The Organization for Economic Cooperation and Development is warning of a “marked slowdown” in eurozone economies next year and says the European Union needs to clarify its anti-crisis measures.
In an update Monday of economic forecasts timed to coincide with this week’s meeting of the Group of 20 major economies, the OECD says “patches of mild negative growth” are likely in the eurozone in 2012.
It says economic growth in the eurozone will stall at 0.3 percent next year, after just 1 cash advance no faxing.6 percent growth this year.
The Paris-based OECD says “detailed information is needed” on how the EU will implement the package of measures announced last week aimed at resolving the European debt crisis, to prevent a repeat of the global crisis that hammered economies three years ago.
The leaders of South Korea and Japan agreed Wednesday to expand the size of a currency swap deal and push to resume stalled free trade negotiations, as Tokyo returned looted Korean royal documents in a goodwill gesture.
Seoul and Tokyo have close economic ties and are key U.S. allies in Asia, but many older Koreans still harbor deep resentment against Japan over its 35-year colonial occupation of Korea that ended in 1945. Ties suffered this year because of a territorial dispute and differences over the occupation.
On Wednesday, the leaders of the two countries agreed in a meeting in Seoul that they would expand the size of their total currency swap arrangements to $70 billion from the current $13 billion as a backstop against global economic turmoil. The measures consists of dollar-local currency and bilateral won-yen arrangements.
Swaps allow one central bank to borrow a currency from another, offering an equivalent amount of its own as collateral.
“We reached the agreement … based on a belief that we should strengthen our financial and currency cooperation to preemptively stabilize the financial market as the world’s economic uncertainty is deepening,” South Korean President Lee Myung-bak said at a news conference with Japanese Prime Minister Yoshihiko Noda.
Lee and Noda said they also agreed to bolster efforts to resume stalled negotiations on signing a free trade agreement.
The two countries began free trade talks in 2003, but the negotiations remain stalled over trade barriers on agriculture and fish. The South Korea-Japan deal drew renewed attention after the U.S. Congress ratified a free trade accord with South Korea this month. That deal still needs approval from South Korea’s parliament fast payday loan.
In an effort to improve ties, Noda repatriated five volumes of Korean royal documents that his country took away during its rule.
“The return should be seen as a gift with a political intention,” Seoul National University international relations professor Park Cheol-hee said.
The documents are part of 1,205 historical volumes that Japan agreed to give back to South Korea when Noda’s predecessor, Naoto Kan, met with Lee last year. A Japanese official traveling with Noda told reporters in Seoul that Tokyo is to return the remaining books by Dec.10. The official declined to be named because of office policy.
Noda told Lee that he would seek to return the remanning books at an appropriate time, according to South Korea’s presidential office.
The books’ return came two months after South Korea banned three conservative Japanese lawmakers from entering the country after they arrived at a Seoul airport with a plan to travel near islets at the center of territorial and historical disputes between the countries.
The two countries are also at odds over Seoul’s offer to hold talks on Japan’s compensation of Korean women forced into sexual slavery for Japan during its colonial rule. Japan declined, saying the matter was settled by a 1965 treaty that normalized ties between Japan and South Korea.
“I stated several times that moving toward the future without forgetting history is the basis of South Korea-Japan relations,” Lee said.
Noda told reporters the issue of sex slaves wasn’t discussed during Wednesday’s meeting.
Nearly two decades ago, Missouri created a quasi-public workers’ compensation firm to bail out small businesses facing a crisis in the skyrocketing cost of coverage.
Since then, Missouri Employers Mutual has parlayed its nonprofit status, state backing and federal tax exemption into a dominant market position. It now makes the lion share of its money from bigger clients and investments.
Meanwhile, the problem the company was established to solve has dissipated, some competitors and government officials say. And that raises the question of whether the company
A late sell-off wiped out the stock market’s gains Thursday as the stalemate over raising the country’s debt limit continued.
The market had been up for much of the day after an unexpected decrease in new applications for unemployment benefits. Stocks sank in the last half-hour of trading after Senate Majority Leader Harry Reid said that a bill to end the stalemate, proposed in the House of Representatives, would fail if it reached the Senate.
“That gave a catalyst for selling,” said Quincy Krosby, market strategist at Prudential Financial.
The Dow has fallen five straight days because of worries that the U.S. might default on its debt if Congress doesn’t raise the country’s borrowing limit. It’s down more than 484 points, or 3.8 percent. Just five days remain until the Treasury Department says the government won’t have enough money to cover all of its bills.
Even if the U.S. doesn’t default, investors worry that the country might lose its triple-A credit rating. That could raise interest rates and possibly slow the U.S. economy, which is still recovering from the worst recession in decades.
“We’re running out of time,” said Phil Dow, director of equity strategy at RBC Wealth Management in Minneapolis. “It’s getting scary.”
The chief executives of several of the country’s largest banks sent a letter to The White House and to Congress urging a quick resolution to the debt limit debate. Bank of America Corp.’s Brian Moynihan, JPMorgan Chase & Co.’s Jamie Dimon, and Goldman Sachs Group Inc.’s Lloyd Blankfein and others warned on Thursday that the consequences on not acting would be grave for the economy, the job market, and for America’s global economic leadership.
The Dow Jones industrial average fell 62.44 points, or 0.5 percent, to close at 12,240.11. The index had been up as many as 82 points earlier in the day.
The Standard & Poor’s 500 fell 4.22, or 0.3 percent, to close at 1,300.67. The S&P 500 has four straight days. The Nasdaq composite index was up 1.46, or 0.1 percent, to 2,766.25.
The price of gold, which tends to rise when investors are fearful of economic disruptions, fell $1.70 to $1,613.40 an ounce. Gold is up $100 an ounce in the last two weeks and nearly $200 an ounce since the beginning of the year, when it traded at $1,422 an ounce. When gold prices are high, experts say it’s a good indicator that people are reluctant to invest in other markets.
The dollar rose against other currencies. Treasury prices were also up slightly.
Markets declined less on Thursday than they did earlier in the week. That’s partly because the government reported that first-time applications for unemployment benefits fell to 398,000 last week, the fewest in four months. Economists had expected 415,000 first-time applications for unemployment benefits. And any figure below 400,000 is typically associated with job growth.
Technology stocks rose after LSI Corp., which makes storage and networking chips, forecast revenues that were higher than investors were expecting. Its stock gained 14.1 percent, the most in the S&P 500.
Bristol-Myers Squibb Co. rose 1.5 percent after the drugmaker reported earnings that were better than analysts anticipated. The company also raised its earnings forecast for 2011.
Exxon Mobil Corp. fell 2.2 percent after its earnings came in below analysts’ estimates.
Akamai Technologies Inc. fell 19.1 percent, the most in the S&P 500 index, after the online streaming company’s earnings were lower than analysts had expected. Sprint Nextel Corp. fell 15.9 percent. The nation’s No. 3 wireless carrier said its loss widened in the second quarter, partly because of a tax expense and investment losses.
The Dow is down 3.5 percent for the week and is headed for its worst week since last July. The S&P 500 is down 3.3 percent for the week, while the Nasdaq is down 3.2 percent. Still, the Dow is up 5.7 percent for the year, the S&P is up 3.4 percent for the year and the Nasdaq is up 4.3 percent for the year.
Nearly two stocks fell for every one that rose on the New York Stock Exchange. Volume was relatively heavy at 4.4 billion shares.
When Federal Reserve Chairman Ben Bernanke talks about ’subdued inflation trends,” many Americans probably wonder if he ever buys groceries or gasoline.
Food and energy make up less than one-fourth of the official Consumer Price Index, but they loom large in the average person’s perception of how fast prices are moving. We know that gasoline is nearly $4 a gallon, and we know when our favorite cut of meat costs more.
Can’t the Fed see the same things?
Of course it can, but Bernanke and his colleagues don’t want to be distracted by temporary changes that are caused by weather or events in the Middle East. They pay close attention to something called core inflation, which omits food and energy prices.
That opens them up to criticism, of course. It seems as though they’re ignoring all the things that are going up, while only counting the stuff that is stable or declining.
Energy prices, for example, rose 15.5 percent between March 2010 and March 2011, including a 27.5 percent jump in gasoline. Food was up 3.6 percent, including a 7.9 percent rise in meat prices.
The overall CPI rose 2.7 percent, and the core number, which Bernanke was alluding to when he spoke of ’subdued” inflation, rose just 1.2 percent. (Actually, the Fed focuses on something called the personal consumption expenditure index, and core PCE is up just 0.9 percent. Over longer periods, the PCE and CPI should show similar trends.)
Given the disparity between core and headline, it’s not surprising that many Americans see the Fed as out of touch. “There is somewhat of a disconnect between inflation numbers that are reported and the inflation that people feel out there,” acknowledges William Gavin, an economist at the Federal Reserve Bank of St. Louis. “People form their inflation expectations based on the prices of things they buy frequently.”
That means the average American probably doesn’t notice the price of housing unless they’re shopping for a new place to live. Shelter, though, makes up nearly a third of the market basket used to calculate the CPI, and its prices are fairly stable, up just 0.9 percent in the past year.
Armchair economists also are less sensitive to the prices of things like recreation, clothing and communications services, although among them they make up 12 percent of the market basket. All three have declined in price in the past year, according to CPI statisticians.
When I hear from readers who contend that the government undercounts inflation, they’re often just expressing an opinion about the prices that are most visible to them. For low-income Americans, though, the cost of living has risen faster than the CPI would indicate.
“If you look at the lowest-income people in the U.S., almost half of their income is spent on food and energy,” Gavin said. “The people who are hurt most by inflation are those who have the most exposure to things that are going up in price.”
As for the Fed’s focus on core inflation, Gavin says it probably “has backfired a little bit” by making policymakers seem insensitive to everyday concerns.
The central bank is truly concerned about the overall price level, not about any subset of the CPI, Gavin says. “I don’t think there has ever been any doubt
Companies in the U.S. added workers in April, signaling the labor market is strengthening, data from a private report based on payrolls showed today.
Employment increased by 179,000 in April from a revised 207,000 the prior month, according to figures from ADP Employer Services. The median estimate in the Bloomberg News survey called for a 198,000 advance this month.
The gain in employment projected by ADP may be insufficient to help the economy accelerate after a surge in food and fuel costs caused growth to slow to a 1.8 percent annual rate in the first three months of the year. Businesses added 200,000 jobs in April and the jobless rate held at 8.8 percent, economists project a Labor Department report to show in two days.
“This pace keeps things moving forward but not at a strong enough growth rate to really, really improve labor market conditions and improve the economy,” said Steven Ricchiuto, chief economist at Mizuho Securities USA Inc. in New York who forecast a gain of 175,000. “The labor market is still underperforming the expectations where growth will be and should be at this point.”
Estimates for the ADP data ranged from increases of 164,000 to 240,000, according to the Bloomberg survey of 34 economists.
Over the previous six reports, ADP’s initial figure was closest to the Labor Department’s first estimate of private payrolls in February, when it understated the gain in jobs by 5,000. The estimate was least accurate in December, when it overestimated the increase in employment by 184,000.
Fewer Firings
Another report today showed U.S. employers announced fewer job cuts in April than the same month last year, a sign that the labor market is firming. Planned firings decreased 4.8 percent to 36,490 last month from April 2010, according to Chicago-based Challenger, Gray & Christmas Inc. Government agencies accounted for the biggest cutbacks by industry.
Stock-index futures were little changed after the report. The contract on the Standard & Poor’s 500 Index maturing in June was at 1,352.1 at 8:58 a.m. in New York, matching yesterday’s close.
Today’s ADP report showed an increase of 41,000 workers in goods-producing industries, which includes manufacturers and construction companies. Employment at factories rose by 25,000.
Service providers added 138,000 workers, ADP said.
Companies employing more than 499 workers expanded their workforces by 11,000 jobs. Medium-sized businesses, with 50 to 499 employees, created 84,000 jobs and small companies also increased payrolls by 84,000, ADP said.
Economy Recovering
“Employment has begun to show signs of improvement,” Scott Davis, chief executive officer of United Parcel Service Inc. (UPS), said during an April 26 call with analysts. “In the U.S., unemployment dipped below 9 percent for the first time in almost two years, further evidence that the recovery continues.”
While payrolls have grown each month since October, Federal Reserve Chairman Ben S. Bernanke said on April 27 that central bankers would like to see more strength in the U.S. labor market, noting that a recovery has been “quite slow.”
“The labor market is improving gradually,” Bernanke said to reporters during the first-ever press conference following a Federal Open Market Committee meeting. “We would like to make sure that that is sustainable. The longer it goes on, the more confident we are.”
‘Anemic’ Recovery
Federal Reserve Bank of Boston President Eric Rosengren today said record stimulus is necessary to spur the “anemic” economy and that raising interest rates to combat increasing food and fuel prices would impede growth.
“With significant slack in labor markets, stable inflation expectations, and core inflation well below our longer run target, there is currently no reason to slow the economy down with tighter monetary policy,” Rosengren said in prepared remarks for a speech in Boston.
Overall payrolls, which include government workers, probably rose by 185,000 in April, according to the median forecast of economists surveyed before the Labor Department’s May 6 report.
The ADP report is based on data from about 340,000 businesses employing more than 21 million workers.
Panasonic Corp., Japan’s biggest home appliance maker, is cutting about 17,000 jobs worldwide over two years as its losses swell from restructuring costs and damage from the March 11 disasters.
President Fumio Ohtsubo said the company will streamline operations to boost profitability, including selling some of its businesses, and reduce its nearly 367,000 workers to 350,000 by the fiscal year ending March 2013.
Like other Japanese electronics makers including archrival Sony Corp., Panasonic has been struggling against competition from newcomers and formidable players from South Korea like Samsung Electronics Co., the world leader in flat-panel TVs. Panasonic has been steadily trimming its workforce to reduce costs. About a year ago it had 385,000 workers.
Osaka-based Panasonic reported a 40.7 billion yen ($499 million) loss for the January-March quarter on Thursday. The loss was largely due to 61 billion yen ($748 million) in restructuring costs, it said. Panasonic had reported an 8.89 billion yen loss for the same period the previous year.
The maker of Viera flat-panel TVs and Lumix digital cameras said its bottom line was also hurt by the March 11 earthquake and tsunami in northeastern Japan, which stalled production because of parts shortages and curbed consumer spending amid the ensuing nuclear reactor crisis.
Panasonic said it was unable to give forecasts for the fiscal year that began April 1 because it could not yet calculate the full damage from the disasters. It said the disasters shaved 21 billion yen ($258 million) off its operating profit for the fiscal year ended March 31.
Panasonic has been trying to turn itself around in recent years by adapting to a global shift toward cheaper gadgets, including new strategies that it is chiseling after adding Japanese battery and solar-panel maker Sanyo Electric Co. as a subsidiary.
Sanyo’s strength lies in cheaper home appliances as well as in solar-panel and battery businesses, which are expected to benefit from greater consumer enthusiasm for “green” energy-efficient technologies.
Ohtsubo said the businesses will be unified under the Panasonic brand, targeting 9.4 trillion yen ($115 billion) in sales for the fiscal year through March 2013.
Panasonic hopes to be No. 1 in the world in lithium-ion batteries and among the top global three in solar panels, he said.
A turnaround will come from boosting its flat TV operations, taking advantage of growth in new markets like India and Vietnam, Ohtsubo said.
“There is so much left for us to tackle,” he said from Osaka headquarters via a satellite feed in Tokyo. “We hope to revive our TV business.”
For the three months ended March 31, Panasonic’s global sales dipped 7 percent on-year to 2.04 trillion yen ($25 billion).
For the fiscal year, it reported a 74 billion yen profit ($908 million), a reversal from the 103.5 billion yen loss for the previous fiscal year.
A strong yen also hurt Panasonic, slashing fiscal year operating profit by 43.9 billion yen ($539 million). A strong yen hurts Japanese exporters by eroding the value of their overseas earnings.
(This version CORRECTS jobs cuts figure to 17,000.)
Singapore’s inflation held at 5 percent in March as housing and transportation costs surged, supporting the central bank’s decision this month to allow further currency appreciation.
The increase in the consumer price index matched the gain reported previously for February and the median estimate of 13 economists surveyed by Bloomberg News, a Department of Statistics statement showed today. Prices rose 0.1 percent from February, without adjusting for seasonal factors.
Asian central banks from China to Thailand and India are raising interest rates or allowing their currencies to gain to curb price pressures as oil and food costs rise. Singapore’s dollar has risen to records after the central bank said April 14 it would allow further appreciation in its third tightening of monetary policy in a year.
“Food inflation is rising despite a strong Singapore dollar while oil prices have continued to escalate despite the gradual stabilization in the Middle East and North Africa political crisis,” Irvin Seah, an economist at DBS Group Holdings Ltd. in Singapore, said before the report. The “chance is high that inflation will remain stuck at an uncomfortably high range of 4.5 to 5.5 percent in the coming months before easing off in the second half of the year,” he said.
The Monetary Authority of Singapore, which uses the exchange rate as its main tool to manage inflation, said this month it will re-center the currency’s band upwards, a move economists including Seah said amounts to a one-off revaluation. Inflation may reach the upper end of the central bank’s 3 percent-to-4 percent forecast range this year, it said.
The Singapore dollar has gained more than 11 percent against the U.S. currency in the past year to be the best performer in Asia excluding Japan. It traded at S$1.2345 a dollar at 12:42 p.m. local time.
Consumer prices may rise faster in the coming months after Singapore Power Ltd., the island’s main electricity provider, increased tariffs for the April-to-June quarter by an average 6.5 percent because of higher oil costs.
Swiss Reinsurance Co. estimates its claims resulting from the eartquake in Japan will reach $1.2 billion net.
Swiss Re said Monday that the scale of destruction means it will take longer than usual to assess the damage caused to residential and commercial property.
Spokesman Rolf Tanner noted that damage to nuclear facilities and as a result of radiation contamination isn’t covered by insurance policies.
Workers at the damaged Fukushima nuclear plant are struggling to contain radiation after the cooling system was knocked out by the tsunami that followed the quake.
Zurich-based Swiss Re says it has donated $500,000 to the relief and reconstruction effort in Japan.
Asian markets posted solid gains Friday, and the yen retreated from historic highs, after the world’s seven major industrial nations agreed to intervene in currency markets to help earthquake-stricken Japan.
The benchmark Nikkei 225 in Tokyo rose 3.2 percent, or 285.81 points, to 9,248.48, capping a turbulent week that saw stocks lose 16 percent on Monday and Tuesday _ the first two trading days after Japan was struck by a mammoth earthquake and towering tsunami that wiped out much of its industrial northeast.
Other major Asian indexes also opened higher after mostly dour trading the day before. Hong Kong’s Hang Seng index rose 0.8 percent to 22,451.29. South Korea’s Kospi was up 1.4 percent to 1,985.91.
Finance officials from the G-7 said they had agreed on coordinated currency intervention to support Japan’s economy following a devastating earthquake. It would mark the first time the G-7 countries have jointly intervened in currency markets since the fall of 2000.
The Japanese government said it would intervene in the Tokyo market once morning trading opened, but the Finance Ministry declined later to confirm whether that happened. Finance Minister Yoshihiko Noda said the planned intervention was meant to calm “volatility” and the G-7 governments were not aiming at a specific exchange rate for the yen.
A stronger yen hurts Japan’s powerhouse export sector _ potentially dealing another problem to an economy already wracked by the biggest earthquake in its history on March 11, which crippled nuclear reactors that are still leaking radiation.
The G-7 pledge adds to a flurry of moves by Japan to calm roiled financial markets. The Bank of Japan injected an additional 6 trillion yen ($76.7 billion) in same-day funds Thursday that banks could access immediately. From Monday to Wednesday, the central bank’s emergency funding totaled 55 Business Card Holders.6 trillion yen ($688.3 billion).
In Asia on Friday, the dollar had risen to 81.80 yen after the intervention announcement. It had traded at 78.97 yen Thursday afternoon after earlier hitting 76.53 yen _ an all time low for the dollar and a record high for the yen.
The yen’s strength in the wake of the disaster has been attributed to investors expecting the Japanese to repatriate funds from overseas to pay reconstruction costs _ or in the case of insurance companies, to pay claims for the massive loss of property and life. But analysts also said they believed currency speculators had contributed to the yen’s rise.
In New York on Thursday, stocks rose broadly on signs that the U.S. economy is improving.
A gauge of manufacturing in the mid-Atlantic region jumped in February to the highest point since January 1984. The survey from the Federal Reserve’s Philadelphia branch showed new orders soared. Production at U.S. factories, mines and utilities dipped last month but was higher in previous months than first estimated, according to the Federal Reserve.
The Labor Department reported that the number of people applying for unemployment benefits fell more than economists expected last week. Ongoing claims dropped to the lowest level since October 2008.
The Standard & Poor’s 500 rose 16.84, or 1.3 percent, to 1,273.72. The Dow gained 161.29 points, or 1.4 percent, to 11,774.59. The Nasdaq rose 19.23, or 0.7 percent, to 2,636.05. The technology-heavy index is down 0.6 percent for the year.
Benchmark crude for April delivery was up $1.61 at $103.03 a barrel in electronic trading on the New York Mercantile Exchange.
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