25/07/2013 World Business Report

Much more on that story on the BBC website. For now, those are the

latest headlines. Now for the latest financial news, in World Business

Facebook shares surge 20% as its earnings smash Wall Street

estimates. Plus, flying the flag or just flagging? Will the latest

growth figures show signs of life in Also coming up: improving fortunes

full-forward. Americans return to the car showrooms outlast. -- for

Ford. Since Facebook went public on the

New York stock exchange last year with a valuation of $100 billion,

only then see its stock flounder below its flotation price, to the

investment world it's been controversial to say the least. The

bulls, if you like, point to the social networking site's billion

plus users around the world and massive future earning potential.

The bears say it will always struggle to justify its vast

valuation, and might even go the way of MySpace and fall out of favour

with users altogether. Late on Wednesday, the company released

quarterly results and it was definitely one-nil to the bulls.

Facebook says it made revenues of over $1.8 billion in the three

months to June. That's a jump of more than 50% on the same period

last year and much more than Wall Street was expecting. On that, a

healthy $333 million was profit, compared with a quarterly loss of

some $150 million last year. The results after the Wall Street close

had an effect on the share price that was nothing short of

electrifying. Facebook stock surged 20% in after-hours trading, to

$31.81. But that's still a way off its flotation price of $38. Here's

It's been just over one year since shares in Facebook went public. Back

then, its initial public offering was described as disappointing. Even

disastrous. But not today. Investors are cheering results that came in

much stronger than expected. At their focus had been on how Facebook

has managed to make money out of all of its users. Wednesday's figures

are showing that it has managed to track many more users and

advertisers. -- attract many more. But, as people use their mobile

phones more to check Facebook on the company has been ramping up its

mobile phone users. Figures showed the advertising revenue from

devices, which was practically done at the time of the IPO, now accounts

for over 40% of its advertising revenue, which is what investors

want to hear. But some say, let's not celebrate yet. Because even

though shares have surged, thanks to these strong figures, they are still

well below the IPO price of $30. But at least amid growing concerns that

Facebook could be losing some of its its younger users, it is at least

making investors happy. The health of America's car

companies has long been a measure of the state of its economy. On

Wednesday, Ford reported better than expected US earnings for the second

quarter and raised its profit and sales forecasts for the year, thanks

to booming truck sales in the States. On Thursday, it's General

Motors' turn to report. With the US corporate reporting season now well

under way, how robust does the US recovery look from Wall Street?

Samira Hussain reports from New After years of pennypinching,

Americans are shopping again. Chief among those purchases, new cars.

That's driving up profits for some of America's biggest car

manufacturers. I think we are clearly in growth mode.

automobile industry is growing robustly around the world. We are

growing within that. In fact, we are above the overall industry. It's an

industry phenomenon on but Ford clearly has a lot of momentum around

the world. Consumer spending overall are bright spots in the US economy.

Admit -- with more than one third of American companies reporting their

quarterly earnings, a clear picture of just how well this economy is

doing emerges. It's telling us that the economy is growing at only a

traditionally at a much stronger rate than we are today. With

earnings now increasing by about 3.5% on a yearly basis, it's showing

that the gains are not what Wall Street has been used to.

companies as financials are surprising investors I posting gains

of 20%. A spec -- sectors like basic materials, industrials and utilities

are not performing as well, adding pressure is on the strength of the

global economic recovery. Consumers are and will continue to be behind

the wheel of this country's austerity. While earnings are

showing some sign of strength, the US economic recovery has not hit the

To the UK, where hopes for a sustained economic recovery could

get a boost later from official growth figures. Gross domestic

product is widely forecast to have increased by 0.6% in the April to

June period. If confirmed, that would be twice the pace of growth in

the first quarter, which was 0.3%. Unofficial monthly data published

since then has suggested a continued improvement. Also, revisions to

official numbers have show that the double-dip recession at the end of

2011 and beginning of 2012 never actually happened.

Even so, 0.6% is hardly strong growth. So, what kind of recovery

are we looking at? Rob Wood, Chief UK Economist at Berenberg Bank,

joins us. Many thanks for coming in this morning. What you make of this

figure? Does it get you excited? It is good news. After the quagmire of

last year, dancing up and down between positive and negative

growth, two consecutive quarters of growth is good news. It's a big

turnaround. If it adds up to 1% over a couple of quarters, that's still

pretty good for the early stages of recovery. Do we think that this sort

of stabilisation that we have been seen across the eurozone,

stabilisation of the single currency, has that played a part? I

think that has been imported. threat -- uncertainty surrounding

the eurozone has probably been holding back firms from investing

more than they might. And the bad headlines in the papers probably

weigh on consumers thinking as well. But ultimately what we have seen is

the Bank of England policy, that is, low interest rates, finally

feeding through. Mortgage rates have come down the best part of 1% over

12 months. And house prices and the housing market are turning up. We

can argue about the sense of pushing up house prices, given how high they

are, but what certainly seems to be are, but what certainly seems to be

the case is that fast rising ice -- the case is that fast rising ice --

house prices get people spending. Retail figures have been strong,

suggesting the high street is this might pick up. But official

manufacturing figures that came out showed a rather unexpected prop?

Manufacturing is struggling. That's where you can see the eurozone

coming through. Slowly clawing its way to expansion, as the Rose and

stabilises and returns to growth, as we saw in the figures yesterday. --

as the eurozone. I did not strong. The growth is coming from consumers

going out and spending. What we see in the service sector, its growing

quite well, but the manufacturing sector has been stagnating. OK. Good

news, then. Thank you. China has been moving to boost its

slowing economy, which is growing at its weakest pace in more than a

decade. Among the measures, scrapping taxes for small businesses

and offering help to struggling exporters. Let's go straight to Rico

Hizon in our Singapore office. What are you have twice?

Beijing says it will be suspending the value added tax and turnover tax

for the small and medium-sized businesses. They have monthly sales

of about $3500. This initiative, which takes effect on the 1st of

August, is set to benefit more than 6 million small companies and boost

employment and income for millions of people. As for exporters, they

also have some measures. The government will be implementing

signification of customs clearance procedures are cut operational fees

and speed up a shipment of small and medium-sized private enterprises.

Analyst say these measures are aimed at basically cushioning the impact

of slowing growth on small businesses. Apart from that, the

government is completely opening up the railway construction market, to

develop it further and encourage private players to invest in the

sector. It will also issue new bonds to help fund railway construction.

Overall, China's economic growth has slowed for two quarters in a row.

The government said these measures will push to basically stabilise

economic growth over the next few years.

Many thanks for that. Time now for a quick look to see how

markets are doing. If we can bring them up for you... We might not be

able to. But I can tell you that Asian markets have retreated from