April 25, 2024

Jobless Claims Rise and Housing Starts Fall

Jobless claims rose sharply last week, while housing starts tumbled in April and a gauge of underlying inflation pointed to weak demand.

The data could feed fears over the impact of a government austerity drive that began in January and could also raise pressure on the Federal Reserve to continue to buy bonds to support the economy.

The number of Americans filing new claims for unemployment benefits climbed last week at the fastest pace in six months, the Labor Department said on Thursday. Initial claims for state unemployment benefits jumped by 32,000 to 360,000. That was the biggest jump since November and confounded analysts’ expectations for a more modest increase.

“I think there’s plenty of slack in the labor market,” said Tanweer Akram, an economist with ING U.S. Investment Management in Atlanta.

Futures indexes for United States stocks turned lower after the data’s publication, and so did yields on government debt. The dollar weakened against the euro and the yen.

A Labor Department analyst said no states had estimated their data, and there were no signs that furloughs for government employees had played a significant role in last week’s increase in claims.

The economy has shown signs that growth slowed late in the first quarter and in April as Washington’s push to trim the budget deficit weighed on consumers and businesses. The federal government raised taxes in January, and sweeping budget cuts were initiated in March.

Many analysts have noted that a reluctance by employers to lay off workers has made an outsize contribution to recent improvements in employment levels. Last month, employers added 165,000 new jobs while the unemployment rate dropped to a four-year low at 7.5 percent.

Housing has also been an economic bright spot, but a separate report showed groundbreaking for new homes fell more than expected in April. The Commerce Department said starts at building sites for homes fell 16.5 percent last month. Still, permits to build new homes increased, a reassuring indication that the housing sector could still contribute to the economic recovery.

In a third report, a sharp drop in gasoline costs led consumer prices to tumble in April by the most in over four years, while a gauge of underlying inflation was also weak.

The Labor Department said its Consumer Price Index slipped 0.4 percent, the biggest decline since December 2008 when America was suffering some of the worst days of its financial crisis. Analysts had expected a more modest 0.2 percent decline in last month’s prices.

In the 12 months through April, consumer prices rose 1.1 percent. That is well below the Fed’s 2 percent inflation goal. Much of April’s decline in prices was because of an 8.1 percent dive in gasoline costs, the biggest since December 2008.

Article source: http://www.nytimes.com/2013/05/17/business/jobless-claims-rise-and-housing-starts-fall.html?partner=rss&emc=rss

OPEC Leaves Production Quotas in Place

Members of the Organization of Petroleum Exporting Countries left their 30 million barrel-per-day quota for oil production intact Wednesday, a decision that indicates the cartel’s satisfaction with current crude prices and its reluctance to do anything to further weaken the world economy.

But even though it stuck with the status quo, the group, whose representatives are in Vienna for the meeting, may face serious tests in the near future, as rising production outside the cartel threatens its market share and influence in the world.

So far, OPEC has had an easy year. Crude prices have been stable and within the range the organization favors. Although U.S. oil prices have fallen into a $80- to $90-per-barrel range, the non-U.S. benchmark Brent crude remains well above $100 per barrel. The OPEC basket, which members considers representative of what they receive for their oil, was $104.80 per barrel on Tuesday.

“At these prices no one wants to rock the boat,” said Bhushan Bahree, an OPEC analyst at IHS Cera , who was in Vienna for the meeting.

But the global oil market is going through major changes, led by the surge in oil production in the United States, which reached 6.5 million barrels per day in September, the highest since 1998 and a huge 900,000 barrels-per-day increase from a year earlier, according to the U.S. Energy Information Administration.

Iraq, an OPEC member not subject to the organization’s quotas because the country is recovering from the ravages of war, is also rapidly increasing production and now is at levels last seen in the late 1990s.

OPEC is unlikely to escape being buffeted by these shifts. “More production in the U.S. means there is less available for OPEC,” said Jamie Webster, an analyst for Washington-based consultants PFCEnergy, who was in Vienna observing the meeting.

The cartel’s 12 members — Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela — produce roughly one third of global oil output.

The high oil prices of recent years have led oil companies to invest heavily in exploration and in techniques to extract hydrocarbons that until recently were off limits, such as from the shale formations in North Dakota in the United States. As a result, supply is increasing faster than just about anyone expected, while demand remains sluggish thanks to the tepid world economy.

IHS Cera expects the global supply of oil from non-OPEC producers like the United States, Kazakhstan, and Brazil to grow by 1.2 million barrels per day next year — well ahead of demand, which is only likely to increase by 800,000 barrels per day.

Should this prediction, which is similar to the cartel’s own forecast, prove on the mark, OPEC will need to trim its output, giving up market share. The signs are that it is already doing so. An OPEC report published Wednesday showed that Saudi Arabia, the key decision maker in the group, had already cut output by 200,000 barrels per day in November to 9.5 million barrels per day, the lowest since October 2011.

The cartel’s own report says that demand for OPEC oil will be 29.7 million barrels per day in 2013 — a roughly 1.3 million barrel per day decline from the present.

“If the world ends up with a lot more capacity to produce oil than appetite to consume it, then either OPEC countries have to figure out a way to cut back production or prices will crash,” said Michael Levi, an energy fellow at the Council on Foreign Relations. “Sometimes OPEC doesn’t make decisions, but individual countries do and then others follow.”

Abdalla Salem El-Badri, the OPEC secretary general, acknowledged the possibility of production cuts in Vienna on Wednesday. “Maybe in the coming months we will produce less,” he said.

Recently, OPEC members have not published specific quotas, but the whole organization was supposed to observe a 30 million barrel-per-day ceiling, which it is now exceeding by around 1 million barrels per day. This lack of specific targets allows the Saudis to try to keep the global system balanced by adjusting the amount of oil they sell without the need to haggle over changes.

But if prices look in danger of plummeting, they will ask their Gulf neighbors and the wider organization to help out, possibly threatening the organization’s cohesion.

“It could cause tension in OPEC if they had to cut back substantially to shore up prices; some of the pain might have to be shared,” said Mr. Bahree of IHS CERA.

Article source: http://www.nytimes.com/2012/12/13/business/global/opec-leaves-production-quotas-in-place.html?partner=rss&emc=rss

You’re the Boss Blog: This Is Not Your Father’s Company

She Owns It

Portraits of women entrepreneurs.

Susan ParkerSara Krulwich/The New York TimesSusan Parker

Most family businesses don’t survive beyond the founder’s generation. Bari Jay, in its second generation, and Johnson Security Bureau, in its third, are two exceptions. Both companies are thriving largely because of the efforts of two of our business group members, Susan Parker and Jessica Johnson, respectively. Each woman stepped in after her father’s death, and remade aspects of the business, often taking steps that their fathers never would have  considered — or endorsed. During our latest meeting of the group, Ms. Johnson and Ms. Parker talked about what their fathers might think if they were to see how things run today.

“My dad and I butted heads on how the business should run in the last months that he was alive,” said Ms. Johnson, who took over in 2009. Areas of disagreement included estimating and bidding on projects, using technology, leveraging relationships with existing clients and forging relationships with new ones. Typically, Ms. Johnson’s father would hear of a security contract becoming available through a connection. Knowing someone who was familiar with his work was enough for her father to get a foot in the door, said Ms. Johnson. After that, he just sold the client on price and then performed.

“He got very comfortable,” said Ms. Johnson, who has far fewer security industry contacts but an extensive sales background. She urged her father to take a more proactive approach. “Sometimes you’ve got to go out there and hustle,” she said. But Mr. Johnson had never really had to market the business. For that reason, and also because of a general reluctance to embrace technology, he was hesitant to set up a Web site, or even to get voice mail, Ms. Johnson said.

She also said she and her father had different expectations regarding employees. “My dad never really worked for anyone else,” said Ms. Johnson, who says she believes her years of having a boss helped her better understand employee needs. She noted that the employment relationship must serve both employer and employee. “I don’t think he was as focused on it being a good fit both ways,” she said.

“He had no point of reference,” said a group member, Alexandra Mayzler, who said she understood his position because she, too, had never had a boss. Ms. Mayzler said she often struggled to determine the best way to communicate with employees at Thinking Caps Tutoring. While she wants to be approachable, she can’t always stop what she’s doing to address concerns that might be as minor as a request to write a recommendation letter. To understand what it’s like to be an employee, Ms. Mayzler said she constantly turned to a friend who worked in “corporate America.”

Ms. Parker said that, because she and her sister had worked for other companies before they took over Bari Jay in 2008, they had expectations about how to handle the human relations aspect of the business. The sisters established an official H.R. policy and handbook, which Ms. Parker said was unusual for a small garment center business. She said that because they had both held other jobs, neither could imagine going without a handbook. “You can get sued,” she said. Additionally, the sisters set up a 401(k) plan that contributed matching funds. “These are things I had at my old job, so I knew about them and wanted them,” she said.

She added that, if her father were working with them today, he would “want nothing to do with this whole H.R. thing.” While he would be happy to let his daughters run with it, it’s unlikely he would have seen a need to establish anything formal.

Additionally, she said, he would have continued to delegate the tasks required to execute business with Bari Jay’s Chinese factories. Because he was resistant to change, the company was among the last of its competitors to go overseas, in 2004. Until then, Bari Jay’s factories were located in New York City, in Queens and in Chinatown. Ms. Parker said her father did visit the Chinese factories that Bari Jay used, serving as the personable face of the company.

“He was old-school garment center, and didn’t want to learn the new way of doing things,” she said. For example, he always paid by check. Dealing with payments to Chinese factories would have required him to learn how to go online to send a wire transfer.

Despite Bari Jay’s growth and success, Ms. Parker said, business would probably be even better today if her father, who had 40 years of garment center experience, were working with his daughters today. Ms. Parker has a wide network of informal advisers, including a competitor, some of her father’s old industry friends and his mentor, who is 83 and still working. “We have a lot of people to call, but I wouldn’t need all of them if my dad were here,” Ms. Parker said.

“Could you hire someone with that experience?” asked Ms. Mayzler.

“When we first took over, we looked into it, but a lot of the people we talked to walked in with huge egos and wanted huge salaries,” Ms. Parker said. Nothing seemed to warrant either, she said, so she and her sister decided to figure things out for themselves.

You can follow Adriana Gardella on Twitter.

Article source: http://feeds.nytimes.com/click.phdo?i=6881f278833f27d26769ced4bcf97c71

Bucks Blog: Many Consumers Plan to Spend Less This Holiday Season

Holiday shoppers in Miami.Associated PressHoliday shoppers in Miami.

With economic concerns weighing heavily, 42 percent of Americans –and 49 percent of parents — say they plan to spend less this holiday season than last year, a recent survey found.

Bankrate.com’s November Financial Security Index poll, released early this week, found that just 10 percent of Americans plan to spend more this year than they did in 2010.

But it remains to be seen if consumers can stick to their budgets. Retailers, for instance, reported strong sales over the Thanksgiving holiday weekend.

“While consumers indicate a reluctance to spend more this holiday season, there is a notorious disconnect between how consumers feel and how consumers act, particularly regarding spending,” said Greg McBride, senior financial analyst for Bankrate.com, in a statement.

Princeton Survey Research Associates conducted the telephone survey of 1,005 adults in early November. The margin of sampling error is four percentage points.

The index fell to its second-lowest level of the year, as feelings of job security hit a new low. Just 13 percent of Americans feel more secure in their jobs now than they did one year ago, which helped drag down the overall index to 92.5 points, just above the 2011 low of 92.3 recorded in August. (A reading below 100 indicates decreasing levels of financial security compared with 12 months earlier.)

The percentage of Americans reporting higher net worth than one year ago rebounded slightly in November, thanks to the October stock market rally. Feelings on both savings and debt were largely unchanged from October, with only 11 percent of Americans more comfortable with their savings and 20 percent more comfortable with their debt relative to one year ago.

Are you planning to spend less over the holidays this year? How will you make sure you stay within your budget?

Article source: http://feeds.nytimes.com/click.phdo?i=ec2e3fa79689fb3ad970bfeabe6a3c4a