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| Cineworld confirms UK and US closures; UK car sales hit two-decade low – business live | Cineworld confirms UK and US closures; UK car sales hit two-decade low – business live |
| (32 minutes later) | |
| Rolling coverage of the latest economic and financial news | Rolling coverage of the latest economic and financial news |
| Cineworld’s decision to shut its UK and US screens is awful news for around 45,000 staff, who are now out of work, explains my colleague Jasper Jolly: | |
| Here’s his full story: | |
| Britain’s services companies continued to cut jobs last month, despite growth holding up better than feared. | |
| The latest survey of purchasing managers across UK services firms shows that layoffs continued last month -- a trend that is worsening with Cineworld’s closures. | |
| Data firm Markit explains: | |
| Despite this, Markit’s latest UK service sector PMI has come in at 56.1 for September, better than the ‘flash’ reading of 55.1 recorded during the month. | |
| That shows solid growth, although still down on the five-year high of 58.8 seen in August. It’s notably better than the eurozone, where service sector activity fell (see earlier post). | |
| Firms reported that business continued to pick-up in September. But, growth slowed amid the move back to home-working and the 10pm closure for pubs and restaurants. | |
| Markit explains: | |
| James Fairclough, CEO of AA Cars, says September’s drop in car sales is disappointing, as consumers cut back due to the pandemic: | James Fairclough, CEO of AA Cars, says September’s drop in car sales is disappointing, as consumers cut back due to the pandemic: |
| Karen Johnson, head of retail & wholesale at Barclays Corporate Banking, points out that some people are putting their lockdown savings towards greener vehicles: | Karen Johnson, head of retail & wholesale at Barclays Corporate Banking, points out that some people are putting their lockdown savings towards greener vehicles: |
| Sue Robinson, chief executive of the National Franchised Dealers Association, says supply chain problems amid the pandemic are partly to blame - and warns that a no-deal Br4exit would compound this: | Sue Robinson, chief executive of the National Franchised Dealers Association, says supply chain problems amid the pandemic are partly to blame - and warns that a no-deal Br4exit would compound this: |
| Sales of electric and hybrid cars actually rose in September, though, while petrol and diesel demand slumped. | Sales of electric and hybrid cars actually rose in September, though, while petrol and diesel demand slumped. |
| Diesel was particularly out of demand, with registrations falling 38%, while petrol registrations fell by over a fifth. | Diesel was particularly out of demand, with registrations falling 38%, while petrol registrations fell by over a fifth. |
| In contrast, electric vehicle sales surged by over 180% year-on-year, with plug-in hybrids (which use a battery and an internal combustion engine) jumped by 138%. | In contrast, electric vehicle sales surged by over 180% year-on-year, with plug-in hybrids (which use a battery and an internal combustion engine) jumped by 138%. |
| The SMMT explains: | The SMMT explains: |
| Mike Hawes, SMMT chief executive, adds: | Mike Hawes, SMMT chief executive, adds: |
| UK car sales are on track to slump by nearly a third this year, following the tumble in September. | UK car sales are on track to slump by nearly a third this year, following the tumble in September. |
| The SMMT warns that rising unemployment, and ongoing pandemic restrictions, will hurt the auto industry: | The SMMT warns that rising unemployment, and ongoing pandemic restrictions, will hurt the auto industry: |
| Newsflash: Britain’s car industry has just experienced its weakest September sales in two decades. | Newsflash: Britain’s car industry has just experienced its weakest September sales in two decades. |
| The UK new car market declined -4.4% in September, according to figures published today by the Society of Motor Manufacturers and Traders, with just 328,041 new registrations. | The UK new car market declined -4.4% in September, according to figures published today by the Society of Motor Manufacturers and Traders, with just 328,041 new registrations. |
| That is the weakest September since 1999, when the dual number plate system (updated twice-yearly) came in -- and 15% below the September average over the last decade. | That is the weakest September since 1999, when the dual number plate system (updated twice-yearly) came in -- and 15% below the September average over the last decade. |
| The SMMT reports that demand from business and consumers was notably weak last month -- which usually buoyant for car sales, as people upgrade to get a new licence plate: | The SMMT reports that demand from business and consumers was notably weak last month -- which usually buoyant for car sales, as people upgrade to get a new licence plate: |
| More details to follow.... | More details to follow.... |
| We also have confirmation that the eurozone’s service sector struggled last month, as governments imposed new restrictions as Covid-19 cases rose. | We also have confirmation that the eurozone’s service sector struggled last month, as governments imposed new restrictions as Covid-19 cases rose. |
| The latest Services PMI report, which measures activity in the sector, has slumped into contraction in September. | The latest Services PMI report, which measures activity in the sector, has slumped into contraction in September. |
| Service sector firms in France, Italy and Spain all reported that conditions worsened last month, pulling the overall eurozone services PMI down to 48.0 (showing a fall in activity) from 50.5 in August. | Service sector firms in France, Italy and Spain all reported that conditions worsened last month, pulling the overall eurozone services PMI down to 48.0 (showing a fall in activity) from 50.5 in August. |
| Chris Williamson, chief business economist at IHS Markit says Europe’s recovery is floundering: | Chris Williamson, chief business economist at IHS Markit says Europe’s recovery is floundering: |
| While Cineworld’s shares have slumped, the broader stock market has opened higher today. | While Cineworld’s shares have slumped, the broader stock market has opened higher today. |
| The FTSE 100 has risen by 32 points, or 0.5%, to 5932, which would be its highest closing level in two weeks. | The FTSE 100 has risen by 32 points, or 0.5%, to 5932, which would be its highest closing level in two weeks. |
| After Friday’s panic about Donald Trump’s Covid-19 infection, the markets are calmer this morning -- and digesting a poll which gives Joe Biden a 14-point lead over the president. | After Friday’s panic about Donald Trump’s Covid-19 infection, the markets are calmer this morning -- and digesting a poll which gives Joe Biden a 14-point lead over the president. |
| Mohit Kumar of Jefferies explains: | Mohit Kumar of Jefferies explains: |
| Shares in Cineworld have more than halved at the start of trading in London, to a new all-time low. | Shares in Cineworld have more than halved at the start of trading in London, to a new all-time low. |
| They’ve slumped by 56% to 17p, as City traders react to the temporary closure of screens across the UK and US - two major markets for the group in better times. | They’ve slumped by 56% to 17p, as City traders react to the temporary closure of screens across the UK and US - two major markets for the group in better times. |
| Cineworld’s shares had been worth 220p each back at the start of 2020, before the Covid-19 pandemic. | Cineworld’s shares had been worth 220p each back at the start of 2020, before the Covid-19 pandemic. |
| The closure of Cineworld venues across the UK and US is a huge blow to the “beleaguered entertainment industry”, says Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown: | The closure of Cineworld venues across the UK and US is a huge blow to the “beleaguered entertainment industry”, says Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown: |
| Streeter also points out that the UK’s new wage subsidy scheme, which helps companies bring staff back part-time, is no help here: | Streeter also points out that the UK’s new wage subsidy scheme, which helps companies bring staff back part-time, is no help here: |
| Cineworld has also told shareholders that it is considering ‘all options’ for new fundraising: | Cineworld has also told shareholders that it is considering ‘all options’ for new fundraising: |
| The company warned the City last month that a second lockdown could put its future at risk, after it posted losses of £1.3bn for the first half of 2020. | The company warned the City last month that a second lockdown could put its future at risk, after it posted losses of £1.3bn for the first half of 2020. |
| Here’s some early reaction to Cineworld’s decision: | Here’s some early reaction to Cineworld’s decision: |
| Cineworld took the decision to shutter its UK and US cinemas just a couple of days after No Time to Die, the latest Bond epic, was delayed until next spring. | Cineworld took the decision to shutter its UK and US cinemas just a couple of days after No Time to Die, the latest Bond epic, was delayed until next spring. |
| My colleagues Jim Waterson and Julia Kollewe wrote last night that the lack of blockbuster releases could be devastating for the industry. | My colleagues Jim Waterson and Julia Kollewe wrote last night that the lack of blockbuster releases could be devastating for the industry. |
| Here’s Mooky Greidinger, Cineworld’s chief executive, on the decision to shut cinemas in the UK and US: | Here’s Mooky Greidinger, Cineworld’s chief executive, on the decision to shut cinemas in the UK and US: |
| 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. |
| We start with some breaking news - Cinema chain Cineworld has just announced it is temporarily suspending operations at all of its 536 Regal theatres in the US and its 127 Cineworld and Picturehouse theatres in the UK. | We start with some breaking news - Cinema chain Cineworld has just announced it is temporarily suspending operations at all of its 536 Regal theatres in the US and its 127 Cineworld and Picturehouse theatres in the UK. |
| It’s taken the move following the lack of new films to draw in audiences, including the twice delayed new James Bond instalment (which has been pushed back to next year). | It’s taken the move following the lack of new films to draw in audiences, including the twice delayed new James Bond instalment (which has been pushed back to next year). |
| These closures will impact approximately 45,000 employees, says Cineworld, which employs around 5,500 people in the UK. | These closures will impact approximately 45,000 employees, says Cineworld, which employs around 5,500 people in the UK. |
| In a statement to the City, Cineworld blamed “an increasingly challenging theatrical landscape and sustained key market closures” due to the COVID-19 pandemic. | In a statement to the City, Cineworld blamed “an increasingly challenging theatrical landscape and sustained key market closures” due to the COVID-19 pandemic. |
| So with major films delayed, it simply can’t provide enough compelling new films to attract filmgoers. | So with major films delayed, it simply can’t provide enough compelling new films to attract filmgoers. |
| The closures will begin on this Thursday (the 8th October). | The closures will begin on this Thursday (the 8th October). |
| News of the closures broke yesterday, sparking anger among staff that they learned of the plan through the newspapers. | News of the closures broke yesterday, sparking anger among staff that they learned of the plan through the newspapers. |
| The latest delay to the next James Bond film was the final blow to Cineworld, which wrote to government ministers warning the industry has become “unviable” without major blockbusters to lure customers to the big screen again. | The latest delay to the next James Bond film was the final blow to Cineworld, which wrote to government ministers warning the industry has become “unviable” without major blockbusters to lure customers to the big screen again. |
| More details to follow.... | More details to follow.... |
| Cars and services companies are also on the agenda today, as investors also watch Walter Reed military medical center for the latest on Donald Trump’s health. | Cars and services companies are also on the agenda today, as investors also watch Walter Reed military medical center for the latest on Donald Trump’s health. |
| September is usually a very strong month for UK car sales, as driver scramble to buy a new licence plate to impress the neighbours. But last month, sales slumped by 4% as the coronavirus crisis continued to hit demand. | September is usually a very strong month for UK car sales, as driver scramble to buy a new licence plate to impress the neighbours. But last month, sales slumped by 4% as the coronavirus crisis continued to hit demand. |
| Figures due at 9am are expected to show that fewer than 330,000 new cars were sold in September, which would be the lowest in over 20 years. | Figures due at 9am are expected to show that fewer than 330,000 new cars were sold in September, which would be the lowest in over 20 years. |
| That would intensify concerns that the UK economy is struggling as it faces a tough winter, with many commuters still working from home - and others fearing for their jobs. | That would intensify concerns that the UK economy is struggling as it faces a tough winter, with many commuters still working from home - and others fearing for their jobs. |
| We also get the final healthcheck on service sector companies in September, from data firm IHS Markit. It’s expected to show that service growth slowed in the UK and the US last month, and lurched into reverse in the eurozone. | We also get the final healthcheck on service sector companies in September, from data firm IHS Markit. It’s expected to show that service growth slowed in the UK and the US last month, and lurched into reverse in the eurozone. |
| Stock markets in Europe and the US are on track to open higher following signs that president Trump’s health is improving. There have already been gains in Asia-Pacific markets overnight including a 2.5% surge on Australia’s ASX index. | Stock markets in Europe and the US are on track to open higher following signs that president Trump’s health is improving. There have already been gains in Asia-Pacific markets overnight including a 2.5% surge on Australia’s ASX index. |
| The latest word from Washington is that Donald Trump “has continued to improve” since Saturday, after contracting Covid-19, and could be released as early as Monday. | The latest word from Washington is that Donald Trump “has continued to improve” since Saturday, after contracting Covid-19, and could be released as early as Monday. |
| Last night Trump said he was receiving ‘great reports’ from his doctors, before taking a trip to see the crowd outside Walter Reed - a move blasted as astoundingly irresponsible by one emergency medical physician at the site. | Last night Trump said he was receiving ‘great reports’ from his doctors, before taking a trip to see the crowd outside Walter Reed - a move blasted as astoundingly irresponsible by one emergency medical physician at the site. |
| Trump was helicoptered to Walter Reed on Friday night (after Wall Street had closed), less than a day after reporting his positive test, and has received a series of treatments, from an experimental cocktail of antibodies to the steriod dexamethasone. | Trump was helicoptered to Walter Reed on Friday night (after Wall Street had closed), less than a day after reporting his positive test, and has received a series of treatments, from an experimental cocktail of antibodies to the steriod dexamethasone. |
| So there’s some confusion over his health, which will keep the markets on edge today. | So there’s some confusion over his health, which will keep the markets on edge today. |
| The agenda | The agenda |
| 9am BST: UK car sales for September | 9am BST: UK car sales for September |
| 9am BST: Eurozone service sector PMI report for September | 9am BST: Eurozone service sector PMI report for September |
| 9.30am BST: UK service sector PMI report for September | 9.30am BST: UK service sector PMI report for September |
| 10am BST: eurozone retail sales for August | 10am BST: eurozone retail sales for August |
| 2.45pm BST: US service PMI for September | 2.45pm BST: US service PMI for September |