Japan’s February machinery orders rise in sign of business resilience By Reuters


© Reuters. FILE PHOTO: A robot designed by Toyota Motor Corp drops an empty bottle in the waste bin at the offices of Toyota Research Institute – Advanced Development, Inc. (TRI-AD) in Tokyo

By Daniel Leussink

TOKYO (Reuters) – Japan’s core machinery orders unexpectedly rose in February, suggesting business investment remained resilient even as companies braced for a major jolt to demand from the coronavirus pandemic.

Core machinery orders, a highly volatile data series regarded as an indicator of capital spending in the coming six to nine months, rose 2.3% in February from the previous month, Cabinet Office data showed on Wednesday.

The rise followed a 2.9% gain in January and was better than a 2.7% decline predicted by economists in a Reuters poll.

Many analysts expect the global economy to slip into recession due to the widening impact from the pandemic, which has already triggered financial market turmoil in recent weeks as investors brace for a sharp contraction.

Analysts expect the hit to consumption from the coronavirus to worsen in coming months after Prime Minister Shinzo Abe declared a state of emergency on Tuesday that is seen paralysing activity in major cities.

“Given that other activity indicators and the manufacturing surveys held up well, the resilience of machinery orders in February is not a surprise,” said Capital Economics Japan Economist Tom Learmouth.

“A sharp downturn is in the pipeline though, which should partly be reflected in the March data. We’re forecasting a 3% quarter-on-quarter fall in non-residential investment this quarter.”

Abe unveiled a stimulus package of almost $1 trillion on Tuesday that includes 39.5 trillion yen ($363 billion) in direct fiscal spending, largely to offset the immediate damage from the pandemic.

Japanese business confidence soured to a seven-year low in the quarter through March, a Bank of Japan (BOJ) survey showed last week, as the pandemic hit sectors from hotels to car makers.

By sector, manufacturers’ orders edged down 1.7%, weighed by chemicals, while core orders from the service-sector rose 5.0%, led by gains in the transport and postal business.

The BOJ is set to hold its next meeting in three weeks after easing monetary policy last month by pledging to buy exchange-traded funds at double the current pace, joining global central banks in fighting the pain from the pandemic.

Analysts see Japan’s economy, which shrank in the final quarter of last year, contracting over the following two quarters as the pandemic worsens.

From a year earlier, core machinery orders were down 2.4% in February, largely in line with a 2.9% decline seen by economists in a Reuters poll and after a 0.3% fall in January.

($1 = 108.6900 yen)

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Hong Kong business activity slumps further in March as virus pummels economy By Reuters


© Reuters. A general view of Hongkong International Terminals as part of the Kwai Tsing Container Terminals in Hong Kong

HONG KONG (Reuters) – Business activity in Hong Kong deteriorated further in March, a private survey showed on Friday, as demand, output and confidence plunged amid the deepening coronavirus pandemic.

While the adjusted IHS Markit headline Hong Kong Purchasing Manager’s Index (PMI) edged up to 34.9 in March, from 33.1 in February, it still signaled the second-sharpest deterioration of private sector conditions in the city since July 1998, when the survey began.

The 50-mark separates growth from contraction on a monthly basis.

“Key sectors of the economy such as retail, travel and tourism were decimated by the global coronavirus outbreak. Business activity across Hong Kong continued to contract at a severe pace in March, as new sales plummeted further,” said Bernard Aw, principal economist at IHS Markit.

Hong Kong’s small, open economy, which was already in recession, has been hit from all sides by the health crisis, particularly in the retail and tourism sectors. Retail sales fell by a record 44% in February from a year earlier. [nL4N2BM07S]

The trade outlook is also grim for the bustling port as increasing health lockdowns in many parts of the world crush global demand. While China’s factories are gradually returning to work, growth is still well below usual levels and new orders from the mainland remain close to the record low seen in February.

With orders drying up, companies continued to cut back production, though the survey’s output gauge ticked up to 26.0 after plummeting to 22.5 in February. New orders also showed another severe contraction.

“The average PMI for the first quarter suggests that the Hong Kong SAR economy had fallen deeper into recession. There are also concerns that the downturn will worsen in the second quarter as more drastic anti-virus measures may be taken worldwide,” said Aw.

Business confidence, a forward-looking subcomponent in the survey, fell to its second-lowest since the data were first available in April 2012, with 59 percent of the survey respondents predicting lower output over the next 12 months due to uncertainties over the economic impact of the virus.

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China’s Luckin Coffee says business will continue amid financial fraud probe By Reuters


© Reuters. FILE PHOTO: A cup of ‘Luckin Coffee,’ coffee is displayed during the company’s IPO at the Nasdaq Market site in New York

BEIJING (Reuters) – Luckin Coffee Inc (O:) said on Sunday it will maintain normal operations at its stores and apologised to the public, days after it announced an internal investigation had shown its chief operating officer and other employees fabricated sales deals.

Shares of Luckin, which competes in China with Starbucks Corp (O:), sank as much as 81% on Thursday in New York after it said the investigation had found that fabricated sales from the second quarter of 2019 to the fourth were about 2.2 billion yuan ($310 million).

“Regarding the suspected financial fraud and the extremely bad impact it has caused, Luckin Coffee hereby sincerely apologizes to the public,” the company said in a post on its official Weibo account.

China’s securities regulator said on Friday it would investigate claims of fraud at Luckin Coffee and sources said some of the banks involved in the Chinese chain’s successful U.S. IPO last year were reviewing their work in the listing.

Founded in June 2017, Luckin’s IPO had attracted a number of prominent U.S. investors, including hedge funds.

Like others in the industry, the company has been hit hard by the coronavirus epidemic. In late January, it was forced to temporarily close an estimated 200 coffee shops in the central Chinese city of Wuhan, the original epicentre of the outbreak, as well as many in other cities.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

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Britain’s Nationwide says business banking plan now unviable By Reuters


© Reuters. FILE PHOTO: Signage outside a Nationwide Building Society branch in London

LONDON (Reuters) – Nationwide Building Society, one of Britain’s biggest lenders, is abandoning plans to enter the business banking market, saying the coronavirus epidemic has made it commercially unviable.

In one of the first major strategic shifts to be announed by a British lender in response to the outbreak, Nationwide said on Friday that the impact of the virus, including changes to central bank interest rates, had made business banking unappealing.

Nationwide will return a 50 million pound ($61.9 million)grant from a fund set up to foster competition among British banks and improve business banking, it said.

The building society said its decision will cost it around 70 million pounds and that all staff working on the project will be redeployed elsewhere.

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Trump says will ask Congress for more small business funds if money runs out By Reuters


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© Reuters. U.S. President Trump leads daily coronavirus response briefing at the White House in Washington

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WASHINGTON (Reuters) – U.S. President Donald Trump said on Saturday he would ask Congress for more money to make loans to small businesses struggling with the economic fallout from the coronavirus outbreak if the original $349 billion allocated in a fiscal stimulus bill runs out.

“I will immediately ask Congress for more money to support small businesses under the @ppploan if the allocated money runs out,” Trump wrote in a post on Twitter.

The launch of the small business bailout fund has been rocky since it opened on Friday morning.

Tens of thousands of businesses have swamped lenders, community bankers have complained of an inability to access the Small Business Administration (SBA)’s system and the Treasury Department was still issuing updated guidance and form templates on Friday afternoon.

As of Friday evening, lenders originated more than 17,000 loans valued at about $5.4 billion under the program, Jovita Carranza, the administrator of the Small Business Administration, said in a tweet.

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Weak U.S. core capital goods orders point to deepening business investment downturn By Reuters


© Reuters. U.S. made plywood is shown for sale in Los Angeles

By Lucia Mutikani

WASHINGTON (Reuters) – New orders for key U.S.-made capital goods fell sharply in February as demand for machinery and other products slumped, suggesting a deepening contraction in business investment that analysts said signaled the economy was already in recession.

The coronavirus pandemic has further darkened the outlook for business investment as measures to contain the highly contagious virus have brought the country to a sudden stop. The Federal Reserve has taken extraordinary steps to soften the hit on the economy. U.S. senators were set to vote on Wednesday on a record $2 trillion fiscal stimulus package.

“Business investment is the key swing factor in every recession and right now the pendulum is swinging the wrong way with declining orders likely to drag the economy over the cliff and down into recession in March,” said Chris Rupkey, chief economist at MUFG in New York.

Orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, dropped 0.8% in February after rising by a slightly downwardly revised 1.0% in January, the Commerce Department said on Wednesday.

These so-called core capital goods orders were previously reported to have increased 1.1% in January.

Economists polled by Reuters had forecast core capital goods orders dropping 0.4% in February. There were decreases in orders for machinery, primary metals and computers and electronics products last month. But demand for electrical equipment, appliances and components increased 1.3% last month.

Shipments of core capital goods fell 0.7% last month. Core capital goods shipments are used to calculate equipment spending in the government’s gross domestic product measurement.

They increased 1.1% in January. Business investment has contracted for three straight quarters, the longest such stretch since 2009. Economists have blamed the business investment rot on the Trump Administration’s 20-month-old trade war with China. The weakness in business investment comes at a time when corporate profits are weakening.

“Given that profits are likely now declining, financial market conditions have tightened and the economy contracting, business investment will take it on the chin,” said Ryan Sweet, a senior economist at Moody’s Analytics in West Chester, Pennsylvania. “Business investment in equipment will drop sharply in the second quarter.”

Stocks on Wall Street extended their massive rally from Tuesday, with investors comforted by the huge stimulus package. The dollar fell against a basket of currencies, while U.S. Treasury prices rose.

ABRUPT HALT

The coronavirus, which causes a respiratory illness called COVID-19, has brought the economy to a abrupt halt, with governors in at least 18 states, accounting for nearly half the country’s population, ordering residents to stay mostly indoors.

“Non-essential” businesses have also been ordered closed, leading to massive unemployment and a rush to apply for jobless benefits. A survey by data firm IHS Markit on Tuesday showed its gauge of U.S. business activity dropped to a record low in March. Analysts say the economy slipped into recession in March.

Recessions in the United States are called by the National Bureau of Economic Research. The NBER’s business cycle dating committee does not define a recession as two consecutive quarters of decline in real gross domestic product, as is the rule of thumb in many countries.

Instead, it looks for a drop in economic activity, spread across the economy and lasting more than a few months. Measures taken by the Fed to stem the slide include slashing interest rates to zero, promising bottomless dollar funding and implementing an array of programs to help keep companies afloat.

Overall orders for durable goods, items ranging from toasters to aircraft that are meant to last three years or more, accelerated 1.2% last month after gaining 0.1% in January. They were boosted by a 4.6% rebound in orders for transportation equipment, which followed a 0.9% decline in January.

Orders for civilian aircraft slipped 0.3% last month after soaring 356.7% in January. Motor vehicles and parts orders accelerated 1.8% in February after falling 0.5%.

But orders for transportation equipment are set to weaken. Boeing (N:) has temporarily closed some its plants in Washington State, one the regions hardest hit by the coronavirus, and auto makers have shuttered factories to protect their workers from COVID-19.



U.S. business group calls for large-company loans to prevent layoffs By Reuters



WASHINGTON (Reuters) – The U.S. Chamber of Commerce on Friday called for a new federal bridge loan program to help larger companies with over 500 employees keep workers on their payrolls as they struggle with falling demand due to the coronavirus.

The proposal, which would not have a specific dollar cap, would be for a fourth round of coronavirus rescue funding, in addition to a $1 trillion package that would provide payments to individuals, aid to small and mid-size businesses and loans to airlines and other selected industries hard-hit by the virus.

That package, still under negotiation in Congress, “fails to take care of the 68 million American workers that are employed by enterprises with more than 500 employees,” the chamber said in a statement.

The influential business lobby group said the program should be for large companies that have seen a revenue loss of 10% or more due to the virus outbreak for a maximum amount covering three months of payroll and healthcare expenses.

Employers who lose 25% of their revenues but maintain 90% of their employees at existing pay levels through December 2020 could have 10% of the five-year loan forgiven, according the proposal, as an incentive to retain staff.

“It is a loan, not a bailout,” said Neil Bradley, the chamber’s chief policy officer.

He told a conference call that the group does not want to put a specific dollar cap on the program because the demand is unknown, and the goal is to keep more people on company payrolls and off government-paid unemployment compensation.

“Our primary principle remains clear and firm: No family and no business should go bankrupt because of the financial hardships caused by the coronavirus,” Bradley said.

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Japan business mood plunges to decade lows on coronavirus woes: Reuters Tankan By Reuters


Japan business mood plunges to decade lows on coronavirus woes: Reuters Tankan

By Tetsushi Kajimoto

TOKYO (Reuters) – Japanese business confidence plunged to decade lows in March as the spreading coronavirus outbreak stoked fears of a global recession and sent stock markets tumbling, the Reuters Tankan survey showed on Tuesday.

The monthly poll suggested that the Bank of Japan’s tankan quarterly survey due April 1 will show a sharp deterioration in business sentiment both at manufacturers and non-manufacturers.

The global spread of the virus has hammered world trade, supply chains and tourism, dealing a heavy blow to Japan’s fragile economy, which is teetering on the edge of a recession.

The souring business mood could derail capital spending, one of the few bright spots in the Japanese economy. That will heap pressure on the government and the central bank to deploy more stimulus measures.

The BOJ eased monetary policy on Monday by pledging to buy riskier assets such as exchange-traded funds (ETF) at double the current pace, joining global central banks in combating the widening economic fallout from the epidemic.

All manufacturers across industries were pessimistic about business conditions, according to the Reuters poll of 501 large- and mid-sized nonfinancial companies, of which 242 firms responded on condition of anonymity.

Among service sector firms, no firms except those in real estate/construction and information/communications were optimistic.

Most of the companies expressed fears of the virus’ impact on their business, on top of already weak consumer spending due to an October sales tax hike and sluggish global demand aggravated by the U.S.-China trade war.

“We cannot see how much impact the virus may have on our business in March. We fear sharp drops in sales,” a manager at a chemicals firm wrote in the survey.

A machinery maker manager said: “Just as the U.S.-China trade friction seems to be settled for the time being, the new virus is causing worry about downward revision to our profits.”

The sentiment index at manufacturers fell to minus 20 in March from minus 5 in the previous month, while the service-sector gauge dropped 25 points to minus 10, the Reuters Tankan poll showed. A negative figure means pessimists outnumber optimists.

The manufacturers’ index hit the lowest since December 2009, the depths of the global financial crisis.

Non-manufacturers’ were the most pessimistic since June 2011 in the wake of the Fukushima nuclear disaster.

Manufacturers expected to be even more glum in three months’ time, with the index seen falling further to minus-25 in June, while service-sector morale was seen unchanged in June.

The BOJ’s December tankan showed big manufacturers’ mood hit a near seven-year low in the fourth quarter as the Sino-U.S. trade war curbed external demand and the October national sales tax hike to 10% from 8% dealt a blow to consumer demand.

Japan’s economy, the world’s third largest, shrank at a 7.1% annualized rate in October-December, and many economists see another contraction in the current period, which would spell a technical recession – or two straight quarters of negative growth.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

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French business decline in early March on par with 2008 slump: INSEE By Reuters


© Reuters. French business decline in early March on par with 2008 slump: INSEE

PARIS (Reuters) – Business conditions in France were deteriorating at a rate at least on par with the downturn seen at the height of the 2008 global financial crisis even before health and safety measures were tightened due to the coronavirus outbreak, the INSEE official statistics agency said on Monday.

INSEE said that data on hand before the government stepped up precautionary measures last week had suggested the economy contracted slightly in the first quarter and was on course to decline more sharply in the second quarter. It added however those estimates were now out of date since the measures had been tightened.

“Despite the favorable economic indicators in January and February, the pre-collection of business survey responses in early March signaled a deterioration of the business climate at least of the same order as in late 2008,” INSEE said in statement.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

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Business travel sector to lose $820 billion in revenue on coronavirus hit: industry group


Passengers wearing face masks stand on a moving walkway at Beijing Capital International Airport as the country is hit by an outbreak of the novel coronavirus, China, March 9, 2020. REUTERS/Thomas Peter

(Reuters) – The global business travel sector is expected to take a revenue hit of about $820 billion, with China accounting for nearly half of the losses, as corporates curb travel plans in the wake of the coronavirus epidemic, an industry body said bit.ly/38HSMrG on Tuesday.

Business travel to Asia has been the worst hit, with at least three out of every four companies reporting they have canceled or suspended all or most business trips to China, Hong Kong, Taiwan and other Asia-Pacific countries, according to a survey by Global Business Travel Association (GBTA).

The industry group’s latest estimate is sharply above its February forecast of a $560 billion hit.

The fast-spreading virus, which originated in the central Chinese city of Wuhan, has killed more than 4,000 people, mostly in China, while disrupting businesses globally.

“Coronavirus is significantly impacting the business travel industry’s bottom line,” GBTA Chief Operating Officer Scott Solombrino said in a statement.

“The impact to the business travel industry – and to the broader economy – cannot be underestimated.”

China, which has seen a 95% drop in business travel since the outbreak, is expected to lose $404.1 billion in revenue from corporate travel, followed by $190.5 billion in loss for Europe.

Airline and hotel industries, which typically are the biggest beneficiaries of corporate spending, have taken a major hit to their revenue as the virus continues to spread, the industry group said.

Reporting by Bhargav Acharya in Bengaluru



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