By Nick Carey
(Reuters) – Detroit’s automakers will report results this week, highlighting the damage the coronavirus pandemic wrought on the second quarter, but investors will be focused on what they say about current demand as infection rates spike in key truck markets like Texas and COVID-19’s ongoing impact on the U.S. economy.
To slow the outbreak’s spread, North American production was shut down for much of the second quarter at General Motors Co , Ford Motor Co and Fiat Chrysler Automobiles NV (FCA) . It only restarted in mid-May.
Although sales fell 34% at GM, which reports earnings on Wednesday, 33% at Ford and 39% at FCA, the automakers said demand was improving toward the end of the second quarter and touted the resilience of the U.S. consumer.
High-margin pickup trucks remained a bright spot for Detroit’s automakers during the quarter, putting pressure on them to replenish supplies fast.
While investors want to know how much cash Detroit’s automakers burned through during the second-quarter shutdown, all eyes will be on what comes next – as the coronavirus pandemic rages through states that provided a hefty chunk of their sales throughout the outbreak’s early stages.
“U.S. retail automotive sales have recovered sharply close to pre-COVID levels,” Deutsche Bank analysts wrote in a research note this week, “but the resurgence of COVID across the South and Southwestern parts of the country creates outlook uncertainty.”
The pandemic is also not just a health crisis, but an economic one that could continue to drag down sales.
Weekly jobless claims numbers from the Labor Department released last week showed the number of Americans filing for unemployment benefits unexpectedly rose for the first time in nearly four months, suggesting the labor market was stalling amid a resurgence in new COVID-19 cases and depressed demand.
“Unemployment is a huge factor for buying a car, as is consumer confidence,” Cox Automotive analyst Michelle Krebs said. “We think there’s a lot of risk on the horizon for the automakers and unemployment is the big concern.”
Automakers also face increased competition from used vehicles.
Americans typically become more frugal and favor used cars in uncertain times. Cars remain a vital commodity in a country where getting to work without a vehicle is impossible in all but a few large cities.
Meanwhile, sales to rental car companies, corporations and government agencies have collapsed and recovery will be slow.
Concerns also remain over the ability of Detroit’s automakers to keep plants open as the pandemic spreads.
(Reporting By Nick Carey; Editing by Aurora Ellis)
Thai leader says unity necessary to revive virus-hit economy – 570 News
BANGKOK — Thailand’s prime minister, facing growing demands from students for change, warned Thursday that the nation must pull together to overcome the economic damage caused by the coronavirus pandemic.
In a speech marking the appointment of a new team of financial specialists to his Cabinet, Prayuth Chan-ocha said the economic crisis will not go away quickly.
Thailand has been praised for its handling of the health effects of the coronavirus, with no local cases reported for 80 days. But it has suffered an especially strong shock to its economy because of its heavy dependence on tourism and exports.
Prayuth’s speech comes at a time of growing political pressure, as a student-led protest movement issues increasingly strident calls for his government to step down, the military-installed constitution to be revised, and limits to free speech to be lifted to promote democracy.
Some of the protesters’ criticisms challenge aspects of the country’s constitutional monarchy, setting them at odds with the conservative political establishment led by royalists and the military.
Prayuth, as army commander, led a coup in 2014 that ousted an elected government, served as prime minister in the military regime that followed, and returned as prime minister after a general election last year that was widely seen as free but not fair.
He declared Thursday that “our future is in the hands of the young,” but pushed aside the demands of the mainly young protesters at frequent rallies around the country.
“Right now, we must focus on the economic survival of tens of millions,” he said. “Let’s get the economy going first, first get that done by working together, and we can look to fixing the other issues, collaboratively, later.”
He also referred to the political conflict that has afflicted the country for much of the past decade and a half, including street clashes and two military coups.
“The politics of division that rejects a united approach to solving problems belongs to another era in history,” he said.
Prayuth said he appointed experts rather than politicians to the Cabinet to manage financial policy because “the economy is as big a threat to our lives as is the health threat.”
The Asian Development Bank recently forecast that the economy will contract by 6.5% in 2020, compared to its December 2019 projection of 3.0% growth.
“We are a small boat in a big ocean, and our economy can only start returning to normality when the rest of the world starts returning to normality,” Prayuth said.
Grant Peck, The Associated Press
Province ramping up efforts to restart economy – CHVN Radio
Premier Brian Pallister is sharing ways the province is hoping to grow Manitoba’s economy.
Pallister says there are approximately 40,000 people unemployed who had jobs one year ago.
“If we have a safer society we’re going to have people more confident to go to work, to shop and create more job opportunities.”
He says both public safety and a growing economy are locked in a symbiotic relationship, which is why the province is paying for advertisements, highlighting things they say are important for Manitoba.
The province’s #RestartMB campaign is focusing on both public safety and economic recovery as officials say Manitobans are ready to live with COVID-19 while creating jobs and restarting services.
“Public health and safety is a key driver of recovery, and as we continue to safely restart our economy and reopen our communities, we must learn to live with this virus,” Pallister says. “We are committed to being ready for what lies ahead – ready to live with COVID-19, ready to return to school, ready to restart our services, create jobs and grow our economy.”
He adds the province must continue to act and follow public health advice to keep COVID-19 test positivity cases low.
“The past four months since COVID-19 arrived in Manitoba have been a period of rapid response and adaptation for programs and for public engagement,” Pallister says. “We have done well and accomplished much, adapting as we go and working rapidly to respond.
The campaign hopes to continue to encourage Manitobans to contact the Manitoba Economic Support Centre to access programs and resources. Pallister says the centre has called more than 20,000 businesses to promote programs such as wage subsidies and the Manitoba Gap Protection Program.
The Premier says the centre will promote program priorities in the coming weeks.
Japan's wholesale price fall eases further as economy emerges from coronavirus jolt – TheChronicleHerald.ca
By Leika Kihara
TOKYO (Reuters) – Japan’s wholesale prices fell at a smaller annual pace in July than in the previous month as global and domestic demand rebounded, a sign the economy was gradually emerging from the damage wrought by the coronavirus pandemic.
But analysts expect any pick-up in prices to remain shallow as fears of a huge second wave of infections weigh on business and consumer sentiment.
The corporate goods price index (CGPI), which measures the price companies charge each other for their goods, fell 0.9% in July from a year earlier, Bank of Japan data showed on Thursday, less than a median market forecast for a 1.1% drop.
The decline was less steeper than a 1.6% fall in June and the smallest downturn since March, when it was off 0.5%.
Declines in gasoline, chemical and nonferrous metal prices eased in July, reflecting a pick-up in demand as China and many advanced economies lifted lockdowns, the data showed.
Agricultural goods prices also fell at a much slower pace than in June, as demand for beef and other food products recovered after Japan ended lockdown measures in late May.
“As economies re-open, downward pressure on prices from the pandemic appears to be easing,” Ichiro Muto, head of the BOJ’s price statistics division, told reporters.
“But there’s no change to the broader picture, in which the pandemic is weighing heavily on wholesale prices,” he said.
Japan’s economy slipped into recession and is expected to have suffered an annualised contraction of 27.2% in April-June, as the coronavirus crisis crushed business and consumer spending.
While economic activity has re-opened, a recent surge in infection numbers is clouding the outlook for the recovery.
(Reporting by Leika Kihara; Editing by Shri Navaratnam)
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