Morning business round-up: Australian economy shrinks


What made the business news in Asia and Europe this morning? Here's our daily business round-up:

Australia's economy recorded its sharpest contraction for 20 years during the first three months of the year after the country was hit by natural disasters.

The economy contracted by 1.2% in the first quarter of 2011 compared with the previous quarter, with flooding and cyclones in the resource rich states of Queensland and Western Australia having a significant impact.

In China, the country's manufacturers have started to feel the effects of the government's policy to reduce credit-fuelled growth in the country, figures suggest.

China's purchasing managers' index (PMI) fell to a nine-month low of 52 in May, down from 52.9 the month before. A level above 50 indicates expansion.

The figures showed that the manufacturing sectors in Greece and Spain contracted last month, while France and Germany - which have been key drivers of eurozone growth - saw a slowdown.

Media caption, Biz Heads

In the UK, the PMI figures indicated that the country's manufacturing sector had grown at its weakest pace in almost two years in May.

In corporate news, Toyota has said its production in Japan is likely to return to normal levels faster than expected.

A company spokesman told the BBC that output at its domestic factories is expected to recover to 90% of pre-quake levels as early as this month.

Strong revenue growth in the US has helped building and heating materials group Wolseley to report a rise in trading profits, despite seeing a "subdued" residential UK construction sector.

Trading profits for the three months to the end of April rose 30% to £131m, with a 10% growth in like-for-like revenue in the US helping to offset "weaker trends in the UK".

Insurance group Axa is selling its Canadian unit to Intact Financial for $2.7bn, and has outlined a five-year plan to raise earnings and reduce debt.

In the UK, there are concerns over the fate of care home firm Southern Cross.

The business, which looks after 31,000 people, has said it will be paying 30% less rent to its landlords over the next four months.

For a wider look at the world of business you can download the Business Daily podcast, which today looks at whether the IMF been too ready to bail out Europe.

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