U.S. economic news
Job losses ease, according to several reportsU.S. nonfarm payrolls fell by a better-than-expected 36,000 in February, as noted in a report from the U.S. Department of Labor. The unemployment rate remained steady at 9.7%. A series of winter storms on the East Coast last month are expected to have lowered payrolls temporarily because they caused some businesses to close for a few days. Economists polled by Dow Jones Newswires had expected a loss of 75,000 jobs, primarily because of the weather.A private report issued earlier in the week by ADP Employer Services indicated that U.S. companies cut just 20,000 jobs in February, the smallest decline in two years. Although the Labor Department’s payroll figures were affected by the severe snowstorms, as some hourly workers would have earned less because of days missed due to storms, ADP’s report is based on a computerized log that is not affected in this way.
Weekly jobless claims declined to 469,000, from 498,000, for the week ended February 26, less than the forecasted 475,000. The four-week moving average of claims fell to 470,750 from 474,250. Consumer confidence rose in January for the third consecutive month, according to the Conference Board.
Signs of economic recovery: Fed Beige Book, ISM, retail salesThe U.S. Federal Reserve Board’s Beige Book, a survey of the nation’s 12 economic regions, gave further support to those who believe that the U.S. economy is moving forward, albeit slowly and deliberately. The economy improved in nine of the Fed’s 12 regions in February. And while improvements are being described as modest, that gradual growth has not led to any signs of inflation or is it expected to for some time. That should be positive for the stock and bond markets, which generally do not respond well to inflationary signs because they lead to higher interest rates and may squeeze profit margins.
U.S. service industries are recovering from the recession, according to the Institute for Supply Management’s index of nonmanufacturing businesses, which rose to 53 in February from 50.5 in January. The February figure was the highest since October 2007, two months before the recession began. The ISM’s manufacturing gauge hit 56.5 in February, its seventh consecutive monthly increase.
Retail sales picked up in February. Same-store sales rose by 4% overall from a year earlier at 28 retailers that report through Thomson Reuters. More than 80% of retailers surveyed beat expectations as they cleared items from Christmas inventories without much markdown.
U.S. and global corporate news
Adidas profit tumblesGerman sportswear maker Adidas reported a 65% drop in quarterly net profit, and it lowered its forecast for 2010. The company, second only to Nike in its industry, earned 19 million euros in the fourth quarter of 2009, down from 54 million euros a year earlier. Sales fell 4.5%, and earnings were squeezed by rising input costs and the decline in the Russian ruble against the euro.AB InBev net earnings lag expectationsAnheuser-Bush InBev reported 2009 fourth-quarter results that fell short of expectations. The world’s largest brewer earned $1.28 billion for the period, up sharply from a $29 million profit a year earlier, a figure that was skewed by one-time charges related to the merger of InBev and Anheuser-Busch and only partial results a year ago. The firm’s core earnings of $3.12 billion rose from $2.81 billion a year earlier but failed to meet expectations of $3.29 billion in profit.
Bayer’s earnings riseGerman pharmaceutical firm Bayer saw its net profit rise to 153 million euros for the final quarter of 2009, up from 106 million euros a year earlier. However, earnings were lowered by 80 million euros because of unfavorable currency exchange rates.
Adecco witnesses U.S., French job reboundAdecco SA, the world’s largest employment firm in sales, recorded a fourth-quarter net profit of 42 million euros following a 22 million euro year-earlier net loss as job markets in the United States and France began to recover.
Nissan recalls 500,000 vehiclesJapanese car manufacturer Nissan Motor is recalling more than 500,000 trucks, sport-utility vehicles, and minivans in North America, Asia, and Europe because of problems with brake pedal pins and fuel gauges.
Global economic news
Greek government takes new steps to stave off crisisThe Greek government announced a new set of tax increases and payouts for public employers as it continued its efforts to reduce its country’s large budget deficit and allay fears that Greece might default on its debts. European Union officials had demanded deeper cuts before extending any financial bailout for the country. Included were increases in Greece’s sales tax as well as taxes on alcohol, cigarettes, and luxury goods.Markets responded well to the moves, as the cost of insuring Greek sovereign debt against default in the credit-default-swap market fell. A Greek government bond sale raised 5 billion euros ($6.85 billion) by Thursday morning. The offer to pay 6.3% on 10-year notes attracted 14.5 billion euros in bids, a strong sign of confidence.
Eurozone inflation eases; retail sales fallThe annual inflation rate for 16 countries within the eurozone fell to 0.9% in February, down slightly from 1.0%. The European Central Bank held its key interest rate at 1% at its policy meeting Thursday as inflationary pressures remain contained. The ECB has held rates steady since May 2009.
Meanwhile, sales volume in the eurozone fell by 0.3% from December 2009 to January 2010. Sales declined 1.3% year over year from January 2009.
Eurozone growth slowed from 0.4% in the third quarter, when it emerged from recession, to 0.1% in the fourth quarter, the Eurostat statistics agency reported. Compared with figures from a year earlier, the Eurozone GDP fell 2.1% in the fourth quarter after a 4.1% year-to-year decline in the third quarter of 2009.
India’s exports and imports riseIndia’s exports and imports both had robust growth in January, reflecting a recovery in global economic activity. While exports rose 11.5% in January from a year earlier, imports soared 35.5%. Oil imports rose 56% and non-oil imports grew 28.8% reflecting strong growth in economic activity in India.
Australia’s economy reboundsAustralia’s economy picked up pace in the fourth quarter as GDP rose 0.9% from the third quarter and 2.7% from the year-earlier period, according to a report from the Australia Bureau of Statistics. Australia’s economy was boosted by business investment, a surge of new construction, growth in corporate profits, and government spending.
Mixed reports on Russian economyRussia’s economy stalled in February, with a quarter-to-quarter decline in GDP of 0.1%, according to VTB Capital, the investment banking unit of a Russian bank. The Russian economy grew just 0.5% from February 2009 to February 2010. Unemployment reached 9.2% in January, its highest level since March 2009. However, a report on the global economy issued on Friday by the Organization for Economic Cooperation and Development (OECD) said that the leading economic indicators for Russia rose, along with those of China and all members of the Group of Seven large developed economies. The report said the leading indicators for Brazil and India fell.
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Sources: MFS research; The Wall Street Journal; The Wall Street Journal Online; Bloomberg News; CNNMoney.com; Forbes Online; msnbc.com.
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