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| UK car sales fall again, but eurozone growth hits six-year high - business live | |
| (35 minutes later) | |
| 9.32am BST | |
| 09:32 | |
| Graham Hiscott, business editor of the Mirror, says weakening consumer spending is hitting the car industry: | |
| New cars sales fell for the third month in a row, with demand for diesels diving 14.7%, says @SMMT. More evidence of consumer slowdown. | |
| Howard Archer of the EY Item Club agrees that April’s tax changes are a factor (there’s a good explanation here on Auto Express) | |
| #SMMT report #UK new #car sales down 4.8% y/y in Jun. Third successive fall after strong Q1 when some sales brought forward by VED changes | |
| 9.29am BST | |
| 09:29 | |
| Car sales to UK individuals, rather than businesses, shrank by nearly 8% in June. | |
| Sam Tombs of Pantheon Economics predicts further falls in the month ahead. | |
| He’s tweeted a graph, showing how consumer confidence can be a leading indicator for the car market (he’s shifted the consumer confidence figures ahead by six months) | |
| UK private new car sales down 7.8% y/y in June and down 4.8% y/y in H1 overall. The slump in consumer confidence signals further falls ahead pic.twitter.com/wdue5GRXIw | |
| 9.25am BST | |
| 09:25 | |
| Diesel car sales fell particularly sharply last month, by almost 15%. | |
| Chris Giles of the FT says the figures are a concern: | |
| New car sales beginning to look rather sickly pic.twitter.com/zhY0JaIZMi | |
| 9.18am BST | |
| 09:18 | |
| UK car sales fall again | |
| Breaking: UK car sales have fallen for the third month running. | |
| Car registrations declined by 4.8% in June, new figures from the Society of Motor Manufacturers and Traders show. That means that sales so far this year are down by 1.1%, following steeper falls in April and May. | |
| The SMMT blames recent tax changes for the fall. It says there was “market turbulence’ as drivers rushed to buy vehicles in March before new vehicle excise duty changes pushed up the cost of running many cars. | |
| Mike Hawes, SMMT Chief Executive, says the drop in car sales isn’t a cause for alarm. | |
| “As forecast, demand for new cars has started to cool following five consecutive years of solid growth but the numbers are still strong and the first half of the year is the second biggest on record. | |
| Provided consumer and business confidence holds, we expect demand to remain at a similarly high level over the coming months. | |
| But... this decline may be a signal that consumers are being more cautious, or struggling to cope with rising inflation. | |
| I’ll pull some more reaction together now. | |
| 9.08am BST | |
| 09:08 | |
| You can read the full eurozone PMI report here. | |
| 9.06am BST | |
| 09:06 | |
| Eurozone service sector growth slows, but still strong | |
| It’s official: The eurozone private sector has posted its best quarter since 2011, despite a slight slowdown in June. | |
| That’s according to this morning’s service sector data from Markit, plus manufacturing surveys released on Monday. | |
| Markit reports that its service sector PMI dropped to 55.4 last month, down from 56.3 in May. | |
| That drags the ‘composite PMI’, covering the whole private sector, down to 56.3 from 56.8. | |
| That’s comfortably over the 50 point mark that separates expansion from contraction. Firms reported that new work kept rolling in, boosting business confidence and leading to strong job creation. | |
| Chris Williamson of Markit says the figure suggest the eurozone economy grew by an “impressive” 0.7% in the second quarter of this year. | |
| The dip in the PMI in June certainly doesn’t look like the start of a slowdown. Growth of new orders accelerated very slightly to reach the second- highest in just over six years, and companies are struggling to satisfy this increase in demand. | |
| “Operating capacity is being strained despite the region seeing the best spell of employment growth for a decade in recent months. | |
| “Rising demand is also boosting firms’ pricing power, both for goods and services. While price pressures have cooled since earlier in the year, linked mainly to lower global commodity prices, this is still the strongest period of inflationary pressure that the region has seen for six years. | |
| 8.59am BST | 8.59am BST |
| 08:59 | 08:59 |
| Germany’s service sector growth slowed to a five-month low in June: | Germany’s service sector growth slowed to a five-month low in June: |
| #Germany Markit Services PMI Final at 54 https://t.co/67ci1U6XhK pic.twitter.com/lh3NnjLW0J | #Germany Markit Services PMI Final at 54 https://t.co/67ci1U6XhK pic.twitter.com/lh3NnjLW0J |
| 8.58am BST | 8.58am BST |
| 08:58 | 08:58 |
| French firms are still basking in the afterglow of Emmanuel Macron’s victory. | French firms are still basking in the afterglow of Emmanuel Macron’s victory. |
| France’s services PMI has hit 56.9 for June, only slightly down on May’s 70-month high of 57.2. Firms reported a jump in new business, which meant they hired new staff at the fastest rate since March 2008. | France’s services PMI has hit 56.9 for June, only slightly down on May’s 70-month high of 57.2. Firms reported a jump in new business, which meant they hired new staff at the fastest rate since March 2008. |
| Alex Gill of Markit says the future looks positive for France: | Alex Gill of Markit says the future looks positive for France: |
| “As was the case in May, employment was a key talking point in June, with the rate of job creation the sharpest in over nine years. Robust client demand and a strong degree of optimism are likely to lead to further jobs growth over the coming months.” | “As was the case in May, employment was a key talking point in June, with the rate of job creation the sharpest in over nine years. Robust client demand and a strong degree of optimism are likely to lead to further jobs growth over the coming months.” |
| 8.53am BST | 8.53am BST |
| 08:53 | 08:53 |
| Italy is next.... and its service sector growth has also slowed. | Italy is next.... and its service sector growth has also slowed. |
| The Italian services PMI has dropped to 53.6, down from 55.1 in May. That’s lower than expected, but still firmly in ‘expansion’ territory. | The Italian services PMI has dropped to 53.6, down from 55.1 in May. That’s lower than expected, but still firmly in ‘expansion’ territory. |
| 8.50am BST | 8.50am BST |
| 08:50 | 08:50 |
| After a rollicking couple of years, Ireland’s service sector took a little breather last month. | After a rollicking couple of years, Ireland’s service sector took a little breather last month. |
| The Irish Services PMI came in at 57.6 in June, a seven-month low, down from 59.5 in May. But that’s still a pretty impressive figures, with firms reporting that new orders kept rising as client demand picked up. | The Irish Services PMI came in at 57.6 in June, a seven-month low, down from 59.5 in May. But that’s still a pretty impressive figures, with firms reporting that new orders kept rising as client demand picked up. |
| 8.33am BST | 8.33am BST |
| 08:33 | 08:33 |
| In the City, shares in housebuilder Persimmon have jumped by 3.5% to the top of the FTSE 100 leaderboard after posting strong financial results this morning. | In the City, shares in housebuilder Persimmon have jumped by 3.5% to the top of the FTSE 100 leaderboard after posting strong financial results this morning. |
| Persimmon completed 8% more houses in the first half of 2017 than a year ago, and grew its revenues by 12%. | Persimmon completed 8% more houses in the first half of 2017 than a year ago, and grew its revenues by 12%. |
| The company, which is Britain’s second-largest builder, bullishly told shareholders that business is pretty good: | The company, which is Britain’s second-largest builder, bullishly told shareholders that business is pretty good: |
| “We have continued to experience good levels of customer demand… with the market taking the snap UK general election in its stride. | “We have continued to experience good levels of customer demand… with the market taking the snap UK general election in its stride. |
| Consumer confidence remains resilient and compelling mortgage rates continue to offer good support to new home buyers.” | Consumer confidence remains resilient and compelling mortgage rates continue to offer good support to new home buyers.” |
| 8.21am BST | 8.21am BST |
| 08:21 | 08:21 |
| Spanish service sector growth hits 22-month high | Spanish service sector growth hits 22-month high |
| Olé! Spain’s service sector has just posted its fastest growth in almost two years, as its recovery continues to build. | Olé! Spain’s service sector has just posted its fastest growth in almost two years, as its recovery continues to build. |
| The Spanish Services PMI has jumped to 58.3, up from 57.3 in May - a level showing strong growth. That’s the best reading since August 2015. | The Spanish Services PMI has jumped to 58.3, up from 57.3 in May - a level showing strong growth. That’s the best reading since August 2015. |
| Spanish firms reported that growth in new business accelerated, job creation was the fastest in a year, and business optimism was high. | Spanish firms reported that growth in new business accelerated, job creation was the fastest in a year, and business optimism was high. |
| Encouragingly, almost a quarter of the firms surveyed said they’d taken on extra staff in June, partly because they’re optimistic about their future workload. | Encouragingly, almost a quarter of the firms surveyed said they’d taken on extra staff in June, partly because they’re optimistic about their future workload. |
| That could help to pull down Spain’s jobless rate - the second highest in the eurozone, after Greece. | That could help to pull down Spain’s jobless rate - the second highest in the eurozone, after Greece. |
| Andrew Harker, Senior Economist at IHS Markit, says the | Andrew Harker, Senior Economist at IHS Markit, says the |
| “The Spanish service sector ended the first half of 2017 with a flourish, with PMI data for June signalling the strongest increases in output and new orders for almost two years and employment growth picking up as well. | “The Spanish service sector ended the first half of 2017 with a flourish, with PMI data for June signalling the strongest increases in output and new orders for almost two years and employment growth picking up as well. |
| Firms also took advantage of strong demand conditions to raise their selling prices and provide a welcome boost to profit margins. Companies see little reason to doubt the sustainability of the upturn at present, reflected in our business confidence data remaining around the highest seen over the past two years. | Firms also took advantage of strong demand conditions to raise their selling prices and provide a welcome boost to profit margins. Companies see little reason to doubt the sustainability of the upturn at present, reflected in our business confidence data remaining around the highest seen over the past two years. |
| 8.13am BST | 8.13am BST |
| 08:13 | 08:13 |
| This morning’s UK service sector report will be “critical” for sterling, says Kathleen Brooks of City Index: | This morning’s UK service sector report will be “critical” for sterling, says Kathleen Brooks of City Index: |
| A weaker than expected services sector PMI could see GBP/USD lose more momentum, which ironically may be good for the FTSE 100. | A weaker than expected services sector PMI could see GBP/USD lose more momentum, which ironically may be good for the FTSE 100. |
| This pair fell sharply on Monday after the worse than expected manufacturing PMI report for June, since the services report is more relevant for the UK economy then the pound reaction could be bigger if we get another data miss. | This pair fell sharply on Monday after the worse than expected manufacturing PMI report for June, since the services report is more relevant for the UK economy then the pound reaction could be bigger if we get another data miss. |
| 8.09am BST | 8.09am BST |
| 08:09 | 08:09 |
| Overnight, we’ve seen that China’s service sector slowed as firms were hit by subdued demand. | Overnight, we’ve seen that China’s service sector slowed as firms were hit by subdued demand. |
| The China Caixin services purchasing managers’ index (PMI) dropped to 51.6, from May’s 52.8 (a four-month high). | The China Caixin services purchasing managers’ index (PMI) dropped to 51.6, from May’s 52.8 (a four-month high). |
| Some businesses reported a drop in new orders, suggesting Beijing efforts to clamp down on cheap credit may be cooling the economy. | Some businesses reported a drop in new orders, suggesting Beijing efforts to clamp down on cheap credit may be cooling the economy. |
| Signs of slower growth in #China services activity adds to sluggish manufacturing output. Services #PMI at 51.6. https://t.co/XNMKefyrsP pic.twitter.com/zRHlfnRGrK | Signs of slower growth in #China services activity adds to sluggish manufacturing output. Services #PMI at 51.6. https://t.co/XNMKefyrsP pic.twitter.com/zRHlfnRGrK |
| 8.00am BST | 8.00am BST |
| 08:00 | 08:00 |
| Reuters has jumped the gun, and is reporting that ‘preliminary data’ shows that UK car sales fell again last month. | Reuters has jumped the gun, and is reporting that ‘preliminary data’ shows that UK car sales fell again last month. |
| They write: | They write: |
| British new car registrations fell by around 5% last month year-on-year and overall sales for the first six months of the year dropped by 1%, according to preliminary data from an industry body. | British new car registrations fell by around 5% last month year-on-year and overall sales for the first six months of the year dropped by 1%, according to preliminary data from an industry body. |
| The Society of Motor Manufacturers and Traders will release the full numbers at 0800 GMT [9am UK time]. | The Society of Motor Manufacturers and Traders will release the full numbers at 0800 GMT [9am UK time]. |
| UK new car sales drop around five percent in June - preliminary data https://t.co/JeE2Wm6vWM pic.twitter.com/eMPI4lMPSx | UK new car sales drop around five percent in June - preliminary data https://t.co/JeE2Wm6vWM pic.twitter.com/eMPI4lMPSx |
| Updated | Updated |
| at 8.13am BST | at 8.13am BST |
| 7.34am BST | 7.34am BST |
| 07:34 | 07:34 |
| The agenda: UK economy in focus | The agenda: UK economy in focus |
| Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business. | Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business. |
| Britain’s service sector makes up around 80% of the economy, from hotels and restaurants to haulage firms, accountants, and IT companies. So investors are nervously waiting to discover how they fared in June, and if last month’s general election had any impact. | Britain’s service sector makes up around 80% of the economy, from hotels and restaurants to haulage firms, accountants, and IT companies. So investors are nervously waiting to discover how they fared in June, and if last month’s general election had any impact. |
| Data firm Markit’s monthly service sector PMI, due at 9,30am, is expected to drop to 53.5 from 53.8 in May. | Data firm Markit’s monthly service sector PMI, due at 9,30am, is expected to drop to 53.5 from 53.8 in May. |
| That would show that growth slowed last month, (50 being the cut-off point between expansion and contraction), and reinforce concerns that the economy is suffering from political uncertainty. | That would show that growth slowed last month, (50 being the cut-off point between expansion and contraction), and reinforce concerns that the economy is suffering from political uncertainty. |
| RBC Capital Markets say: | RBC Capital Markets say: |
| As with the earlier manufacturing and construction surveys, we expect to see some pull back in the services PMI this month; to 53.5 from 53.8 previously as the uncertainty caused by the general election result impacts on the predominantly domestically-focused sector. | As with the earlier manufacturing and construction surveys, we expect to see some pull back in the services PMI this month; to 53.5 from 53.8 previously as the uncertainty caused by the general election result impacts on the predominantly domestically-focused sector. |
| Even allowing for the weaker readings in the other sectors, an outcome in line with that expectation would still leave our PMI-based indicator pointing to GDP growth of 0.4% q/q though it would also reinforce the signals from those other sectors of the economy losing some momentum at the end of the quarter. | Even allowing for the weaker readings in the other sectors, an outcome in line with that expectation would still leave our PMI-based indicator pointing to GDP growth of 0.4% q/q though it would also reinforce the signals from those other sectors of the economy losing some momentum at the end of the quarter. |
| The PMIs are calculated by asking purchasing managers across the country how their business is performing, so it’s a useful snapshot of the situation. Given the size of the service sector, it could shift the pound - which is hovering around $1.291 his morning. | The PMIs are calculated by asking purchasing managers across the country how their business is performing, so it’s a useful snapshot of the situation. Given the size of the service sector, it could shift the pound - which is hovering around $1.291 his morning. |
| Watching the #UK #PMIservices at 9:30am London time. #GBPUSD pic.twitter.com/hI5c9EFdlp | Watching the #UK #PMIservices at 9:30am London time. #GBPUSD pic.twitter.com/hI5c9EFdlp |
| There’s also a flurry of other service sector reports from around the world today, including several European countries during the next couple of hours. | There’s also a flurry of other service sector reports from around the world today, including several European countries during the next couple of hours. |
| City investors are also bracing for the latest UK car sales figures, due this morning. Sales fell in April and May (partly due to tax changes) so June’s figure are nervously awaited. | City investors are also bracing for the latest UK car sales figures, due this morning. Sales fell in April and May (partly due to tax changes) so June’s figure are nervously awaited. |
| A third fall would fuel fears that consumers are cutting back on big-ticket items (and perhaps show that the Bank of England should hold fire on interest rates). | A third fall would fuel fears that consumers are cutting back on big-ticket items (and perhaps show that the Bank of England should hold fire on interest rates). |
| On the corporate front, online supermarket chain Ocado and housebuilding group Persimmon are reporting results to the City. | On the corporate front, online supermarket chain Ocado and housebuilding group Persimmon are reporting results to the City. |
| The agenda: | The agenda: |
| 9am BST: Eurozone service sector PMI for June | 9am BST: Eurozone service sector PMI for June |
| 9am BST: UK car sales figures for June | 9am BST: UK car sales figures for June |
| 9.30am BST: UK service sector PMI for June | 9.30am BST: UK service sector PMI for June |
| 10am BST: Eurozone retail sales for May | 10am BST: Eurozone retail sales for May |
| 3pm BST: US factory orders for May | |
| Updated | Updated |
| at 9.23am BST |