36 1GM Thursday August 6 2020 | the times
Business
A big bounce in car sales last month has
given some relief to motor dealers.
Latest figures from the Society of
Motor Manufacturers and Traders
showed that new car registrations in
July rose to 175,000 vehicles, 11 per cent
higher than in the same month last
year.
However, whether this is the start of
a sustainable recovery in a trade where
thousands of employees are being laid
off by showrooms is unclear, the
SMMT warned.
Sales this year are running at 58 per
cent of 2019 levels and the trade is
factoring in a 30 per cent fall for the full
year from 2019’s 2.3 million vehicles —
itself a drop from the peak of 2.7 million
— to 1.6 million.
The big test of whether motor
retailing is returning to any form of
normality — it has been through three
years of slowing sales because of weak
consumer demand during uncertainty
driven by Brexit — will come with the
registration plate change in September,
the biggest car-selling month of the
year, alongside March and its plate
switch.
The bounce in new registrations was
helped by the reopening of showrooms
in June after three months of cratering
sales. In March, April, May and June
together there were 240,000 lost sales
compared with the same period in 2019,WIKTOR SZYMANOWICZ/NURPHOTO/GETTY IMAGESJuly car sales drive recovery hopes
higher in hard-pressed motor trade
Robert Lea Industrial Editor with the monthly registration drops in
April and May measured at 97 per cent
and 89 per cent, respectively.
The comparative figures for July are
less reliable, as sales during the month
and August tend to be slow ahead of
September.
“The next few weeks will be crucial in
showing whether or not we are on the
road to recovery,” Mike Hawes, chief
executive of the SMMT, said. “By the
end of September we should have a
clearer picture. Showrooms have only
just fully reopened and there is much
uncertainty. The market remains frag-
ile in the face of future spikes and local-
ised lockdowns, as well as, sadly, prob-
able job losses across the economy.”
The strong July performance is likely
to end, for the time being, any remain-
ing talk of a taxpayer-funded scrappage
scheme in which the Treasury offers
motorists — as it did in the financial
crisis a decade ago — £2,000 to trade in
their old vehicles. Manufacturers
desperate to shift stock are offering
attractive discounts and deals to lure in
consumers.
The society does not believe that
scrappage is a particularly good incen-
tive for the British industry, as it pro-
motes transactions for small and cheap
models from South Korea and eastern
Europe and does not support the
higher-end vehicles built in British
factories. The crisis in UK automotive
manufacturing has resulted in 11,000
jobs going this year and more than
20,000 over the past couple of years.
There have been 1,800 job cuts at
Pendragon showrooms and the Strat-
stone and Evans Halshaw group, 1,500
redundancies at Lookers and 500 posts
lost at Jardines.
The latest data appears to indicate
the accelerating death of the diesel-
engined passenger car. Diesel sales are
down 60 per cent this year and account
for only one in six cars sold.
Tempus, page 42The services sector grew at its fastest
rate in more than five years last month
as the economy started to regain
momentum after the lockdown.
The IHS Markit/CIPS purchasing
managers’ index for the services sector
rose from 47.1 to 56.5. The figure is
comfortably above the 50 mark that
separates growth from contraction.
Business activity is gaining momen-
tum now that shops, restaurants and
Services pick up the pace as momentum returns
pubs have reopened. It comes after a
robust performance in the manu-
facturing sector, where the measure of
activity rose from 50.1 to 53.3 in July.
Taken together, the two readings took
the composite PMI index from 47.7 to 57
in July, its highest level since June 2015.
Tim Moore, economics director at
IHS Markit, said: “UK service providers
are starting to see light at the end of the
tunnel after a record slump in business
activity during the second quarter of- Higher levels of service sector
output were almost exclusively linked
to the reopening of the UK economy
after lockdown and the return to work
of employees and clients.”
About 38 per cent of businesses said
that business activity had risen in July,
compared with a low of 7 per cent in
April. By comparison, 24 per cent said
that business activity had declined in
July.
IHS Markit cautioned against read-
ing too much into the latest findings. It
said: “Survey respondents often notedoutput had simply risen from an
extremely low base and would take a
long time to recover to pre-pandemic
levels.”
Staffing numbers fell at a sharp pace in
July amid concerns that the recovery in
consumer demand would peter out. The
employment index was 38.8, far below
the 50 mark that signals jobs growth.
According to the Office for Budget
Responsibility, low levels of demand will
push unemployment from 3.9 per cent to
almost 12 per cent this year.Gurpreet Narwan
Jobs market
still stuck in
a downturn
Gurpreet Narwan
Economics CorrespondentThe downturn in the jobs market
is easing, but companies are still reluc-
tant to recruit, according to KPMG and
the Recruitment and Employment
Confederation.
Demand for permanent and
temporary jobs fell again in July as
businesses adjusted their staffing
requirements. The KPMG/REC index
for permanent and temporary place-
ments rose from 34.3 to 44.7 and from
33.5 to 45.1, respectively. Both indices
edged closer to the 50 mark that indi-
cates growth. Permanent staff appoint-
ments and temporary billings fell at
their slowest rate in five months.
However, the employment outlook
remains bleak. According to the Office
for Budget Responsibility, the jobless-
ness rate will reach nearly 12 per cent
this year, its highest since the 1980s.
Vacancies fell for a fifth consecutive
month, which contributed to a record
increase in the supply of labour. The
report said: “The supply of temporary
workers rose at the fastest rate in two
decades of data collection, while the
upturn in permanent labour supply was
the second sharpest on record.”
Greater competition for jobs put
pressure on salaries. The REC survey of
400 recruitment and consultancy com-
panies found that pay for permanent
and temporary staff had fallen in July.
The permanent salaries index was 41.6
and the temporary counterpart 45.2.
James Stewart, vice-chairman at
KPMG, said: “It’s encouraging to see
the downturn in recruitment easing.
However, we are still a long way from
being out of the woods.”July new car registrations (000s)
200
175
150
125
100
75
50
25
0
050709 11 13 15 17 2020 Source: SMMTT
he offshore
energy sector
could underpin
60 per cent of the
emissions reductions
needed to hit the UK’s
2050 net zero target, a
government-backed
report has suggested
(Emily Gosden writes).
The combination of
carbon capture and
storage, or CCS,
hydrogen fuel and the
electrification of
offshore oil and gas
platforms together could
deliver 30 per cent of the
necessary emissions
reductions, accoerding
to the Oil and Gas
Authority.
A further 30 per cent
of the emissions savings
could be made usingpower generated by
offshore renewable
energy sources such as
wave, wind and tidal
installations, it says.
The authority was set
up in 2015 to regulate,
influence and promote
the British oil and gas
industry. It is funded by
an industry levy and is
owned by the business
department.
Its original mission
was to maximise the
recovery of oil and gas
from the North Sea as
oldfields decline.
Reflecting the growing
impetus to act on climate
change, it is now
carrying out increasing
work on decarbonisation.
The report looks at the
potential for “offshoreenergy integration”, to
co-ordinate different
offshore energy systems,
including oil and gas,
renewables, hydrogen
and carbon capture and
storage. “Energy
integration can help
reduce production
emissions, as well asaccelerate the progress of
CCS and hydrogen,” it
says.
Carbon capture and
storage technology
would trap carbon
emissions generated by
burning fossil fuels in
power plants and
industry, thentransporting them for
disposal offshore, either
in saline aquifers or in
disused oil and gasfields.
It could enable the use of
the North Sea’s
remaining fossil fuels
while minimising their
emissions.
The authority saysthat there is enough
storage capacity in
British offshore
reservoirs to meet
“hundreds of years of
UK CCS needs”.
North Sea gas also
could be used to make
hydrogen, with the waste
product of carbondioxide disposed of
offshore though carbon
capture and storage.
In 2018, offshore oil
and gas platforms
consumed power
equivalent to all the
households in Wales,
generated through
burning gas or diesel.Offshore energy can
underpin zero target
Protesters outside Downing Street in Whitehall last week call for a green economic recovery: the report says wind power will help cut emissions