Info seputar HK Hari Ini 2020 – 2021.
UK van sales jumped in August, defying the slowdown in car registrations.
The light commercial vehicle (LCV) market saw its second best August on record with 20,582 new vans registered last month, 6.1% more than a year ago, according to the Society of Motor Manufacturers and Traders.
The SMMT says the recent relaxation of lockdown rules helped boost demand for vans in August, along with demand from builders and for online shopping deliveries.
Light vans weighing 2.5 tonnes or less saw a decline of -23.3%, but all other classes saw growth. Heavier vans weighing more than 2.5 tonnes, the lion’s share of the market, saw a 7.0% increase in overall registrations as demand for online shopping and construction remained robust and pandemic restrictions continued to ease across the UK.
Notable but atypical growth was seen in the 4×4 market, up 522.6% as a result of new models entering the market in the traditionally small segment.
Van registrations are up 50% so far this year, compared to 2020, with the Ford Transit Custom the best-selling model.
The SMMT also warn, though, that the shortage of semiconductors is affecting commercial vehicle production.
The price of aluminium has hit a fresh 10-year high today, as reports of a coup in Guinea added fresh fuel to its rally.
Guinea is a major supplier of bauxite, the ore processed to produce aluminium.
Yesterday, an elite army unit announced it has seized power in the west African country, deposing the president, Alpha Condé, and imposing an indefinite curfew.
Aluminium had already been trading at a decade high, and concerns over potential disruption to Guinea’s output drove it higher.
Reuters has the details:
Benchmark aluminium on the London Metal Exchange (LME) was up 1.1% at $2,757 a tonne at 10:59 GMT after touching its highest since May 2011 at $2,775.50.
Prices are up about 40% this year.
Aluminium is used widely, from cans and packaging to construction and aerospace, and is also used in electric cars – both in the batteries which power them, and in the bodies of some vehicles, to reduce weight.
Prices have jumped as demand has risen, and as curbs on electricity use at Chinese smelters hit output.
Last week, Coca-Cola’s British and continental bottling operation said it was facing a shortage of aluminium cans.
So these price rises, and potential shortages, could add further disruption to supply chains.
China imports more than half of its bauxite from Guinea, according to Bloomberg, which says:
The ready availability of cheap, high-quality Guinean bauxite helped cement China’s position as global leader in aluminum output. But it also leaves the world aluminum market exposed to disruptions in the African country….
The outcome of the coup attempt is unclear, but the political turmoil offers a test for this relatively new supply chain. Investors need to mull a range of possibilities, from a relatively peaceful power transfer in Conakry that preserves the bauxite status quo, to more disruptive scenarios that curb shipments.
The construction industry could face cement shortages this autumn, unions claim, if lorry drivers employed by construction materials group Hanson vote for strike action in a dispute over pay.
More than 200 lorry drivers and engineers at Hanson’s Castle Cement arm have rejected a pay offer of 2.5% for this year, says the Unite trade union.
They’ll be balloted on industrial action later this month — and if they vote to strike, industrial action could begin this October.
The drivers deliver dry cement to large construction projects such as Hinkley Point, high speed rail project HS2, Sellafield and Thames Tideway, and to building product companies including Jewson and Marshalls, Unite explains.
If strikes do occur then both large and small construction projects will swiftly run short of cement as many only have limited storage facilities, says Unite national officer Adrian Jones:
“Our members are simply not going to accept a pay offer which amounts to a pay cut in real terms.
“With the ongoing driver shortage, our members are seeking a pay increase which recognises their hard work and dedication.
“If strikes do occur then it will have major implications for the construction industry. Supplies of cement will quickly run out, which will result in projects being delayed.
Several retailers and delivery firms have recently hiked the pay of their lorry drivers, with one HGV driver reporting a 40% wage rise last week.
The logistics industry are trying to train up more drivers, after recruitment was disrupted by the pandemic. But getting these recruits qualified and on the road will take time.
My colleague Joanna Partridge visited an HGV training site near Bristol last week, and found plenty of interest:
At the Portbury warehouse, owned by a customer of the logistics firm Wincanton, apprentices are queueing up to get behind the wheel. The company has run an apprenticeship scheme since 2017, but never before on the current scale of 128 participants.
There, they learn the ropes in logistics while the firm funds their HGV driver training and the tests required to gain a driving licence. After a year, provided they have passed their tests, the apprentices are guaranteed a job driving lorries.
Wincanton hopes the scheme will go some way towards filling its current 600 driver vacancies, 13% of its 4,700-strong workforce of drivers, as well as a fast-track driver training scheme for current staff, or people who may already have some driving experience.
The boss of Wagamama has said the restaurant chain is struggling to hire chefs at a fifth of its sites, as companies across the economy warn of recruitment difficulties.
Wagamama, which serves pan-Asian food, has been hit by shortages of staff from Europe following Brexit immigration restrictions, its chief executive, Thomas Heier, told the Press Association, with difficulties at 30 of its 147 sites.
“We’ve seen a reduction in our EU workforce in particular,” Heier said, “but the other thing we’re seeing is increased competition from logistics and delivery firms who are struggling with an increased number of vacancies.”
Investors across the eurozone have turned gloomier this month, suggesting the region’s economy recovery has past its peak.
Research group Sentix’s index of eurozone investor confidence has dropped to 19.6 points this month, down from August’s 22.2.
That’s the lowest reading since April, and weaker than expected, signaling that growth slowed.
A gauge of investors’ future expectations dropped for the fourth month running to its lowest level since May 2020 (from 14.0 to 9.0), while a measure of current conditions was unchanged.
Sentix managing director Manfred Hübner explains:
The economic recovery process that has been going on for about a year after the painful lockdown in spring 2020 has passed its zenith for the time being….
The question now is whether we are dealing with a trend reversal or a growth slowdown, as is typical for the middle phase of an economic recovery. So far, the signs point to the latter. The further development in China is likely to be decisive
Hübner also warned that the momentum of the global economy is slowing.
For the global economy, too, the signs point to a so-called “mid-cycle slowdown”, i.e. a slowdown in growth in the middle of the cycle. The Asia ex-Japan region is particularly affected, where the overall index has already weakened for the fifth time in a row.
The situation index fell to its lowest level since February 2021.
The shortage of European workers helped to pull UK construction growth down to a five-month low in August, says Martin Beck, senior economic advisor to the EY ITEM Club:
“On the demand side, the outlook for the construction sector remains very healthy. Structural factors – such as higher demand for larger, out-of-town, properties and retail-to-residential conversions in cities – will support new home building, while maintenance and repair activity will gain from the strength of households’ appetite for home improvements and the need to retrofit buildings to meet the Government’s net zero ambitions. And the higher levels of public sector investment planned for the next few years, including spending on infrastructure projects like HS2, will further boost activity.
“The construction sector faces significant supply-side issues in meeting this demand. EU workers returning home during the pandemic has decreased the availability of workers. And a synchronised global recovery in construction has pushed up the price, and reduced the availability, of key materials such as cement, copper and steel.
A ‘perfect storm’ has hit UK builders as they struggle to get hold of material and labour. warns Jan Crosby, head of infrastructure, building and construction at KPMG UK.
The industry is telling us that this is one of their biggest concerns right now, and that supply chain delays are preventing them from taking on new work to grow their construction businesses at a time when the economy is bouncing back.
Global demand for materials, the HS2 high-speed rail project, the shortage of lorry drivers, and the loss of some EU workers after Brexit are all shaking up supply chains, making it harder for construction firms meet demand.
“The scale of HS2 is acting as a magnet for certain elements of the supply chain, including heavy equipment and cement; the global demand for steel and timber is pushing up prices and lead times for most goods can take much longer than normal. Additionally, labour in the south has been impacted by Brexit and HGV drivers are in high demand.
“The good news is that demand remains high across most markets – particularly residential and infrastructure. Rising end prices for houses and real estate are often fully mitigating the impact of the cost increases – at least in the private sector. However, availability will act as a break on how much the industry can respond to the high demand.
“This month has again seen slow growth for the sector. The ongoing lorry driver shortages and lack of stock mean these supply vs demand worries aren’t going away quickly.
Disruption caused by Brexit was another factor hitting builders last month, says Duncan Brock, group director at the Chartered Institute of Procurement & Supply:
“Formidable supply chain pressures restrained purchasing activity and building projects across the board in August as 68% of construction companies reported even longer delivery times for materials compared to July.
A combination of ongoing covid restrictions, Brexit delays and shipping hold-ups were responsible as builders were unable to complete some of the pipelines of work knocking on their door.
“Material and staff costs went through the roof as job hiring accelerated to fill the gaps in capacity left behind by employee moves, overseas worker availability and brought on by skills shortages. Paying higher wages for experienced staff along with low stocks of materials at suppliers meant inflationary pressure rose at a rate almost on a par with June’s survey record. 84% of supply chain managers reported paying more for their purchases.
Britain’s builders have also been hit by supply chain problems in August.
The UK construction sector grew at the slowest pace since February, as “sustained, and severe, supply chain disruption” hit building firms, and drove up costs sharply.
Data firm IHS Markit reports that its UK Construction PMI fell to 55.2 in August, down from 58.7 in July.
That shows a sharper slowdown than expected, as the restricted supply of materials and transport began to weigh on overall construction activity [any reading over 50 shows growth].
Builders reported that supply chains were stretched, with some struggling to either source raw materials and parts, or receive them, as supplier delivery times continued to lengthen.
Ongoing material shortages are being exacerbated by a lack of transport and freight availability, and congestion at the ports, the report says.
Usamah Bhatti, Economist at IHS Markit, explains:
Supply chain disruption continued to disrupt activity across the UK construction sector, as demand for materials and logistics capacity outstripped supply.
Average vendor performance continued to deteriorate at a near-survey record rate, as firms noted severe shortages of building materials, a lack of available transport capacity and long wait times for items from abroad due to port congestion.
This drove up input cost inflation, which accelerated at the second-fastest rate in the 24-year history of the survey (beaten only by June’s record rise).
Builders said concrete, fuel, steel and timber all jumped in price, for example.
Growth slowed across housebuilding, commercial work and civil engineering activity, with a dip in new order growth too.
Job creation fell to a four-month low, as rising costs and “a lack of skilled workers” led to a slowdown in hiring.
Markit points out that the supply chain crisis is weighing on client confidence too:
Businesses noted a continued resumption of projects that had been delayed due to Brexit and the COVID-19 pandemic, though client confidence was dampened by volatility in raw material supplies and increased cost burdens.
Reaction to follow…
Sales of petrol and diesel cars fell the sharpest in August.
Diesel sales were down almost 65% year-on-year, while petrol sales fell 40%.
But sales of pure battery electric (BEV) cars rose 32%, while plug-in hybrid (PHEV) sales jumped 72%, and hybrids were up over 45%, keeping the overall fall in car registrations to 22%.
Sue Robinson, chief executive of the National Franchised Dealers Association, says:
“It is encouraging to see that strong sales of electrified vehicles partly offset the monthly decline.
Year to date, the market is 20% above last year, although the overall performance is not yet at pre-pandemic levels.
“Despite the decrease in new car registrations, franchised vehicle dealers are optimistic about their prospects for the remainder of the year as consumer confidence remains robust, as demonstrated by buoyant sales of used and nearly new cars.
Karen Johnson, head of retail & wholesale at Barclays Corporate Banking, warns that supply chain problems could hit car sales in September, usually a bumper month for demand:
“We might be in the ‘new normal’, but it’s the same old patterns for UK car dealers. August has upheld its reputation as a typically quieter month for new car registrations, with sales falling both month on month and year on year.”
“Although there continue to be positive reports of strong used car sales, dealers across the country will already be looking ahead and wondering how much the shortage of new vehicles is going to impact registrations in September?”
James Fairclough, CEO of AA Cars, says supply problems mean dealers have fewer cars to sell.
“After a poor July, sales of new cars continued to disappoint in August. But there is an important silver lining to the clouds currently hanging over the market – the culprit is likely to be patchy supply rather than flagging demand.
“In July the number of cars leaving UK factories and heading for the domestic market slumped by 38.7%, meaning that despite dealers’ best efforts to fulfill orders as quickly as possible, too often they just don’t have the vehicles to sell.
Seán Kemple, Managing Director of Close Brothers Motor Finance, points out that major carmakers such as Toyota cut production due to chip shortages, and others may follow:
“Unless something drastically changes in the remaining four months of the year, it’s looking unlikely that the manufacturing shortages hitting the car industry will level out by the end of 2021. The ongoing impact of the chip shortage means that a full recovery is not in sight for quite some time.
“Retailers are being asked to sell according to what manufacturers are able to produce, meaning that consumer choice is limited. However, this means consumers may be more likely to get a discounted price. For customers who aren’t willing to be flexible, it may be best to wait for things to get back to normal and for manufacturing to pick up again.”
“Despite the challenges in the car industry, we’re seeing more people wanting to drive and considering car ownership; many don’t want to use public transport due to health reasons and persisting Covid anxiety. With this in mind, dealers need to be upfront with their customers about what cars they have available, and perhaps be prepared to be flexible on price points given the lack of options.”
Just in: last month was the weakest August for UK car sales in eight years, as supply issues continue to undermine the market.
Industry body the Society of Motor Manufacturers and Traders reports there were just 68,033 new cars registered in August, a drop of 22% compared with last year.
That’s the weakest monthly performance for any August since 2013, and 7.6% below the average over the last decade (August is usually a quiet month, as buyers wait for the new year plate-change in September).
The SMMT says the fall is partly due to constrained supply, as the global shortage of semiconductors undermines production volumes.
Mike Hawes, SMMT chief executive, said the figures are disappointing, although not wholly surprising.
The global shortage of semiconductors has affected UK, and indeed global, car production volumes so new car registrations will inevitably be undermined. Government can help by continuing the supportive Covid measures in place currently, especially the furlough scheme which has proven invaluable to so many businesses.
“As we enter the important September plate-change month with an ever-increasing range of electrified models and attractive deals, buyers in the market for the new 71 plate can be reassured manufacturers are doing all they can to ensure prompt deliveries.”
So far this year, UK car registrations are 20.3% higher than in 2020, when the early waves of Covid-19 hit the economy. But, they are still 25% below the 10-year average for January-August.
In August, registrations by private, business and fleet buyers all fell by double digits in the month. Fleet purchases were worst hit, down 27.5%, while sales to individuals dropped 15.2%.
The eurozone construction sector shrank last month, hurt by rising cost pressure and severe supply chain disruption.
Data firm IHS Markit’s latest survey of purchasing managers at eurozone building firms found:
- Further decline in output despite renewed growth of new orders
- Cost burdens rise rapidly amid severe supply-chain disruption
- Confidence around the 12-month outlook weakens
Companies blamed the drop in activity on raw material and labour shortages, which disrupted work on site, along with rising input prices (materials and wages).
There were longer delays obtaining supplies, which were “overwhelmingly attributed” to raw material shortages and supply bottlenecks.
This pulled Markit’s eurozone construction PMI down to 49.5 in August from 49.8 in July. That’s further below the 50-point mark showing stagnation, indicating a small drop in activity.
Eurozone housebuilding activity did pick up in August, but this was countered by a fall in commercial building and civil engineering work.
And there were “sharp and accelerated” declines among French and German construction firms, which offset a series-record upturn in construction output in Italy.
Usamah Bhatti, Economist at IHS Markit, said:
“The downturn in the eurozone construction sector extended into its second month in August, as businesses reported a slightly quicker fall in activity. Positively, growth in new business inflows resumed, albeit at a marginal pace, marking the third rise in new orders in four months.
That said, firms continued to report widespread shortages of raw materials and labour across the bloc and beyond, which placed everincreasing strain on supply chains and cost burdens.
The rate of input price inflation softened from July’s peak, but remained among the strongest seen since the series began in January 2000. Increased headwinds, notably from local and global supply chains, dampened business confidence.
The degree of optimism eased to the softest since May. At the national level, only Italian firms indicated a rise in activity, and one that was the fastest on record. Yet this was offset by sustained declines in Germany and France.”
European stock markets have opened higher, as investors conclude that Friday’s bad US jobs report is good news for asset prices.
In London, the FTSE 100 is up 0.5% or 36 points at 7174.
Tech-focused investment trust Scottish Mortgage (+1.8%) is the top riser, along with the London Stock Exchange Group (+1.7%), Asia-focused bank Standard Chartered (+1.4%), retailer JD Sports (+1.5%) and mining giant Glencore (+1.3%).
The pan-European Stoxx 600 has gained 0.3%, with rises in Germany, France and Spain, and a 0.7% jump in Italy.
The sharp fall in US job creation in August — just 235,000 payroll gains, down from over one million in July — seems to have calmed the markets.
With the delta variant hitting America’s economy, there’s less danger of the US Federal Reserve tapping the brakes on its stimulus programme, the theory goes.
Richard Hunter, Head of Markets at interactive investor, says:
“A major miss from the US unemployment reading has had the ironic impact of reducing investor jitters.
The Delta variant, as largely expected, has continued to impact new job openings, particularly in the areas of hospitality and retail. At the same time, there may be a reluctance for some potential workers to seek employment until the variant subsides. The non-farm payrolls figure of 235000, as compared to the expected consensus of 750000 was below even the lowest of estimates and is further proof that the strength of the US recovery may plateau until normal service can be resumed in society.
That being said, the July figure was also revised to 1.05 million jobs added from the initial reading of 943000, and even the notoriously uneven August figure may yet be subject to revision.
In contrast, the unemployment rate fell in August and wage inflation was muted, suggesting that the Federal Reserve narrative of no imminent stimulus tapering will remain in place, with December now being seen as the earliest possible time.
German factories have seen an unexpected surge in orders, boosted by strong overseas demand for major goods such as ships.
Orders for German-made goods jumped by 3.4% in July, official data from Destatis shows. It lifts new orders to the highest level since the survey began in 1991, after reunification.
Economists had forecast a 1% fall. The stronger-than-expected data suggests Germany’s manufacturing sector has made a decent start to the second half of this year.
The jump in orders was driven by overseas demand from countries outside the eurozone. It rose by 15.7%, due to “many major orders especially from the shipbuilding sector.”
But domestic orders fell by 2.5%, and new orders from the euro area decreased by 4.1%.
If you strip out those major orders, there was a decline of 0.2% in July 2021.
But German factories now face the challenge of filling these orders, given the global scramble for raw materials, parts and workers.
Bastian Hepperle, economist at Bankhaus Lampe, said (via Reuters)
“The development in Germany is disappointing: the order books are still well filled and the order backlog is high.”
“Due to a lack of materials and primary products, there are considerable difficulties in processing orders.”
The labour crisis could last for up to two years, Britain’s leading business lobby group has warned, as it called for ministers to take action on visas for foreign workers and stop “waiting for shortages to solve themselves”.
Amid the most severe labour crunch since the 1970s, the Confederation of British Industry (CBI) launched a broadside against the government, saying the UK’s economic recovery from the winter lockdown was being undermined by a lack of skills in key positions, with mounting risks that the problem would continue for some time.
“Standing firm and waiting for shortages to solve themselves is not the way to run an economy,” said the CBI director general, Tony Danker, whose group represents 190,000 businesses with more than 7 million employees.
“We need to simultaneously address short-term economic needs and long-term economic reform.”
He said the government’s ambition to make the British labour force more highly skilled and productive was right, and that businesses would train and hire more homegrown workers in time, but added that this could not be achieved overnight.
“A refusal to deploy temporary and targeted interventions to enable economic recovery is self-defeating.
The CBI is calling for the government’s shortage occupation list, which helps recruit workers from abroad to fill particular skills gaps, to be updated to include lorry drivers, welders, butchers and bricklayers.
Here’s the full story:
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
UK car sales have dropped as the sector struggles with supply chain problems and staff shortages, and the pandemic weighs on the economy.
The latest industry data, being released this morning, is expected to show new car registrations in August fell by around 22% compared with a year ago, as the global shortage of semiconductor chips continues to hit output.
This follows a drop of almost 30% in July, when the ‘pingdemic’ of people self-isolating also hit sales.
Demand could also be suffering from more people shifting to hybrid working patterns, and the dip in UK consumer confidence in August.
Reuters has more details:
British new car registrations in August fell 22% year on year, preliminary industry data showed on Monday, with the sector still battling pandemic-related supply difficulties.
Over the first eight months of the year the market is up about 20% from 2020, the Society of Motor Manufacturers and Traders (SMMT) said, though numbers remain below pre-pandemic levels as the sector contends with semiconductor chip shortages caused by the coronavirus crisis.
Demand is normally quiet in August because many buyers wait until the licence plate series is updated in September, one of the two annual updates.
Last August, car dealers got a post-lockdown sales boost as they reopened after the first wave of Covid-19.
But this year, they’re facing supply challenges, with the number of cars rolling off UK production lines dropping in June, to the lowest level for that month in almost 70 years.
The SMMT will release August’s final sales figures at 9am UK time.
Last month, Volkswagen and Toyota both warned of production cuts because of the global computer chip shortage. Last Friday, Volvo warned that its sales could fall in the second half of 2021, after being forced to cut production due to material shortages.
The latest healthcheck on UK and eurozone construction firms will also show the impact of supply chain problems.
The latest UK construction PMI is expected to see a slowdown, from a pacey 58.7 in July to around 56.9 in August.
European stock markets are set to open slightly higher, after dipping on Friday after a surprisingly weak US jobs report. Wall Street is closed for Labor Day.
- 8.30am BST: Eurozone construction PMI for August
- 9am BST: New UK car registrations for August
- 9.30am BST: UK construction PMI for August
- 9.30am BST: Sentix survey of eurozone investor confidence
10.30am BST: New German car registrations for August