UK Car Sales Resume As Showrooms Reopen After Lockdown – Business Live

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Photograph: Justin Kase zsixz / Alamy

Hello and welcome to our continued coverage of the global economy, financial markets, euro area and business.

After a scorching 12 months, car sales in the UK are finally on the road to recovery.

Data due this morning will show car sales surged last month when dealerships in England and Wales reopened, following the easing of lockdowns in mid-April which allowed to non-essential stores to reopen.

Preliminary data from the Society of Motor Manufacturers and Traders should show a 30 times year-over-year increase in car sales last month.

This is compared to the nadir of the first lockdown; sales fell 97% in April 2020 to just 4,321 new vehicles, the worst month since shortly after World War II.

In April, car showrooms were reopened (starting Monday, April 12) – rather than relying on online sales methods like click and collect.

As Reuters explains:

Last month, customers were able to purchase cars in person from April 12 in England, while delivery, click and collect and online services also made shopping easier. Factories continued to operate with COVID security measures in place.
Sales stood at around 141,000 vehicles last month, still down 13% from the 2010-2019 monthly average, the Society of Automobile Manufacturers and Traders (SMMT) said on Wednesday.

Reuters UK
(@ReutersUK)

UK new car sales pick up in April after last year’s lockdown https://t.co/JcwtVt772E pic.twitter.com/gZzZZDEFWM

May 5, 2021

However, that would still leave sales below their April 2019 level, when there were 161,064 new car registrations.

It is clear that demand is still affected by the pandemic, with some people working from home rather than the office, on leave or having lost their jobs in the past year.

And that growing demand could put more pressure on manufacturers, who are already struggling to source components like semiconductors as supply chains feel the pressure.

Last month, Mini and Jaguar Land Rover temporarily halted part of production, due to the shortage of computer chips.

Germany Infineon warned yesterday that the global chip shortage could lead to a loss of 2.5 million car sales in the first half of 2021.

We get the car sales figures at 9am UK time….

Also coming today

European stock markets are poised for a higher opening, after faltering yesterday after Treasury Secretary (and former head of the central bank) Janet Yellen surprised investors by talking about the need to raise interest rates.

Tech stocks slumped after Yellen suggested very modest rate hikes may be needed to keep the economy from overheating, due to the Biden administration’s massive infrastructure and social spending projects.

Yellen then clarified the comments, saying she neither foresees nor recommends rate hikes, which seems to have reassured investors …

Prashant Nair
(@_prashantnair)

Yellen commentary on “rate hike”, clarification later!

Yellen causes a flicker -> “It may be that the int. Will have to increase a little to ensure that our economy does not overheat ”

Yellen clarifies later today -> “Let me be clear, this is not something I predict or recommend”

May 5, 2021

Of course, historically low interest rates can’t last forever, but the hike could be difficult. As Chris Weston brokerage Pepperstone Explain:

Ultimately, we all know that the investment made by the Biden administration will need to be matched with tighter monetary policy in the future, so these comments should not in any way shock, but hear him from. a senior official makes the market nervous.
Again, a world where we see declining central bank liquidity is a world that questions the performance of financial assets, as much of future performance has been put forward. And as the gravy train is pulled back, it challenges the extreme valuation and assigns a lower risk premium. This will mean higher volatility.

On the economic front, we get a health record of European companies in the service sector – which could post a return to growth after the eurozone recession last week.

The latest data on the private payroll in the United States could shake the markets – it should show a strong increase in employment last month.

Econoday, Inc.
(@Econoday)

Wednesday, ADP Jobs, PMI Composite Finals and ISM Services. ADP has greatly underestimated the strength of the growth in the wage bill. A surprisingly strong call from ADP (1 million is the high estimate) could raise the forecast for Friday’s jobs report. pic.twitter.com/kIvzL9Dv2d

May 5, 2021

Agenda

  • 9 a.m. BST: Eurozone services PMI for April
  • 9am BST: UK car sales for April
  • Noon BST: weekly figures for US mortgages
  • 1:15 p.m. BST: ADP payroll of US private sector employment in April
  • 3 p.m. BST: US services PMI for April



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