Non-Manufacturing @ISM® Report On Business® (clockwise, from top left) NMI® and Business Activity, New Orders and Employment indexes indicates the degree and speed of the turnaround from April’s historic lows. https://t.co/S1bVseQoLa #ISMROB #economy pic.twitter.com/lCXshCpBab
Just in: Two economic surveys have both shown that America’s economy is recovering from the shock of the Covid-19 pandemic.
The Institute of Supply Management’s monthly healthcheck shows that US services companies returned to growth last month. Purchasing managers across the country reported that new business improved, helping to boost activity.
US ISM non-manufacturing (June): 57.1 vs 50.1 expected, prior 45.4
US ISM Non-Manufacturing PMI At Highest Since Feb 2020
– Non-Manufacturing Business Activity Index At Highest Since Feb 2011
The ISM non-mfg PMI being at its highest since February does not indicate output being back at the levels it was in February.
The loosening of lockdown measures also led to the broad stabilization of new orders, while export sales rose for the first time so far in 2020. As a result, the rate of job shedding softened markedly as some firms highlighted the hiring of new employees to help fulfil new business inflows. Excess capacity also eased as backlogs fell only fractionally. Although business confidence was historically muted, it signalled renewed optimism as hopes of stronger demand drove sentiment higher.
US Services #PMI up to 47.9 in June (37.5 – May) to signal a far slower fall in business activity at services companies as new work volumes eased their decline and business confidence strengthened. Read more: https://t.co/a1TTTNmdzV pic.twitter.com/4obKWnPptx
Boom! The tech-focused Nasdaq index has hit another record high, as the New York stock exchange opens for business.
Hopes of an economic upturn are boosting shares, following encouraging data from China, Europe and the US in recent days. That’s helping traders to look through the latest surge in Covid-19 cases, now rising by one million per week.
Dow surges 370 points, Nasdaq touches a record intraday high as U.S. stock market follows China’s rally on Monday https://t.co/LkNpQEzP9C
Mixing accountancy with auditing has never seemed a very bright idea.
There’s an inevitable conflict of interest if you’re selling lucrative business consultancy services to a client, while your colleague is vigorously interrogating their annual accounts. Even if everyone scrupulously sticks to the rules, all the time, it still doesn’t look when things turn sour.
Related: UK’s big accountancy firms told to split off audit arms by 2024
Global stock markets are showing strong gains today, as signs of economic recovery let investors blot out the rising Covid-19 death toll.
European stocks are all sharply higher, with the FTSE 100 up 104 points or 1.7%.
“European markets have taken their lead from China, with the world’s second largest economy seeing a huge uptick in market speculation leading to a whopping 5.6% rise in the CSI 300.
“With China the first into this crisis, where their economy goes, many will hope to follow. Chinese experiences are no different to those elsewhere around the world, with easy monetary policies and government spending on the rise.
Related: Rolls-Royce faces a long haul back to high-flier status
As well as closing stores, Pret a Manger is also planning to shake up its operations in an attempt to plug its falling sales.
My colleague Rebecca Smithers explains:
In recent weeks, Pret has launched a retail coffee offering with Amazon, broadened its delivery and digital footprint in partnership with Deliveroo, Just Eat and Uber Eats, and launched click and collect trials in five shops in London. Sales from these channels have grown 480% year on year and represent more than 8% of total UK sales.
Pret will launch further innovations over the coming weeks, including an evening delivery menu to be trialled from seven shops and a new hub kitchen in north London.
Related: Pret a Manger to close 30 stores and could cut more than 1,000 jobs
Demand for vans remained weak in June, despite the pick-up in the construction sector.
Sales of UK new light commercial vehicle (LCV) market declined -24.8% year-on-year in June, as lockdown measures eased and businesses began to return to work, according to the latest figures released today by the Society of Motor Manufacturers and Traders.
UK sandwich chain Pret a Manger has announced plans to shut 30 stores, and to cut jobs across the business, after suffering a slump in sales.
Pano Christou, Pret’s chief executive, said on Monday that the chain faced a “significant restructuring of the business” and that job losses “could be 1,000 plus” unless it reached sales of 50 per cent to 60 per cent of pre-coronavirus levels by September.
Sales are roughly 25 per cent of normal levels and the company is burning through more than £20m in cash a month. Pret has been acutely affected by the coronavirus crisis as its business model — to cater convenient food to commuters and office workers — has come under siege from the mass change in working patterns.
NEW: Pret announces job losses “could be 1,000 plus” as it confirms closure of 30 stores https://t.co/Mj4o0ki3dK
In another boost, retail spending across the eurozone have jumped at their fastest pace ever.
Retail sales surged by 17.8% in May compared with the previous month, data firm Eurostat reports.
The 17.8% m/m surge in eurozone retail sales in May is certainly encouraging. It is also broad-based leaving it 7% below January. But as I noted for Germany, on-going strength in food & online sales suggests a lackluster recovery in restaurants & high street sales at this stage. pic.twitter.com/SBP2qiDIDv
Economists are encouraged to hear that UK construction has returned to growth last month.
Tim Moore, economics director at IHS Markit, says there was a ‘steep rebound’ in building output last month.
House building led the way with the fastest rise in activity for nearly five years, while commercial and civil engineering also joined in the recovery from the low point seen in April.
As the first major part of the UK economy to begin a phased return to work, the strong rebound in construction activity provides hope to other sectors that have suffered through the lockdown period.
“As business confidence improved to its largest extent since February, companies were buying up materials and laying the groundwork for a stronger summer’s end. This resulted in the highest input price inflation since the start of the year as supply chains creaked under the strain of increased shortages.
Building performance is dependent on other sectors recovering at a similar pace, and as businesses were opening up, some fell short of their usual delivery capacity.
The rise in infrastructure activity in June was slower than in housing & commercial but more infrastructure activity had continued throughout lockdown as social distancing & other safety measures are often easier to enact on large infrastructure sites. #ukconstruction pic.twitter.com/zCWPwnL7cQ
“Firms remain mindful of how cyclical construction is, generally tracking the ups and downs of the wider economy. The Prime Minister’s speech last week will have pleased those hoping for a recovery driven by schemes spread evenly across the country, rather than focused on a few megaprojects. Yet shovels need to hit the ground to ameliorate short-term liquidity challenges that are prevalent in an industry which continues to operate on wafer-thin margins.
“There’s undoubtedly still plenty of road left to travel in construction’s recovery, with many now facing the challenge of taking the stabilisers off as they move away from using the Chancellor’s furlough scheme and going it solo once again. The pledges to invest in motorways, schools and trainlines have provided a shot in the arm to a beleaguered sector, but until they boost activity levels, Britain’s builders will remain cautious.”
Newsflash: Britain’s building sector has started growing again, after activity slumped during the lockdown.
Data firm Markit has just reported that activity in the sector rose at the fastest rate in almost two years in June.
Higher levels of business activity were overwhelmingly linked to the reopening of the UK construction supply chain following stoppages and business closures during the early stages of the coronavirus disease 2019 (COVID-19) pandemic.
Residential building was the best-performing area of construction activity in June. Around 46% of survey respondents noted an increase in housing activity, while only 27% experienced a reduction. The latest expansion of residential construction work was the steepest for just under five years.
This chart shows how car sales in June were much weaker than usual (although still much better than the 20.4k sold in May)
Elon Musk’s Tesla Model 3 had been the best-selling car in the UK in April and May.
While traditional showrooms were closed, Tesla pressed on with delivering models that had been on order for months, or possibly years.
Breaking: UK car sales so far this year have hit their lowest level in almost 50 years.
The Society of Motor Manufacturers and Traders reports that registrations have fallen by 48.5% since the start of January, with just 653,502 new cars sold.
“While it’s welcome to see demand rise above the rock-bottom levels we saw during lockdown, this is not a recovery and barely a restart. Many of June’s registrations could be attributed to customers finally being able to collect their pre-pandemic orders, and appetite for significant spending remains questionable.
“The government must boost the economy, help customers feel safer in their jobs and in their spending and give businesses the confidence to invest in their fleets. Otherwise it runs the risk of losing billions more in revenue from this critical sector at a time when the public purse needs it more than ever.”
After two absolutely torrid months, manufacturers in Germany have reported a pick-up in sales.
German factory orders jumped by 10.4% in May compared with April, as the global economy began to emerge from the coronavirus lockdown. That’s up from a 25% plunge the previous month.
Hey, there’s your v-shaped recovery in German factory orders! Just got to er, zoom in a bit. https://t.co/xKCwM5Dimg pic.twitter.com/ZKPLKGxs53
Shares in fast fashion chain boohoo have slumped by 12% this morning, after it was implicated in the Covid-19 spike in Leicester – and accused of supporting ‘slavery’ conditions.
On Saturday, the Guardian reported that Boohoo’s Leicester suppliers had been hard at work producing new clothing items to appeal to customers during the lockdown. Some factories, it appears, may have ignored that lockdown and kept working.
The city’s garment manufacturing base has long been criticised for poor working conditions and low pay.
After the campaign group Labour Behind the Label this week published workers’ claims of being asked to keep working despite coronavirus outbreaks on site, an industry source provided the Guardian with a list of more than a dozen suppliers which they alleged sold to Boohoo and continued to operate during the crisis despite infected workers being on site.
Related: Boohoo booms as Leicester garment factories are linked to lockdown
The factory, which displayed the sign Jaswal Fashions, was also operating last week during the localised coronavirus lockdown without additional hygiene or social distancing measures in place. The undercover reporter spent two days working in the factory where he was told to expect £3.50 an hour, despite the minimum wage in Britain for those aged 25 and over being £8.72.
He obtained covert video footage of himself packing garments made in the factory under the label of Nasty Gal, which is owned by the fast-fashion brand Boohoo whose boss, Mahmud Kamani, is set to scoop a £50m bonus.
We are grateful to The Sunday Times for highlighting the conditions at Jaswal Fashions, which, if as observed and reported by the undercover reporter, are totally unacceptable and fall woefully short of any standards acceptable in any workplace…..
Our early investigations have revealed that Jaswal Fashions is not a declared supplier and is also no longer trading as a garment manufacturer. It therefore appears that a different company is using Jaswal’s former premises and we are currently trying to establish the identity of this company.
Bank News: The boss of Lloyds Banking Group has announced plans to step down after 10 (well-remunerated) years at the helm.
My colleague Rob Davies reports:
The Lloyds Banking Group chief executive, António Horta-Osório, is to step down next year after a decade-long tenure that included the lender’s transition back into private hands after its £21bn state bailout during the banking crash.
Horta-Osório has told Lloyds that he intends to step down in June 2021, the bank said, triggering a race for one of the most high-profile positions in the British financial services industry.
Related: Lloyds chief António Horta-Osório to step down next year
Shares in UK housebuilders are rallying sharply this morning.
Our forward order book is strong with total forward sales (including joint ventures) as at 30 June 2020 of 14,326 homes (30 June 2019: 11,419 homes) at a value of £3,249.7m (30 June 2019: £2,604.1m)
Now, with our construction sites operational across the UK, we begin the new financial year with cautious optimism supported by our strong forward order book and our well capitalised balance sheet.”
European stock markets have opened strongly higher, as investors shake off the latest surge in global Covid-19 cases.
In London, the FTSE 100 has gained 112 points or 1.8% to 6271 points, its highest level in almost two weeks.
China seems to be perfectly able to look through the gnarly Western media headlines of another global coronavirus record (212k) instead; local investors are listening to the enthusiastic chorus from the nation’s influential state media, which are universally singing bullish from the same song page laced with hints of policy easing.
Ian Plummer, director at Auto Trader, reports that many consumers have been researching buying a new car since the lockdown eased – but not all have taken the plunge.
And he confirms that uncertainty over a possible scrappage scheme isn’t helping.
The new car market is bouncing-back but we haven’t yet returned to pre-COVID-19 levels. There’s clearly consumer appetite for both new and used cars; with a record month for Auto Trader as consumers conducted 64 million cross platform visits on the platform in June.
The number of leads sent to retailers by consumers was also up a massive 90% year-on-year. Although car buyers spent 10.5 million hours researching cars in June, it does take time to convert this consumer interest into sales.
UK car sales are also suffering because of uncertainty over the government’s economic plans, the Financial Times reports.
A survey from What Car? has found that one in three potential buyers are sitting tight, in case Westminster introduces a new vehicle scrappage scheme.
Chancellor Rishi Sunak is expected on Wednesday to set out measures to boost the economy as the country tries to recover from the pandemic, including help for industry and green housing.
But there is confusion over whether there could be an incentive or scrappage scheme to promote the purchase of new cars, despite the FT reporting last month that such a programme had been considered and was “very unlikely”. In a regular weekly survey of 6,000 people by What Car?, 33 per cent said they were delaying a purchase “in case the government launches purchase incentives”.
Proof that government dilly-dallying over scrappage is hurting sales.
One third of car buyers are holding out for incentives, finds @whatcar.
Full story here: https://t.co/r87RugTsT2
Today’s UK car sales figures will confirm that registrations have been hammered since the pandemic began.
Here’s how the last few months have panned out:
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
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.
New car registration figures for June and the first half of 2020 are published at 9am. Here is the year to date so far: https://t.co/l2IPwHmR12 pic.twitter.com/PJOBtuXg1j
European Opening Calls:#FTSE 6237 +1.30%#DAX 12779 +2.00%#CAC 5098 +1.82%#AEX 579 +1.89%#MIB 20115 +1.97%#IBEX 7537 +1.80%#OMX 1720 +1.45%#STOXX 3362 +2.05%#IGOpeningCall
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.