headwinds

Retail Sales Flat in August

September 15, 2011 by NewsMaker Leave a Comment

The unchanged reading followed a 0.3 percent gain for July that was smaller than previously estimated, the department said. Prices paid by producers were also unchanged in August, according to the Labor Department, while so-called core costs that exclude food and fuel rose less than forecast.

The dim outlook for household spending, which accounts for about 70 percent of the economy, will make it hard for the two-year-old recovery to gain speed, giving the Federal Reserve reason to take additional steps to spur growth.

“Consumers are being more cautious given all the economic headwinds,” said Michael Feroli, chief United States economist at JPMorgan Chase. “Policy makers have to be focused on growth because growth seems to have come close to stalling in August.”

Another report from the Commerce Department showed inventories rose less than forecast in July, indicating companies were bracing for a slowdown in demand. The 0.4 percent increase in stockpiles matched the revised gain in June, which was larger than initially estimated. The median projection in a Bloomberg News survey was for a 0.5 percent advance. Sales climbed 0.7 percent in July, the most since March.

The median forecast of retail sales by 83 economists surveyed by Bloomberg News called for a 0.2 percent rise. The Commerce Department revised the July increase down from a previously reported 0.5 percent advance.

Eight of 13 major categories showed gains last month, led by grocery and sporting goods stores. Demand declined for big-ticket items like automobiles and furniture. Sales at clothing stores dropped 0.7 percent, the biggest drop since December.

Retail sales are not adjusted for inflation, indicating demand may have dropped after taking prices into account.

Purchases at automobile dealers dropped 0.3 percent after rising 0.2 percent in July, the report showed. Cars and light trucks sold at a seasonally adjusted annual rate of 12.1 million in August, down from a 12.5 million pace in the first half of the year and little changed from July, according to the researcher Autodata.

Purchases excluding autos increased 0.1 percent, below the 0.2 percent projected by analysts.

Payrolls in the United States, the world’s largest economy, stagnated last month, and unemployment held at 9.1 percent, Labor Department figures showed earlier this month.

Article source: http://feeds.nytimes.com/click.phdo?i=9dcb506e3308f05ed17619924366e748

Filed Under: Economy News Tagged With: clothing stores, food and fuel, headwinds

I.M.F. Backs Britain’s Recovery Efforts

August 1, 2011 by NewsMaker Leave a Comment

LONDON — The International Monetary Fund endorsed Monday the British government’s tight budget policy and loose monetary stance, while warning that the authorities should stand ready to change course if growth did not gather pace.

In a regular report on the British economy, the fund noted the weak economic environment and an increase in inflation had raised questions about whether macroeconomic policies should be adjusted. “The answer is no,” the report said, “as the deviations are largely temporary.”

Britain has been cutting spending and raising revenue to bolster its weak fiscal position, a legacy of the financial crisis, when it spent public funds to bail out large lenders like Royal Bank of Scotland, Lloyds Banking Group and Northern Rock.

The crisis pushed the fiscal deficit to 11 percent of gross domestic product in the 2009-10 financial year, the highest level since World War II and one of the highest rates in the world. The deficit fell to 9.75 percent in the 2010-11 financial year, and the I.M.F. said a further decline to 8 percent was expected for the following year.

Strong fiscal consolidation “remains essential to achieve a more sustainable budgetary position, thus reducing fiscal risks,” the fund said.

It forecast that growth would pick up to 1.5 percent in 2011 from 1.4 percent last year, and accelerate to 2.3 percent in 2012. Inflation is expected to decline to 2.2 percent next year from 4.5 percent this year.

The current high inflation rates are driven by transitory factors, it said, “and hence maintaining the current scale of monetary stimulus is appropriate given fiscal adjustment and subdued wage growth.”

Still, the fund cited “significant risks to inflation, growth, and unemployment arising from uncertainties surrounding sovereign turmoil in parts of the euro area, headwinds from fiscal policy, volatile commodity prices, and the housing market.”

And the authorities will need to retain flexibility to respond to shocks, the report added.

“If there is mounting evidence that weak demand is likely to cause the economy to stall and enter a period of prolonged low growth and subdued inflation, a significant loosening of macroeconomic policies will be required,” it said.

For British banks, a continued buildup of capital and liquidity buffers remains essential, the fund said. Needing to refinance a large amount of government support as well as private-sector debt over the next two years, banks will remain vulnerable to higher financing costs and disruptions in wholesale funding markets, it warned.

The high level of indebtedness of households and some companies aggravates these vulnerabilities. And weak home prices are likely to weigh on consumption going forward, the fund said, forecasting a reduction in the house price-to-income ratio of 12 percent over the medium term.

Article source: http://www.nytimes.com/2011/08/02/business/global/imf-backs-britains-recovery-efforts.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: british economy, fiscal policy, headwinds

Fed Says Economy Is Growing, but at Uneven Pace

June 9, 2011 by NewsMaker Leave a Comment

The central bank’s district-by-district report, called the beige book, said that economic activity “generally continued to expand,” although at different rates across the country. The pace of growth slowed, for example, in the New York, Philadelphia, Atlanta and Chicago districts. The Dallas district accelerated, while other areas showed growth continuing at a steady pace, the survey said.

The beige book also noted that manufacturing in general expanded, and that activity in the nonfinancial service sectors grew steadily, led by the information technology and business and professional services industries.

The report is intended to get beyond the financial statistics to offer economists and market watchers insights into the regional factors affecting the nation’s economy. The report covered a two-month period when the government’s economic indicators were growing progressively weaker.

The survey, issued eight times a year, seemed to support remarks made a day earlier by the Federal Reserve chairman, Ben S. Bernanke, who described the country’s economic growth as slow and uneven.

Compared with the previous beige book, which raised questions about the impact of the March disaster in Japan, this survey suggested that some of the economic headwinds could be receding.

“What we are seeing is that the business community and the banking community out on the ground see this as a transitory thing,” John Canally, an economist for LPL Financial, said. “Businesses in general are seeing through the soft spot.”

The report said that the supply disruptions caused by the events in Japan had resulted in a reduction in the flow of new cars to dealer inventories, which in turn had held down sales. In addition, bad weather and high gas prices hurt casino, retail and agricultural activity in several regions.

Those factors affected growth in consumer spending, with most districts indicating steady to modestly increasing activity, the survey said. “Elevated food and energy prices, as well as unfavorable weather in some parts of the country, were said to be weighing on consumers’ propensity to spend,” the report said.

The Cleveland district noted a sharp drop in auto production, while businesses in the Chicago area said contingency plans were put into play to deal with supply disruptions. High-tech companies in the Boston and Dallas districts reported a lack of parts that had adverse effects on business, according to the survey.

Business activity related to the agriculture sector was varied because of extreme weather. Cool temperatures delayed crops in the San Francisco Fed district; flooding on the Mississippi River slowed activity for farmers in the St. Louis and Atlanta districts. In the Dallas district, severe drought was expected to hurt the wheat crop, while wildfires led to “significant” agricultural losses, the survey said.

Residential construction and real estate continued to show widespread weakness, the survey said. Labor market conditions improved gradually across most of the country, but some districts said there was a dearth of workers with specialized technical skills. Wage growth was modest, the report said, even though highly skilled workers commanded steeper increases.

In a speech to bankers Tuesday in Atlanta, Mr. Bernanke said he was confident that the pace of growth would increase during the second half of the year, and that he continued to see no signs of broad and enduring inflation despite the recent price rises.

“Over all, the economic recovery appears to be continuing at a moderate pace, albeit at a rate that is both uneven across sectors and frustratingly slow from the perspective of millions of unemployed and underemployed workers,” Mr. Bernanke said in his speech.

The Federal Reserve’s policy-making committee next meets on June 21 and 22.

Article source: http://feeds.nytimes.com/click.phdo?i=d4ee07dfc5ec950923544dad4f6916aa

Filed Under: Business News Tagged With: dealer inventories, headwinds, professional services industries

Beige Book Shows Uneven Economic Growth

June 8, 2011 by NewsMaker Leave a Comment

Economic activity in the United States continued to grow in April and May, but higher food and energy prices, severe weather conditions and supply disruptions caused by the earthquake and tsunami in Japan put pressure on consumers, according to a survey by the Federal Reserve released on Wednesday.

The survey, issued eight times a year, seemed to support remarks made a day earlier by the Federal Reserve chairman, Ben S. Bernanke, who described the country’s economic growth as slow and uneven.

Compared with the previous beige book, which raised questions about the impact of the March disaster in Japan, this survey suggested that some of the economic headwinds could be receding.

The Cleveland district noted a sharp drop in auto production, while businesses in the Chicago area said that contingency plans were put into play to deal with supply disruptions. High-tech firms in the Boston and Dallas districts reported shortages of parts that had adverse effects on business, according to the survey.

The Federal Reserve’s policy-making committee next meets on June 21 and 22.

Article source: http://www.nytimes.com/2011/06/09/business/economy/09econ.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: beige book, headwinds, professional services industries

Wal-Mart to Buy Back Billions More in Shares

June 4, 2011 by NewsMaker Leave a Comment

The initiative, which was announced at the company’s annual shareholders’ meeting here, comes after a previous $15 billion repurchasing plan that was announced last year. The company bought back 244 million shares, worth about $13 billion, under that program.

Charles Holley, the chief financial officer, said the buyback demonstrated the company’s strength and was “indicative of our strong free cash flow position.”

Wal-Mart’s shares have lagged the broader market over the last year, despite the repurchase plan and a 21 percent increase in its dividend, to $1.46 a share, in the 2011 fiscal year. On Friday, its shares rose 11 cents, to $53.66.

Investors have focused instead on the company’s slumping same-store sales — a problem that company executives promised to fix.

“We know we are up against some strong economic headwinds through the recession and slow-paced recovery of the last three years,” Mr. Holley said.

Overall sales increased 4.2 percent in the most recent quarter, but most of that increase came from food purchases. In contrast, Wal-Mart has struggled with apparel sales.

“In the future, you will see less fashion apparel and more basic items, like underwear and T-shirts,” said William S. Simon, president and chief executive of Wal-Mart’s United States operations. “When it comes to fashion,” he said, “customers don’t want to see 10,000 others wearing the same clothes.”

To stem the sales declines, Wal-Mart removed some merchandise from store shelves, including plus-size clothes and fabrics. On Friday, Mr. Simon said that 8,500 items would return to the shelves.

In addition, Wal-Mart plans to roll out over the next year 140 to 160 stores in three formats — the 100,000- or more square-foot superstores, 40,000-square-foot neighborhood markets and new 15,000-square-foot express stores.

The first express stores will open next week in small towns in Arkansas. The first urban express stores will open later this summer in Chicago. The stores are a part of Wal-Mart’s effort to serve rural and urban areas.

Higher food and fuel prices are hurting Wal-Mart’s mainstay shoppers, and Mr. Simon and other executives emphasized that the company would remain a low-cost operator and provide low prices.

The company is also seeking to bolster sales overseas. Just last week, Wal-Mart received approval to acquire Massmart Holdings of South Africa for $2.4 billion.

Shareholder proposals at the meeting related to climate change, gender discrimination policy, political donations and its suppliers’ compliance with international human and workers’ rights were all defeated.

Michael T. Duke, Wal-Mart’s chief executive, said the company was recruiting more women and minorities. It is still facing a federal class-action lawsuit that accuses Wal-Mart of sex discrimination.

As in years past, the shareholders’ meeting, which is held near the company’s headquarters in Bentonville, was equal parts pop concert and pep rally. The host this year was the actor Will Smith, and performers included the winner of the 10th season of American Idol, Scotty McCreery, in addition to Alicia Keys, the Black Eyed Peas and the Canadian Tenors.

Wal-Mart workers traveled from around the world for the meeting. They did the Wal-Mart cheer with the squiggly dance move several times. Each time an executive referred to the success of Wal-Mart’s Sam’s Club unit, Sam’s Club employees erupted with cheering and noisemakers.

Article source: http://feeds.nytimes.com/click.phdo?i=d5f3def632e985771fa55456f0f9a1c3

Filed Under: Business News Tagged With: headwinds, recession, size clothes

U.S. Stock Futures Rise in Pre-Market Trading

May 24, 2011 by NewsMaker Leave a Comment

Rising concerns about the euro-zone debt pressured equities on Monday. While those headwinds remained, markets have steadied, with European shares up 0.25 percent, following a decline of more than 1 percent on Monday.

Both crude and Brent futures rose 1.3 percent after Goldman Sachs raised its forecast for oil, citing strong growth in demand for fuel.

Copper also rallied, gaining 1.4 percent after Goldman forecast an increase in Chinese purchases in the coming months. Gold prices rose 0.5 percent while the United States dollar index fell 0.2 percent.

“Investors are realizing that at the end of the day, there’s more demand for commodities than there is supply. That means the long-term trend is higher,” said Oliver Pursche, president at Gary Goldberg Financial Services in Suffern, N.Y. “When there’s a short-term selloff, we would take it as an entry point.”

Sony rose 4.8 percent to $27.86 in premarket trading after the electronics maker said this year’s operating profit would match last year’s, easing worries about the impact of the March earthquake. Those concerns have contributed to recent weakness in the stock.

SP 500 futures rose 2.3 points Dow Jones industrial average futures added 25 points and Nasdaq 100 futures rose 3.25 points.

The United States Treasury is expected to sell 15 percent of its stake in the American International Group when the insurer prices its stock offering after the market closes.

AutoZone and Medtronic reported results early Tuesday. Medtronic said it was well positioned for sustainable growth in 2012 and beyond, while AutoZone posted domestic same-store sales growth of 5.3 percent.

Applied Materials is scheduled to report results later on Tuesday.

April new home sales data, due at 10 a.m., are seen rising by the same amount as the previous month. The Federal Reserve Bank of Richmond May indexes on area manufacturing and service sectors will also be released.

Article source: http://feeds.nytimes.com/click.phdo?i=a0a149c83a50971ad55dc3eb3a8488f8

Filed Under: Business News Tagged With: headwinds, stock futures, united states dollar

Wall Street Indexes End the Week on the Upside

April 30, 2011 by NewsMaker Leave a Comment

The market’s three main indexes have been climbing steadily in recent weeks as quarterly results trickled out and proved better than expected in many cases.

While the one-day gains on Friday were minimal, they were enough to build on past advances and to push the broader market and the Dow to their best monthly performances this year.

The dollar, on the other hand, declined against its index of six currencies to a three-year low, said Brian Dolan, the chief currency strategist at Forex.com.

The euro was at $1.4839 on Friday, up from $1.4821 on Thursday.

“It is weak across the board,” said Mr. Dolan of the dollar. “U.S. interest rates are low and going to stay low, and other central banks are tightening. There is very little on the fundamental horizon to alter that downtrend.”

But corporate results have surpassed many forecasts.

About 300 of the companies in the Standard Poor’s 500-stock index have reported quarterly results so far, and nearly 80 percent have said sales and operating earnings were higher in the first quarter than they were in the quarter a year ago, according to a survey compiled by Howard Silverblatt, the senior index analyst at Standard Poor’s.

Russell T. Price, the senior economist for Ameriprise Financial, said the first quarter had suffered some economic and financial shocks from the disaster in Japan and the higher oil prices fueled by turmoil in the Middle East and North Africa.

But he said quarterly results were “coming out so much better than expected.” He added, “It is a pretty good indication that corporate America is able to deal with the headwinds.”

Some companies benefited from the higher oil prices. Energy shares in S. P. were up more than 1 percent on Friday.

Exxon Mobil released results on Thursday that reflected an increase in higher oil prices in the first quarter, reporting a 69 percent rise in net income to $10.7 billion, or $2.14 a share. Its shares rose less than 1 percent to $87.98.

Occidental Petroleum rose 8.71 percent to $114.29 after it reported on Thursday that profit rose to $1.55 billion, beating forecasts.

Industrial shares were also up.

Caterpillar, the heavy equipment maker, climbed more than 2.4 percent to $115.41 after its first-quarter income of $1.23 billion a share topped Wall Street’s expectations.

The Goodyear Tire and Rubber Company was 12.04 percent higher at $18.15 after reporting a profit that was four times greater than forecast.

The markets were also partly lifted this week by the Federal Reserve statement on Wednesday that it would continue to stimulate growth with low interest rates.

The Dow Jones industrial average closed up 47.23 points, or 0.37 percent, at 12,810.54, a nearly 4 percent rise in the month and its best close since May 2008. Eighteen of the 30 components rose.

The S. P. was 0.23 percent, or 3.13 points higher, at 1,363.61, in its highest close since June 5, 2008. It rose 2.85 percent in April, its best monthly advance this year.

The Nasdaq was 1.01 points higher at 2,873.54, weighed down by Microsoft, which reported that its third-quarter profit was up 31 percent, but that revenue from the division that includes the Windows operating system fell 4 percent.

Microsoft was down by 2.96 percent at $25.92. Research in Motion, the maker of the BlackBerry, was down by about 14 percent at $48.65 after it lowered its forecast for the current quarter.

The market has also been assessing the latest indicators of growth and spending this week. The government reported on Thursday that the economy grew at a rate of 1.8 percent in the first quarter. Consumer spending increased 0.6 percent in March.

Interest rates were lower. The Treasury’s benchmark 10-year note rose 7/32, to 102 26/32, and the yield fell to 3.29 percent from 3.31 percent late Thursday.

Article source: http://www.nytimes.com/2011/04/30/business/30markets.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: ameriprise financial, financial shocks, headwinds