Services sector and car sales drive up sterling
THE pound rallied yesterday after a turbo-charged boost to the economy from record monthly new car sales and the fastest growth in the dominant services sector for three months.
A rush to beat the April 1 change to the way cars are taxed helped to drive up vehicle registrations by 8.4 per cent to 562,337 in March. This brought the total for the first three months to 820,016, the best ever quarterly performance and 6.2 per cent ahead of last year.
Meanwhile, activity in the services sector, which generates about threequarters of Britain’s output from the likes of restaurants and hotels, IT, communications and transport, rebounded from a five-month low in February, with increasing new sales inquiries from overseas, especially America, as the drop in sterling over the past few months makes UK firms more competitive.
The Markit/CIPS services purchasing managers’ index beat expectations by increasing from 53.3 in February to 55. A reading above 50 means expansion.
Despite worries over a squeeze on consumer spending and rising costs, the survey found most services companies optimistic about the year ahead.
Duncan Brock, of the Chartered Institute of Procurement & Supplies, said: “The service sector defied the slowdown experienced by construction and manufacturing firms. A stronger end to the first quarter from the biggest contributor to UK GDP will provide some relief to the UK economy as a whole.”
The figures from the Society of Motor Manufacturers and Traders showed consumers were increasingly looking to buy alternatively fuelled vehicles, up 31 per cent. Sales of petrol cars were up 13.2 per cent, while the 244,263 diesel registrations was a record for a single month.
SMMT chief executive Mike Hawes, said: “These record figures are undoubtedly boosted by consumers reacting to new vehicle excise duty changes, pulling forward purchases into March.”
Howard Archer, chief UK economist at IHS Markit, said: “March’s record car sales performance is highly impressive. and a major relief to the car sector given that it is such a key month for sales because of the number-plate effect.”
The pound jumped by nearly 0.5 per cent against the euro to 1.171 euros and was up by more than 0.2 per cent against the dollar at $1.247.