UK car sales recover and van registrations hit April record; eurozone ‘pulling out of recession’ – business live

Over in the US, the number of mortgage application has dipped, down 0.9% last week.

US house prices have surged 12% in the last year, the fastest jump since 2006, partly driven by limited supply, and rising demand as the economy reopened. This could now be putting homes out of more families’ reach.

But while loan numbers fell, average loan amounts rose as people stretched themselves to get onto the housing ladder, or move up it.

Joel Kan, economist at the Mortgage Bankers Association (who compile the data) explains:

“This is a sign that the competitive purchase market, driven by low housing inventory and high demand, is pushing prices higher and weighing down on activity.”

Online fashion retailer Boohoo has seen its sales and profits soared during the coronavirus pandemic.

Unlike its high street rivals, Boohoo benefited from the boom in online shopping and being able to trade throughout successive lockdowns,

My colleague Joanna Partridge explains:

Demand from younger consumers for its inexpensive activewear, loungewear and tops while working from home helped Boohoo’s sales climb by 41% to £1.7bn, up from £1.2bn a year earlier.

Boohoo’s adjusted pre-tax profit climbed by 37% in the 12 months to 28 February to a better-than-expected £174m as the group’s customers shrugged off concerns about the group’s supply chain, following last summer’s allegations that linked it to factories with poor working conditions in Leicester and abroad.

Sarah Riding, retail partner at law firm Gowling WLG, adds:

“Despite the ethical supply chain challenges of recent years, the opportunities presented by lockdown to the brand have been capitalised on to tune of this record turnaround. Maintaining this renaissance as we move out of lockdown and competition intensifies will be challenging but one that benefits the customer as the market vies for its attention.”

And here’s Mark Sweney on ITV’s hopes for a surge in adverts this summer:

ITV is predicting a summertime ad boom, with revenues expected to be up as much as 90% year on year, fuelled by the return of must-watch content including Love Island and football’s European Championship.

ITV, which said that total TV advertising was down 6% in the first quarter because of the impact of the latest coronavirus lockdown restrictions on brands spending on campaigns, is forecasting a strong second-quarter recovery.

“We finished the quarter strongly with the substantial majority of our shows back in production and a recovery in the advertising market,” said Carolyn McCall, the chief executive of ITV. “We are encouraged by the UK roadmap out of lockdown and remain cautiously optimistic about the year ahead.”

Here’s our news story on the jump in car sales in April, by my colleague Jasper Jolly:

Today’s burst of economic optimism has now pushed the FTSE 100 back over 7000 points again.

It’s now up 80 points or 1.2% at 7003 points. It was higher at times yesterday, but it’s not closed that high in over two weeks.

European markets are holding their gains too – with the Stoxx 600 still up 1.3%, thanks to gains in Frankfurt, Paris, Milan, Madrid and Amsterdam.

Quite a turnaround from yesterday, when the main indices all fell.

As Sophie Griffiths, Market Analyst at OANDA, says the jump in the eurozone PMI in April is boosting optimism.

After steep losses in the previous session, European bourses are flying higher today, helped by strong earnings and accelerating business activity in the region.

Yesterday’s sell-off was just the tonic to fire up the bulls, who had been complacent with stocks hovering around all-time highs. Tuesday’s declines served as a reminder that valuations are lofty. However, today’s strong corporate updates and upbeat PMI data are supportive of further gains.

Younger people have been flocking to book driving tests since they relaunched last month, says Sue Robinson, chief executive of the National Franchised Dealers Association:

“It is extremely encouraging to see sales of new cars bounce back in April reflecting the significant pent-up demand as the lockdown was eased across the UK and dealerships reopened.

Customer footfall at dealerships is strong and driving schools are seeing a major increase in young people booking driving tests. All of this leads us to believe that there is a very upbeat outlook ahead for the motor industry in the summer and retailers are looking forward to a further release of the pent-up demand accumulated over the past months.”

Driving tests are another area where demand is outstripping supply, though. Some learner drivers have said test slots are “like gold dust”, with a year’s backlog to get through.

Richard Peberdy, automotive lead at KPMG, also predicts that car supply may not keep pace with demand:

“The sales rebound signifies returning consumer confidence as showrooms reopen.

“Demand could outstrip supply as global production remains constrained by parts shortages. But, at least initially, such a scenario is not unhelpful to dealers, holding on to margin and being less reliant on discounting to shift stock. This could be critical for bricks-and-mortar showrooms hit hard by lockdown, and also facing increasing competition from online players and carmakers’ direct-to-consumer propositions.

He’s also encouraged that sales of plug-in electric cars rose (accounting for just over one in eight vehicles in April):

“Strengthening plug-in vehicle sales is encouraging, with demand buoyed by increasing numbers of attractive products available – and as motorists and businesses plan ahead, mindful of schemes such as the expansion of the London Ultra Low Emission Zone in October.”

The global shortage of semiconductors could hurt the UK car industry’s recovery hopes, though.

Seán Kemple, managing director of Close Brothers Motor Finance, fears that the scramble for chips, alongside wider supply chain problems, will mean more disruption this year:

Just as things are looking up for the motor industry, it’s been slammed by a wave of turbulence caused by a global semiconductor shortage. And given how vital these chips are to the industry, in use in everything from power steering to parking sensors, this will have an impact. Car manufacturers like Ford, MINI and Jaguar Land Rover are halting production in the face of severe disruption, which escalated in April. While new car sales have shot up this month, there’s no doubt that demand will be squeezed by an ensuing supply crisis.

Already facing a supply bottleneck due to delays caused by Covid-19 and the aftermath of Brexit, the chip shortage will further push back waiting times for consumers ordering new cars and come at a huge cost for a market recovering from substantial losses.

This disruption won’t be resolved immediately, but the strength of the industry will push it to continue to navigate the challenges thrown its way, and dealers remain agile and engaged with consumers to meet the huge demand in the marketplace as much as possible.”

This table from the SMMT shows how UK new car sales rose by more than 3,000% year-on-year in April, as the reopening of showrooms and the easing of lockdown restrictions boosted demand….

…but despite that dramatic percentage change, sales were still almost 13% lower than an average April over the last decade.