New car registrations remained well below pre-pandemic levels in November but demand for electric vehicles continued to grow, industry figures have revealed.
Some 115,700 new cars were registered last month, according to the Society of Motor Manufacturers and Traders (SMMT).
That was 1.7pc more than a year ago, but 31.3pc below the pre-Covid five-year average.
However, the green technology revolution continued to radically reshape the market, with the proportion of electric vehicle registrations more than doubling from 9.1pc to 18.8pc of the total.
Mike Hawes, the SMMT’s chief executive, warned the “underlying weakness” in sales was being caused by supply chain problems, including global shortages of microchips, which are holding back production.
How do 2021’s new car registrations compare to previous years?
Although new car registrations in November rose by 1.7pc, the Society of Motor Manufacturers and Traders (SMMT) says they are still about a third below pre-pandemic levels.
Overall, registrations in both 2021 and 2020 have been well below previous years, owing to the pandemic and subsequent supply chain snarl-ups.
You can see the difference clearly in this graph that my colleague Joe Curtis has pulled together:
Lorry driver shortage still acute but signs of green shoots
Britain is still suffering from an acute shortage of lorry drivers but the rate at which people are leaving the sector has slowed, according to an industry group.
Logistics UK, which represents freight and haulage businesses, estimates the country lacks around 120,000 drivers, shortages that have disrupted supply chains and left gaps on supermarket shelves.
That reflects the tens of thousands who have returned to the European Union following Brexit and the pandemic, as well as the cancellation of 40,000 truck driver tests during repeated lockdowns.
Logistics UK said the number of HGV drivers fell by 44,000 in the third quarter of 2021 compared with the same time in 2019, leaving the workforce 14pc smaller than it was at the outset of the pandemic.
But that represented an improvement on the fall of 72,000, or 23.4pc, in the second quarter.
Elizabeth de Jong, the group’s director of policy, said:
It is still at an acute level but we are beginning to see those little green shoots that we couldn’t see before.
Sterling up against dollar as traders wait to Bank rate setter’s speech
Sterling has edged higher against the dollar as investors wait for a speech on monetary policy and economic growth from Bank of England Deputy Governor Ben Broadbent.
The pound rose 0.2pc to $1.3262, although this was not far from a 2021 low of $1.3194 touched last week.
Markets now broadly expect the Bank’s monetary policy committee (MPC) to keep interest rates unchanged at a December 16 policy meeting, as the omicron Covid variant spreads across the world.
But Broadbent’s speech, at 11.30am in Leeds University, will still be watched closely for clues, says Jeremy Stretch, head of G10 foreign currency strategy at CIBC:
Should he validate the case for a hike, Omicron risks notwithstanding, we would regard there to be scope for a modest GBP bounce.
Car registration figures “reassuring” despite supply chain woes
Richard Peberdy, KPMG’s UK head of automotive, claims the car registration figures from the SMMT are actually reassuring, even though the impact of supply chain problems is being felt:
Supply shortages continue to limit the amount of cars produced, and as a consequence it’s no surprise to still see lower numbers of car registrations when compared to pre pandemic.
Demand for what’s available, both new and old, continues to outpace car supply however. That’s reassuring for the industry, despite the frustration and financial challenge of not being able to increase supply in order to meet demand.
Electric vehicle adoption is also a huge reassurance during these times. It’s a key reason why our recently published annual survey of global automotive executives shows that the majority are optimistic about the coming years.
Hopes for “mild” omicron lift Footsie
Russ Mould, investment director at AJ Bell, says hopes that the omicron coronavirus variant will turn out to be mild are driving the FTSE 100 higher this morning.
He says this is down to recent comments by officials in the US and South Africa, but warns:
It doesn’t feel like we are out of the woods yet, particularly as, even if this definitely proves to be the case, increased transmissibility could mean a wave of hospitalisations from a lower proportion of people getting really sick.
It still feels like we’re in the guesswork stage of working out what the impact of Omicron will be so it would be naïve to rule out further volatility as markets attempt to work out exactly what’s going on.
New car registrations down, but demand for electric surges
New car registrations remained well below pre-pandemic levels in November but demand for electric vehicles continued to grow, according to the Society of Motor Manufacturers and Traders (SMMT).
Some 115,700 new cars were registered last month, the group says.
This was 1.7pc more than a year ago, but 31.3pc below the pre-Covid five-year average.
However, the green technology revolution continued to reshape the market, with the proportion of electric vehicle registrations more than doubling from 9.1pc to 18.8pc of the total.
Mike Hawes, the SMMT’s chief executive, warned the “underlying weakness” was being caused by supply chain shortages, which are holding back production.
Demand is there, with a slew of new, increasingly electrified, models launched but the global shortage of semiconductors continues to bedevil production and therefore new car registrations. The industry is working flat out to overcome these issues and fulfil orders, but disruption is likely to last into next year, compounding the need for customers to place orders early.
The continued acceleration of electrified vehicle registrations is good for the industry, the consumer and the environment but, with the pace of public charging infrastructure struggling to keep up, we need swift action and binding public charger targets so that everyone can be part of the electric vehicle revolution, irrespective of where they live.
“Cold shower” for German manufacturers
Carsten Brzeski, global head of macro at ING, says of the collapse in German factory orders:
Today’s industrial orders data is a cold shower for German industry. When the global economy came out of the 2020/21 winter lockdown, German industrial orders jumped to unprecedented levels, growing on average by more than 2pc per month.
At the end of the summer, however, orders collapsed and dropped by more than 12pc between July and October. The sharp collapse over the summer is increasingly leaving its mark on industry – a reflection perhaps of ongoing supply chain frictions and companies simply delaying new orders or, worse, cancelling orders, knowing that delivery times are long anyway.
For the time being, order books are still well filled and every improvement in supply chains should lead to an immediate boost in industrial production. However, the summer collapse of industrial orders does not bode well for the medium-term outlook for industrial production.
Germany factory orders collapse
German factory orders tumbled by 6.9pc in October amid falling foreign demand.
The monthly drop, which was worse than economists had predicted, came as supply chain problems continued to plague industry.
Destatis, the federal statistics office, said it followed a small 1.8pc rise in September.
One analyst said the bleak numbers were a “cold shower” for German manufacturers.
Chinese tech index crashes to record low as Beijing meddles
China’s flagship measure of tech stocks has tumbled to its lowest level since launching last year as concerns mount over how much more pain Beijing is willing to inflict on the sector, Bloomberg reports:
The Hang Seng Tech Index closed down 3.3pc, its biggest decline in nearly two months, to the lowest level since before its July 2020 inception. Alibaba and JD.com were the biggest losers, each sinking at least 4.9pc. Both companies are also traded in the U.S.
The decline tracks Friday’s 9.1pc plunge in the Nasdaq Golden Dragon China Index, which was the biggest decline since 2008, on worries that Didi Global Inc.’s delisting would put pressure on other Chinese firms to follow suit.
“The selloffs in the dual-listed stocks in both Hong Kong and the U.S. will continue given the US regulation scrutiny,” said Castor Pang, head of research at Core Pacific Yamaichi. “It could be troublesome for them to submit accounting records to the U.S. government.”
Ted Baker chairman dies aged 77
The chairman of Ted Baker, who also once led the boards of easyJet and Next, has died.
John Barton passed away suddenly, the fashion house announced this morning.
Rachel Osborne, Ted Baker’s chief executive, said:
John was a source of great wisdom for me and for so many of us at Ted Baker and we will hugely miss his support and guidance.
Our thoughts and deepest sympathies are with his wife, Anne, and their family.
Helena Feltham, the senior independent director, has been appointed interim chairman with immediate effect.
CBI warns of “significant headwinds” threatening recovery from Covid
The Confederation of British Industry (CBI) has warned “significant headwinds” are threatening the economic recovery.
In a new economic forecast, Britain’s biggest business lobbying group has cut its prediction for GDP growth in 2021 from 8.2pc to 6.9pc.
It has downgraded the figure for 2022 from 6.1pc to 5.1pc, pointing to “short-term headwinds” including inflation and labour shortages.
Tony Danker, the CBI’s director general, is calling for more “pro-investment and pro-innovation regulation”, as well as a “competitive” tax regime:
Significant headwinds and rising costs of living threaten the extent of recovery and prospects for economic success.
The UK’s New Year resolution must be to give firms the confidence to go for growth. We should be raising our sights on the economy’s potential and seizing the moment.
Omicron leaves markets “beset by uncertainty”
Richard Hunter, head of markets at Interactive Investor, has warned that markets “remain beset by uncertainty as the spread of the Omicron variant threatens to derail the general economic recovery”:
He warns that traders are in for a rollercoaster month, with concerns about the new Covid-19 variant being tempered with expectations that strong jobs data in the UK and US will bolster the case for interest rate rises.
The outlook remains immediately uncertain and the mixed economic messages, let alone the new variant, are muddying the waters.
It is likely that the remaining few weeks of the year will be equally volatile as new information emerges on both.
But his colleague Victoria Scholar, head of investment, says of this morning’s trading in Europe:
European markets are trading on a stronger footing at the start of the week with oil & gas and construction at the top of the basket while all sectors are in the green. Europe’s Stoxx oil and gas index is extending gains after it was the best performer last week, rallying by 3pc.
The FTSE 100 is trading back above 7,160, after its best weekly performance since mid-October with the next major resistance hurdle at 7,200.
BT rises as Discovery plots swoop on BT Sport
BTshares have risen by as much as 1.9pc following a Sunday Telegraph report that US media powerhouse Discovery could gatecrash the sale of BT Sport to streaming challenger Dazn.
As talks between BT and Dazn towards a £600m sale of BT Sport have become bogged down, Discovery is said to have put forward an alternative proposal that is being seriously considered.
The competing discussions are reaching a crescendo, with senior BT figures said to be keen to reach a decision one way or the other before Christmas.
Dazn is bankrolled by Sir Leonard Blavatnik, the billionaire who was named the UK’s richest person with a fortune of £23bn earlier this year.
Bank of England poised to loosen mortgage lending rules
The Bank of England is poised to loosen mortgage lending rules introduced in the wake of the financial crisis, in a move economists have warned risks sparking a housing bubble, my colleagues Tim Wallace and Tom Rees report.
Officials are understood to be considering softening affordability checks for borrowers as part of a review of the market restrictions that concludes next week.
One of the measures being looked at is reducing the additional interest rate charge used to test borrowers’ ability to pay the reversion rate after an initial deal ends.
Oil up on the back of Saudi price hikes
Oil prices have rebounded by more than $1 a barrel after top exporter Saudi Arabia raised prices for crude sold to Asia and the United States.
Brent crude futures for February gained $1.39, or 2pc, to $71.27 a barrel earlier this morning, while US West Texas Intermediate crude for January were at $67.66 a barrel, up $1.40, or 2.1pc.
It came after Saudi Arabia on Sunday raised January official selling prices for all crude grades sold to Asia and the United States by up to 80 cents from the previous month.
The price hikes were implemented despite a decision last week by OPEC+ oil cartel, which includes Saudi Arabia, Russia and others, to continue increasing supplies by 400,000 barrels per day next month.
London markets open, FTSE rises
Trading has begun in London and the FTSE 100 is up.
The blue chip index increased by about 0.6pc or 44.6 points to up 7,166.9.
Meanwhile, the mid-cap FTSE 250 index of firms has risen by about 0.5pc or 120.2 points to 22,766.3.
Bank deputy governor to give speech, amid interest rates speculation
One of today’s key news events is expected to be a speech by Ben Broadbent, Deputy Governor of the Bank of England.
With the Bank’s monetary policy committee (MPC) due to meet on December 16, traders will be watching carefully for hints as to whether interest rates are set to rise.
Michael Saunders, an external MPC member who had previously been seen as hawkish, appeared to soften his enthusiasm for an imminent hike when he gave a separate speech on Friday.
Dr Broadbent will be speaking at the University of Leeds, with a copy of his planned remarks set to be published at 11.30am.
Markets “twitchy” due to omicron fears
Early bird Michael Hewson, chief market analyst at CMC Markets UK, has been discussing the reaction of European governments to the omicron variant of Covid-19 this morning.
In a note, he predicts that traders could be in for another week of volatility:
European stocks also appear to be finding further progress difficult, with the DAX down for the second week in a row as Germany struggles to deal with surging cases of Delta that are threatening to overwhelm its health service, while across the world political leaders appear to be panicking over the threat posed by the Omicron variant, by imposing new restrictions on travel.
While still early days, the evidence continues to support the notion that while Omicron is more transmissible it doesn’t appear to be more deadly with no deaths currently reported because of the virus.
Nonetheless, markets appear to be becoming increasingly twitchy, whether it be over Omicron, or the ability of Europe to deal with its current problem with Delta.
Despite these concerns, European markets look set to start the week in a positive fashion, with Asia markets trading cautiously with little in the way of news flow to drive direction.
FTSE expected to open higher, but traders braced for more virus volatility
The FTSE 100 is expected to open higher this morning even as the spread of the omicron strain of the coronavirus keeps traders in a cautious mood.
Investors are braced for another week of volatility after concerns about the new variant led to the blue chip index’s worst month for more than a year.
It shed more than 2pc in November, with airline stocks hit particularly hard. This morning the Footsie is expected to open 48 points, or about 0.7pc higher at 7,170.
Traders will also be keeping an eye on a speech by Ben Broadbent, Deputy Governor of the Bank of England, for hints about whether an interest rates rise is on the cards this month.
5 things to start your day
1) Bank of England poised to loosen mortgage lending rules: Officials consider softening affordability checks as critics warn it risks housing bubble.
2) Recruiters struggle to recruit recruiters amid ‘Great Resignation’: Headhunters widen their search for staff amid widespread shortages
3) Crackdown on crypto firms needed to ‘wreck’ ransomware, says ex-GCHQ boss: Robert Hannigan said there is need for ‘greater cryptocurrency regulation’ to make the hacking method a ‘poor business model’.
4) No progress made on closing gender pay gap in 25 years, warns IFS: Findings suggest little advance in wage gulf when accounting for ‘rapid improvement’ in women’s education.
5) Too few mechanics for UK’s electric car ambitions, warns Halfords boss: Graham Stapleton said he is ‘very concerned’ that sufficient steps are not being taken to address the ‘skills gap’.
What happened overnight
Asian markets broadly fell in morning trading on Monday, tracking uncertainty over the Omicron variant of Covid-19 as well as disappointing US jobs data and the future of Chinese tech firms on Wall Street. Tokyo, Seoul, Hong Kong and Australia fell in morning trading.
- Corporate: Paragon, Renew Holdings, CareTech (Full year results) Babcock, Supreme, Mercia Asset Management (Interims) Ashtead, BAT, Ferguson (Trading update)
- Economics: Kantar supermarket sales (UK), ONS M&A (UK), Consumer credit (US)