UK car sales fall for 8th month running; anger over rail fares rise – as it happened

Graeme Wearden (until 1.45pm) and Nick Fletcher

from Economics | The Guardian on 2017-12-05 17:49 (#39V3Q)

The slowdown in Britain's auto industry has continued, as rising inflation and anxiety over diesel hits sales

Car sales fell by 11.2% in November
Industry: It's a major concern
Diesel sales slumped by 30%

Elsewhere:

5.49pm GMT

A drop in commodity prices on concerns about Chinese growth helped push UK markets lower, while elsewhere there was a fairly mixed performance. There was little help from Wall Street which slipped back after its recent record breaking runs. The US tax reforms saw investors ditch technology shares in favour of financial and consumer companies which were more likely to directly benefit from the changes. The final scores in Europe showed:

4.39pm GMT

And here's a positive snapshot of the global economy from Markit:

Global economic upturn holds steady at two-and-a-half year high, with euro area remaining a prime growth engine https://t.co/Ib2xDhcKTf #PMI pic.twitter.com/5h37z69syo

4.13pm GMT

The pound is likely to fall quite a bit further if Brexit talks break down, says Capital Economics, but the extent of the currency's decline since the referendum might limit the damage.

Overall the consultancy believes a favourable deal is still the most likely outcome, which should give some support to sterling. Capital Economics' Oliver Jones says:

We think that a transitional deal which largely preserves the status quo will eventually be reached, and a favourable agreement on the future trading relationship will ultimately be struck too.

Given how investors are positioned, signs that such an arrangement is likely might not give sterling much of a lift. But we think that progress towards this type of deal would help the UK economy to hold up better than most expect. We suspect that this would prompt the Bank of England to raise rates by more than is discounted in markets, which would probably support sterling.

3.34pm GMT

Following the weaker than expected US service sector surveys, the Dow Jones Industrial Average has lost its early gains and dipped slightly into the red.

3.12pm GMT

The ISM's Anthony Nieves said: "The rate of growth has lessened in the non-manufacturing sector after two very strong months of growth. Comments from the survey respondents indicate that the economy and sector will continue to grow for the remainder of the year."

And here are some of the comments from the ISM report:

3.05pm GMT

And confirmation of a slowdown in the US service sector last month.

After the decline in the Markit service sector survey, the Institute for Supply Management's non-manufacturing PMI has fallen from 60.1 in October to 57.4. This is below expectations of a level of 59.

US ISM service sector misses; like #Markit version out earlier. Non-manufacturing ISM at 57.4 vs 59 fcast & Oct's 60.1. #USDJPY ticks dn ^KO

2.49pm GMT

The first of two US service sector surveys shows a slightly larger than expected fall in November.

The Markit final service sector PMI has come in at 54.5, down from 55.3 in October and below the initial estimate of 54.7. This is the lowest reading since June.

US Service PMI (Nov F) 54.5, flash 54.7, previous 55.3 $USD pic.twitter.com/wGL5NMx4Dx

2.37pm GMT

Following the US trade data and ahead of the latest service sector surveys, US markets continue to be influenced by the Republican tax bill.

Investors are moving out of technology stocks - which have been hitting new records throughout the year - and into sectors which should directly benefit from the tax measures.

A major sector rotation is taking place. Money is coming out of technology sector and moving in those sectors which are going to be the beneficiary of the US tax overhaul. Hence, we have seen massive inflow of funds in the financial and consumer discretionary sector and while energy sector has experienced outflow.

2.22pm GMT

And over to Bitcoin, which continues to defy gravity:

Here we go again. Bitcoin prices up about 3% this morning. New round number milestone in sight as it approaches $12,000. $XBT $BTC https://t.co/dIfdlfZmoQ

1.58pm GMT

Back with UK car sales, and here is our report by Angela Monagham:

UK sales of new cars fell for an eighth consecutive month in November as economic uncertainty and a sharp fall in demand for diesel cars weighed on demand.

Sales slumped by 11.2% last month to 163,541 vehicles, putting the industry on course for the first drop in annual sales since 2011. New car sales in the first 11 months of 2017 were down by 5% at 2.39m.

1.42pm GMT

Newsflash: America's trade deficit has widened to a nine-month high - a move that won't please Donald Trump.

The gap between what the US imports and exports jumped by 8.6% to $48.7bn in October, the Commerce Department says.

U.S. trade deficit surges 8.6% in October to 9-month high of $48.7 billion on higher imports of oil, consumer electronics. Potential drag on Q4 GDP

*U.S. OCT. TRADE DEFICIT WIDENS TO $48.7 BLN; EST. $47.5 BLN

1.35pm GMT

The fall in the pound's value is supporting shares in London today.

The FTSE 100 is the only European stock index that hasn't lost ground - as investors ponder Brexit, and the prospect of US tax reforms.

"The two overarching macro themes the market honed in on overnight have been the response from European and U.S. traders to the Senate passing its tax plan and that no deal has yet been formally reached in the Brexit negotiations,"

12.51pm GMT

Over in Greece, thousands of protestors have taken to the streets to denounce the leftist-led government's attempts to clamp down on the ability of unions to call strike action.

"Greece is really now turning the corner and I think there is a general acceptance that we are turning the corner."

12.47pm GMT

David Davis, Britain's secretary of state for exiting the EU, is answering an urgent question on the Brexit talks in parliament.

Andrew Sparrow's Politics live blog has full details:

12.34pm GMT

Former transport secretary Andrew Adonis says rail passengers should blame the slump in the pound since the Brexit vote for pushing up fares.

"Commuters are feeling the Brexit squeeze already, as the rise in inflation has pushed up rail fares in their highest increase for five years.

"There is no doubting the impact of the plunge in the value of the pound after the Brexit vote on people's spending power. And now the Government's extreme Brexit plans, and its continued inability to make progress in the negotiations, is causing deep uncertainty and keeping our currency weak.

12.24pm GMT

The Guardian's Business Today email has expanded its property coverage.

As well as key news headlines, an agenda of the day's main events, insightful opinion pieces and a quality feature, there is now more coverage of house prices, mortgages, the rental market - and the best picture galleries from our Money pages.

12.05pm GMT

The Bank of England has admitted to warning UK courts to expect a deluge of insurer applications ahead of Brexit.

The BoE tipped off the High Court, but kept this move private to avoid spooking policyholders - and triggering an even bigger rush to m'learned friends. Now, though, it believes the situation is under control - so we're allowed to know about it.

Minutes from a November meeting of the Bank's Financial Policy Committee (FPC) show that members were given "early estimates" around the number of policyholders that would be impacted if insurers lost permission to collect premiums and pay out claims on cross-border contracts after Brexit.

It is the latest revelation around Brexit preparations being made by both the UK Government and regulators as banks, asset managers and insurers prepare for the loss of passporting rights which currently grant cross-border access throughout the EU.

11.44am GMT

The slowdown in UK service sector growth is weighing on the pound.

Sterling is currently down 0.5% at $1.3405, as traders watch for any signs of Brexit progress.

The Brexit woes were coupled with disappointing services data for November further deepening the losses and putting further downward pressure on the pound. Despite recent manufacturing and construction figures both beating previous estimates, the service PMI, although fuelled with optimism, missed expectations. Analysts have pointed out that Brexit related uncertainty and its effect on UK firms is leading cause of the sharp downtrend, painting a bleak picture of a dominant sector.

Investors and pound traders are now looking towards the next big deadline at the December 14^th-15^th EU Summit where the EU is set to give its verdict on whether Britain can progress to discussing their future relationship. The pound will be in focus for investors over the coming days and there may be more optimism amongst investors ahead of the December EU Summit next week, however, further political doubt could signal more uncertainty for the currency."

My position on the current Brexit negotiations: pic.twitter.com/QDNiUwduWd

11.01am GMT

In another worrying signal, growth in the UK service sector has slowed unexpectedly.

Data firm Markit reports that the growth in business activity weakened in November, having hit a six-month high in October. Job creation was also subdued.

#UK service sector growth eases in November. Prices charged rise at fastest
pace since February 2008. Headline #PMI dips to 53.8 in Nov' from 55.6 in Oct'. https://t.co/rP8utm702B pic.twitter.com/6MAOmA9eGN

"Uncertainty about the economic outlook, linked commonly to Brexit worries, continued to permeate the business mood in November.

However, for now, the survey data indicate that a sufficient degree of optimism in pockets of the economy, notably financial services, tourism, manufacturing and house building, is helping the economy as a whole to sustain steady growth.

10.46am GMT

Alex Buttle, director at car buying comparison website Motorway.co.uk, fears that next year will be tough for the car industry.

The solution? More support for the electric car industry.

"Petrol sales were up last month and the year to date and AFV registrations saw another month of double digit growth, as the electric and hybrid revolution continues to gather pace.

"The Government needs to take note, and put its full backing behind AFV progression by offering more incentives for the consumer.

10.40am GMT

So far this year, sales of Vauxhall cars are down 22%.

10.25am GMT

The Ford Focus hung onto its position as Britain's most popular car in November:

10.03am GMT

Sue Robinson, director of the National Franchised Dealers Association (which represents car dealers), has welcomed the jump in electric car sales.

We are pleased to see the continued increase in market share of AFVs, up 33.1% in November.

The continued commitment from the Government to support the uptake of electric vehicles is extremely encouraging but we also call on the Government to do more to clarify the diesel issue."

9.40am GMT

The uncertainty over Britain's exit from the EU is hurting car sales, warns Chris Bosworth, Director of Strategy at Close Brothers Motor Finance.

He says:

"Today's figures highlight both the cyclical and structural market challenges that the motor industry faced in November, which sees the eighth consecutive month of car registrations being in decline.

Brexit is having an obvious impact on the market as a whole as consumer confidence remains low.

9.40am GMT

Some of the consumers who are shunning diesel cars are buying electric models instead.

Sales of alternatively-fuelled vehicles jumped by a third in November, from 6,661 to 8,867 units. That's 5.4% of the market, up from 3.6% a year ago.

9.31am GMT

This chart, from the SMMT, confirms that UK car sales are down 5% so far this year, led by a slump in demand for diesel.

9.13am GMT

Breaking: UK car sales slumped by over 11% in November, led by a startling decline in diesel sales.

This confirm that demand has now fallen for eight months in a row, putting the sector on track for its first annual decline since 2011.

"An eighth month of decline in the new car market is a major concern, with falling business and consumer confidence exacerbated by ongoing anti-diesel messages from government. Diesel remains the right choice for many drivers, not least because of its fuel economy and lower CO2 emissions.

The decision to tax the latest low emission diesels is a step backwards and will only discourage drivers from trading in their older, more polluting cars. Given fleet renewal is the fastest way to improve air quality, penalising the latest, cleanest diesels is counterproductive and will have detrimental environmental and economic consequences."

9.05am GMT

The European economy has enjoyed another strong month, according to new data which shows that services sector and manufacturing output is growing fast.

The eurozone composite PMI, calculated by data firm Markit reports, has jumped to 57.5 for November from 56.0 in October. Any reading over 50 shows growth, and this is the highest reading since April 2011.

#Eurozone economy sustaining healthy momentum in late-2017 as #PMI showed overall #manufacturing and #services output index at best level in November since April 2011. Composite index up markedly to 57.5 from 56.0

9.01am GMT

Another satisfied customer:

Train fares to rise 3.4% in January! Ironic considering that's about how often they are actually on time!

8.53am GMT

It's another dark morning for UK sub-prime lender Provident Financial.

Shares in Provident have plunged by almost 20%, after it warned investors that it was being investigated by the Financial Conduct Authority (the City watchdog).

8.29am GMT

Britain's rail passengers continue to fume about the prospect of next year's fare hike:

Train fares going up. Please @ScotRail @VirginTrains @CrossCountryUK improve seat availability, train cleanliness, & running time by 3.4% in line with rise. https://t.co/hNblbxe3eU

So train fares going up by 3.4% in january. Perhaps they should try upping the service they provide first before upping the fare #joke

Train fares going up by 3.4% again Imagine what would happen to congestion and air pollution if there was regular, affordable, public transport in this country.

8.25am GMT

The pound is coming under pressure this morning.

It's already shed more than half a cent against the US dollar to $1.341, having traded over $1.35 on Monday.

pound getting whacked this morning pic.twitter.com/B1sce9vVWi

8.13am GMT

Unions have slammed the looming hike in UK rail fares, arguing that passengers aren't getting a good deal.

RMT union general secretary, Mick Cash, said:

"These fare increases are another kick in the teeth for British passengers who will still be left paying the highest fares in Europe to travel on rammed-out, unreliable trains where private profit comes before public safety.

So not only was my train 25 minutes late this morning but I learn that as of train fares increase by 3.4%. In January If I can hardly afford the trains as they are at 12.00 for a day return (with railcard) then so must so many other students! Living In an age of fake austerity

So we're paying 3.4% more on train fares to deal with delays, strikes, cancellations and packed carriages. Great.

Train fares are going to rise 3.4% in January and they wonder why we all drive cars. In other many other nations fares are cheap, as this encourages people to use trains.

So, train fares are going up by 3.4% in January. I wouldn't mind if we had a decent service but we don't, and no signs of it improving either!

8.07am GMT

While car sales are falling, the cost of travelling on Britain's rail network is going up!

Fares are being hiked by an average of 3.4%, in line with last August's retail price index (one measure of inflation).

Rail fares will rise by 3.4% in January - the largest increase for five years, train companies have announced.

Fares for all journeys in 2018 have been published, showing an average rise slightly below the 3.6% set by the government in August for regulated fares, which include season tickets.

7.49am GMT

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

New car registrations in Britain fell by around 11% in November, the eighth consecutive month that sales have declined, according to preliminary numbers from an industry body.

The sales have reflected caution among consumers faced by arise in inflation since the Brexit vote in 2016 and weak wage growth, as well as concerns that the government would clamp down on diesel vehicles to curb pollution.

Starting with Europe we have the latest services PMI's from Spain, Italy, France and Germany. It is expected that we'll see improvements across the board with readings of 55.2, 53.4, 60.2 and 54.9, with France outperforming strongly from an October number of 57.3.

On the data front, having seen two decent numbers on manufacturing and construction PMI's for November, it is hoped that today's services number will complete a nice hat-trick, though expectations are for a bit of a slowdown from Octobers 55.6 to a number in the region of 55.2.

European markets opening call @LCGTrading $FTSE +6 points at 7344$DAX +7 points at 13065$CAC -5 points at 5384$IBEX +2 points at 10210

GUARDIAN: DUP wrecks May's Brexit deal #tomorrowspaperstoday pic.twitter.com/EPdFKFgJUY

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