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UK PMI for April a Record Low: Grocery Sales Boom But No-one Is Buying Cars

The coronavirus pandemic and the subsequent economic impact continue to dominate the financial news around the planet. In the UK, April’s PMI collapsed and virtually no cars are being sold, but supermarkets are continuing to boom.

The PMI figures for April released by Markit show a dramatic drop from March. The composite figures showing all private sector activity nose-dived from a poor 36 in March to a disastrous 13.8 in April.

It is by a long distance the worst performance ever seen in an index that has been used since 1998. It should be remembered that any number under 50 reflects a contracting economy. The poor PMI shows why the debt collection process is becoming ever more useful to struggling firms.

The most badly affected area is the service sector, where the majority of companies have seen their business close down temporarily or else suffer a large drop in their activity.

These numbers add to growing concerns that the UK could suffer its worst recession in living memory this year. The April PMI suggests that the economy could decline at a quarterly rate of 7% or more. It could be even higher though, because this index doesn’t include self-employed or retail numbers.

Groceries and Cars

One of the positive aspects of the current crisis has been the boom seen in the grocery sector. It is expected that online sales will be up by at least a quarter in 2020, as more people buy without leaving their homes.

To deal with this growing demand, many of the biggest supermarkets have improved their internet operations to make it easier for customers to buy during lockdown. Some of them have more than doubled their number of delivery slots.

It is now expected that the trend for online grocery shopping will continue even after the lockdown is lifted at some point. An anticipated growth figure of over 25% is now being suggested for the online grocery industry in 2020. This comes after internet sales made up over 10% of all grocery purchases in the last 3 months.

In stark contrast to the growth in online grocery sales, car sales in the UK have plummeted. In fact, the numbers just released show that they are at the lowest level since the 1940’s.

With showrooms around the country closed, a 97% drop in car sales was seen. Just 4,321 new registrations were recorded in April. This is similar to the slump in new car registrations that has been seen in countries like Italy and Spain.

Last year, the month of April produced over 161,000 new car sales. If we compare March of this year to the same month in 2019, we can see a 44% drop, although the lockdown only started towards the end of the month.

Electric car sales were least affected in April, with a drop of just 10% in their numbers. The best-selling car in the country was the Tesla Model 3 electric vehicle. Almost a third of all sales in the month were for battery-powered vehicles. In addition, most of the vehicles purchased in April were existing orders made by fleet buyers.