What to watch: B&M's steady recovery, UK manufacturing, Ryanair job cuts

·Finance and news reporter
·6 min read
SOUTHEND ON SEA, ENGLAND - JULY 03: A general view of a B&M (BandM) discount retail outlet store on July 3, 2018 in Southend on Sea, England. (Photo by John Keeble/Getty Images)
B&M saw a 'steady recovery' in customer numbers following an 'initial decline' in footfall during the coronavirus lockdown. Photo: John Keeble/Getty Images)

Here are the top business, market, and economic stories you should be watching today in the UK, Europe, and abroad:

B&M sees steady recovery after initial lockdown decline

Discount retailer B&M (BME.L) said on Wednesday that it had seen a “steady recovery” in customer numbers following an “initial decline” in footfall during the coronavirus lockdown.

B&M said that group sales climbed to £1.15bn ($1.4bn) in its first quarter, which ended on 27 June, largely driven by an almost 27% increase in like-for-like sales growth in the UK.

The company said that it had also seen an increase in average transaction value after it reopened dozens more stores during the period.

“The group has made a strong start to the financial year, with a particularly strong performance in our UK businesses, and progress now resumed in France after an eight-week closure period,” said Simon Arora, the chief executive of B&M.

“However, as outlined at our preliminary results for the last financial year announced on 11 June, there are a great deal of uncertainties ahead,” he said, warning of safety concerns and lingering uncertainty about the impact of the pandemic.

“The safety of our colleagues and customers remains our priority whilst we work hard to continue to meet our customers’ needs in these difficult times.”

UK manufacturing stabilises after historic collapse

Britain’s manufacturing sector stabilised in June, following a historic collapse caused by the COVID-19 pandemic.

A closely watched private sector survey of UK manufacturing showed that activity was flat in June, after a precipitous collapse over the previous two months.

IHS Markit’s Purchasing Managers Index (PMI) registered at 50.1, in line with economists expectations. PMIs are given on a scale of 0 to 100, with anything above 50 signalling growth and anything below marking contraction.

“June completed a marked turnaround in momentum in UK manufacturing, as the sector switched from April's record contraction back to stabilisation in the space of two months,” said Rob Dobson, director at IHS Markit.

“Output edged higher and domestic demand firmed as lockdown restrictions loosened, factories restarted and staff returned to work. Business optimism also recovered to a 21-month high.”

Ryanair warns of 3,500 job losses if pay cuts cannot be agreed

Ryanair (RYA.L) chief executive Michael O’Leary said on Wednesday that around 3,500 jobs would be slashed at the airline unless it could agree on a series of pay cuts with staff.

The warning came after Ryanair on Wednesday resumed flights on almost 90% of its route network, albeit with just 40% of its usual July capacity.

The airline is seeking pay cuts of up to 20% for flight crew and 10% for attendants across Europe, but faces pushback from trade unions.

“We've already announced about 3,500 job losses but we're engaged in extensive negotiations with our pilots, our cabin crew, and we're asking them to all take pay cuts as an alternative to job losses,” O'Leary said in an interview with the BBC.

“We're looking from 20% from the best paid captains, 5% from the lowest paid flight attendants — and we think if we can negotiate those pay cuts by agreement, we can avoid most but not all job losses,” he said.

German economic output to ramp up again after coronavirus slump

Europe’s biggest economy looks set to slowly emerge from the coronavirus pandemic from the third quarter of this year, according to Germany’s Ifo Institute for Economic Research.

The pandemic and the measures taken to control the outbreak have plunged the German economy into the deepest recession in its post-war history.

The Munich-based economic think tank said on Wednesday that economic output dropped by over 2% in the first quarter and nearly 12% percent in the second quarter — when commercial and social life were at a near-standstill due to nationwide lockdown.

However, the Institute expects output to grow by 6.9% in the third and 3.8% in the final quarter of 2020.

“From now on things will gradually go up again,” said Ifo economic director Timo Wollmershäuser, noting that there is still much uncertainty around how the pandemic will play out during the rest of the year.

UK house prices see first annual drop since 2012

UK house prices have fallen year-on-year for the first time since 2012, according to closely watched figures from lender Nationwide.

New data shows prices continuing to fall month-on-month as the coronavirus ripples through the property sector. Prices in June dropped 1.4% or around £2,500 on the previous month, after sliding 1.7% in May —the biggest monthly drop in 11 years.

The sustained decline has now wiped out all gains over the past year, with prices now lower than a year before for the first time since December 2012. The average home bought on a Nationwide mortgage was sold for £216,403, though the decline was only slight at 0.1% lower than June last year.

Robert Gardner, Nationwide's chief economist, said the decline was “unsurprising” given the scale of the shock to the economy from the pandemic and now-lifted restrictions on the property market.

He noted that sales and mortgage approvals had slid dramatically in recent months.

Gardner added: “With lockdown measures due to be eased in the weeks ahead, housing market activity is likely to edge higher in the near term, albeit remaining below pre-pandemic levels.

European stocks rise as positive data offset by surging US infections

European stocks rose on Wednesday as investors weighed positive economic data against surging coronavirus infections in the US, which are likely to delay the global recovery.

Blockbuster May retail sales figures in Germany and strong data from China’s manufacturing sector were offset by the US hitting yet another new record for coronavirus cases.

Over 48,000 coronavirus cases in the US were announced on Tuesday, the final day of the second quarter.

The pan-European STOXX 600 index (^STOXX) rose by around 0.5%, while London’s FTSE 100 (^FTSE) rose by 0.2%.

Germany’s DAX (^GDAXI) climbed by around 0.7%, after retail sales in the country rose by 13.9% in May, far ahead of analyst expectations. France’s CAC 40 (^FCHI) was 0.1% in the red.

What to expect in the US

Futures were pointing to a flat open for US stocks on Wednesday.

S&P 500 futures (ES=F) fell marginally, as did Dow Jones Industrial Average futures (YM=F). Nasdaq futures (NQ=F), meanwhile, were also down marginally.