UK car output up 32% on last year in July
Good morning, and welcome to our live coverage of business, economics and financial markets.
UK car production rose year-on-year for the sixth consecutive month in July, as the global chip shortage eased and the numbers of electric cars and hybrids rose.
Production from UK factories rose by 31.6% in July compared to last year, according to new data from the Society of Motor Manufacturers and Traders (SMMT). Output remains 29% below 2019, before the coronavirus pandemic (although that includes the effect of Honda’s closure of a plant in Swindon).
More than eight-in-10 cars made in the UK were shipped overseas. The top destination market, as ever, was the EU, followed by the US, China, Japan and Australia.
Almost two in every five cars were electric, or were hybrids combining batteries with petrol or diesel engines. Electrified volumes rose 73.9% to 30,180. So far this year 200,000 of the UK’s 527,000 cars have been electrified in some way (although the SMMT does not break down how many are pure electric in its announcement).
Mike Hawes, SMMT chief executive, said:
Six months of growth shows that British car production is recovering and, with electrified models increasingly driving volumes, the future is more positive. Recent investment announcements have undoubtedly bolstered the sector but global competition remains tough.
If we are to attract further investment and produce the next generation of zero emission models and technologies, we need a coherent strategy that builds on our strengths and supports all aspects of advanced automotive manufacturing.
Today’s big focus in financial markets will be on inflation data, with key measures ahead from the eurozone and the US today.
Both the European Central Bank and the US Federal Reserve will be watching the data closely for signs that inflationary pressures are easing. They must decide whether to raise interest rates further to make sure inflation stays lower, or whether they have now done enough.
Jim Reid and other analysts at Deutsche Bank, an investment bank, said:
Resilient inflation numbers from Germany and Spain [yesterday] added to speculation that the ECB might deliver a 10th consecutive rate hike next month.
Not everyone is convinced that would be a good idea:
The agenda
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8:55am BST: Germany unemployment (August; previous: 5.6%; consensus: 5.7%)
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10am BST: Eurozone inflation (August; prev.: 5.3%; cons.: 5.1%)
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10am BST: Eurozone unemployment (July; prev.: 6.4%; cons.: 6.4%)
-
1pm BST: India GDP year-on-year growth rate (first quarter; prev.: 6.1%; cons.: 7.7%)
-
1:30pm BST: US personal consumption expenditure price index (July; prev.: 3%; cons.: 3.3%)
Key events
Bank of England must ‘see the job through’ on inflation says chief economist
The Bank of England needs to keep interest rates high enough for long enough to “see the job through” on cutting inflation, its chief economist has said.
Huw Pill said he was focused on a “lasting return to target” for UK inflation, which was at 6.8% in July, well above the Bank’s 2% target.
The Bank’s monetary policy committee (MPC) has raised interest rates for 14 times in a row, and has another meeting on 21 September. It is expected to raise rates further.
Speaking at a research conference in Cape Town organised by the South African Reserve Bank, Pill said (via Reuters):
The key element is that we on the MPC need to see the job through and ensure a lasting and sustainable return of inflation to the 2% target.
At present, the emphasis is still on ensuring that we are – in the words of the MPC’s last statement – sufficiently restrictive for sufficiently long to ensure that we have that lasting return to target.
Germany’s unemployment rate has risen slightly, as expected, to 5.7%.
That’s up from 5.6% in July, according Germany’s federal statistics office.
UBS to make $10bn of cost cuts after taking over rival Credit Suisse
Shares in Swiss bank UBS have jumped by 7% after it said it was hoping to make $10bn (£7.9bn) in cost cuts after absorbing rival Credit Suisse’s domestic bank operations.
Taking over those operations – rather than selling them off or floating it separately – could be politically difficult because of likely job losses in Switzerland.
Nevertheless, investors appear to like what they see in UBS’s first results since the takeover. Its share price is now higher than at any time since the financial crisis in October 2008.
Credit Suisse was sunk not by its domestic operations, but rather by a series of huge errors by its corporate and investment bank. UBS stepped in to rescue it at the behest of the Swiss government after it became clear Credit Suisse would not make its way out of a crisis.
Sergio Ermotti, UBS’s chief executive, said:
Our analysis clearly shows that full integration is the best outcome for UBS, our stakeholders and the Swiss economy. Clients will continue to receive the premium level of service they expect, benefiting from enhanced offerings, expert capabilities and global reach.
And Credit Suisse will continue to sponsor “civic, sporting and cultural activities in Switzerland at least until the end of 2025”.
Are we heading for a Eurozone inflation surprise in a few hours? French inflation has come in higher than analysts’ expectations.
French consumer prices rose by 5.7% in August compared to a year earlier, up from 5.1% in July, according to data harmonised with the rest of the EU published by Insee, France’s statistics office.
That was higher than the 5.4% expected by economists polled by Reuters.
Insee said:
This increase in inflation is due to a rebound in energy prices. The prices of food slowed down (for the fifth consecutive month), as did, to a lesser extent, those of manufactured goods and services.
The FTSE 100 has dipped at the opening bell.
The UK’s blue-chip index is down 0.1%, with mining company Glencore the biggest faller, down 5%.
Glencore is the subject of a story by the Financial Times saying that 200 funds, including some managed by Fidelity, Vanguard, Legal & General, HSBC, Abrdn and Invesco, are taking action on allegations they “suffered loss” as a result of “untrue statements” by commodities company.
The FT reported:
Dozens of the world’s biggest asset managers have accused the trading house Glencore of lying in past share prospectuses to cover up corrupt activities, escalating a far-reaching action in London’s High Court that could have significant ramifications for the natural resources industry.
Glencore has not yet filed its defence in the case, and declined to comment to the FT.
UK car output up 32% on last year in July
Good morning, and welcome to our live coverage of business, economics and financial markets.
UK car production rose year-on-year for the sixth consecutive month in July, as the global chip shortage eased and the numbers of electric cars and hybrids rose.
Production from UK factories rose by 31.6% in July compared to last year, according to new data from the Society of Motor Manufacturers and Traders (SMMT). Output remains 29% below 2019, before the coronavirus pandemic (although that includes the effect of Honda’s closure of a plant in Swindon).
More than eight-in-10 cars made in the UK were shipped overseas. The top destination market, as ever, was the EU, followed by the US, China, Japan and Australia.
Almost two in every five cars were electric, or were hybrids combining batteries with petrol or diesel engines. Electrified volumes rose 73.9% to 30,180. So far this year 200,000 of the UK’s 527,000 cars have been electrified in some way (although the SMMT does not break down how many are pure electric in its announcement).
Mike Hawes, SMMT chief executive, said:
Six months of growth shows that British car production is recovering and, with electrified models increasingly driving volumes, the future is more positive. Recent investment announcements have undoubtedly bolstered the sector but global competition remains tough.
If we are to attract further investment and produce the next generation of zero emission models and technologies, we need a coherent strategy that builds on our strengths and supports all aspects of advanced automotive manufacturing.
Today’s big focus in financial markets will be on inflation data, with key measures ahead from the eurozone and the US today.
Both the European Central Bank and the US Federal Reserve will be watching the data closely for signs that inflationary pressures are easing. They must decide whether to raise interest rates further to make sure inflation stays lower, or whether they have now done enough.
Jim Reid and other analysts at Deutsche Bank, an investment bank, said:
Resilient inflation numbers from Germany and Spain [yesterday] added to speculation that the ECB might deliver a 10th consecutive rate hike next month.
Not everyone is convinced that would be a good idea:
The agenda
-
8:55am BST: Germany unemployment (August; previous: 5.6%; consensus: 5.7%)
-
10am BST: Eurozone inflation (August; prev.: 5.3%; cons.: 5.1%)
-
10am BST: Eurozone unemployment (July; prev.: 6.4%; cons.: 6.4%)
-
1pm BST: India GDP year-on-year growth rate (first quarter; prev.: 6.1%; cons.: 7.7%)
-
1:30pm BST: US personal consumption expenditure price index (July; prev.: 3%; cons.: 3.3%)
