Here is our full story on Airbus. The Toulouse-based planemaker has been hit hard by the collapse in air travel, and received only eight new orders between April and June, compared with 290 in the first quarter.
Eurozone confidence rebounds, but unemployment up
Economic sentiment in the eurozone rose more than expected in July when Covid-19 lockdowns were eased, with the sharpest gains in industry and the service sector, while consumers became more gloomy, according to the European Commission.
Its economic sentiment index rose to 82.3 points in July from 75.8 in June, which was revised higher.
Sentiment in industry rose to -16.2 from -21.6 in June, and in the service sector, to -26.1 from -35.5. But among consumers, confidence worsened, to -15.0 in July from -14.7.
Separately, the European Union’s statistics office said unemployment in the eurozone rose to 7.8% of the workforce in June, up from 7.7% in May, as another 203,000 people lost their jobs, taking the total to 12.685 million people out of work. You can find out more details here.
In Germany, Volkswagen cut its dividend after it moved into the red in the April to June quarter, when car and lorry deliveries dropped by almost a third because of the Covid-19 pandemic.
The world’s biggest carmaker posted pre-tax loss of €1.4bn for the second quarter, compared with a profit of €9.6bn a year earlier. After reopening some of its factories following the Covid-19 shutdowns in March, VW had to close some lines again because demand was weaker than expected. It still expects to make a profit this year, although “severely lower” than last year.
Other carmakers have also suffered but France’s PSA Group, which owns the Peugeot, Citroën, Opel and Vauxhall brands, delivered a second-quarter profit yesterday. It has aggressively restructured its business, including job cuts, reduced the variety of vehicles it offers and pulled out of some markets.
The UK car dealership Pendragon plans to cut 1,800 jobs, in the latest sign of the turmoil hitting the automotive industry because of the coronavirus pandemic, writes my colleague Jasper Jolly.
Pendragon said 15 of its stores would be closed as a result of a review of its operations, which started before the pandemic, with 400 job losses. A further 1,400 redundancies will be made across its dealers and its head office.
The announcement came after new figures from the Society of Motor Manufacturers and Traders (SMMT), which showed 381,357 cars rolled off British production lines from January to June, 42.8% lower than last year.
That’s the lowest number of vehicles since 1954, when second world war rationing ended, as the coronavirus pandemic forced factory closures and prompted at least 11,000 automotive job losses.
In other corporate news, Argos is to stop printing its catalogue after almost 50 years as the buying bible once found in three-quarters of British homes is claimed by the inexorable move to online shopping, my colleague Mark Sweney reports.
European stock markets are sliding deeper into the red.
- UK’s FTSE 100 down 1.3% at 6,049, down 81 points
- Germany’s Dax down 1.78% at 12,593
- France’s CAC down 0.5% at 4,932
- Italy’s FTSE MiB down 1.3% at 19,618
- Spain’s Ibex down 1.39% at 7,105
Germany, Europe’s biggest economy, shrank by 10.1% in the three months to June, the worst decline since records began in 1970. It wiped out nearly 10 years of economic growth. On a brighter note, unemployment fell unexpectedly in July.
Lloyds Banking Group, seen as a bellwether of the UK economy, reported a much bigger than expected loss of £676m for the second quarter after setting aside £2.4bn for bad debts. The Anglo-Dutch oil giant Royal Dutch Shell reported an $18bn loss after global oil and gas prices collapsed, while the European planemaker Airbus was also deep in the red and announced further production cuts to its wide-body A350 jet.
DekaBank economsit Andreas Scheuerle said about Germany’s record economic decline, which wiped out nearly 10 years of economic growth:
Now it’s official, it’s the recession of a century. What has so far been impossible to achieve with stock market crashes or oil price shocks was achieved by a 160 nonometre tiny creature named Corona.
Trade, household spending and business investment in equipment all collapsed between April and June, while government spending increased.
Germany is the first of the major economies to report GDP figures for the second quarter, a flash estimate. The US will follow suit at lunchtime (1:30pm BST). We are expecting an annualised decline of 34.1%, which would be the worst since government records began in 1947.
The drop in GDP would be more than triple the previous all-time decline of 10% in the second quarter of 1958, according to Reuters. On a quarterly basis, GDP probably tumbled 10.6%. The US economy contracted 5% in the first quarter.
Economists at Danske Bank caution that the record drop in German GDP is “old news” and that the economy is now recovering. It’s also worth noting that unemployment actually fell in July, rather than worsening, as reported earlier.
Nonetheless, the second-quarter slump shows the scale of the challenge Europe’s largest economy faces in rebuilding itself from the Covid-19 crisis.
The bigger-than-expected slump in German GDP in the April to June quarter, the biggest since records began in 1970, has accelerated losses on the German stock market.
The Dax in Frankfurt has tumbled 1.5% to 12,633.