U.S. economic news
Employment falls more than expected; unemployment rate steady at 9.5%Employment fell more than expected in July as the economy shed 131,000 jobs; the unemployment rate held steady at 9.5%. The numbers are another sign that the economic recovery may be losing momentum. Nonfarm payrolls fell last month because the rise in private-sector employment was not enough to make up for the government jobs lost.
U.S. service sector growth picks up; manufacturing growth slows
The Institute for Supply Management reported that U.S. service sector growth picked up in July. Service companies have expanded every month this year, but the sector continues to grow at a less robust pace than in the manufacturing sector. Its slow recovery has put a damper on overall hiring because it accounts for 80% of U.S. employment. Despite its strong recovery to date, growth in manufacturing slowed in July.
Retail sales rise but fall short of expectations
Retail sales at U.S. chain stores rose 2.9% in July, falling short of forecasts, as markdowns failed to inspire consumers.
U.S. and global corporate news
European banks post solid profitsHSBC's reported pretax profit more than doubled to $11.1 billion in the first half, while BNP Paribas posted a 31% increase in net income as provisions for bad loans dropped. Barclay's posted a 29% increase in net profit, but costs soared and revenue fell at Barclay Capital's investment banking unit. Société Générale's earnings more than tripled as strong retail operations and lower provisions helped offset a weaker investment banking business. American International Group swung to a $2.7 billion net loss for the second quarter because of charges associated with a unit that is being sold. That loss compares with a $1.8 billion net profit a year ago. Still, the company's insurance business generated an operating profit.
Toyota raises forecast; Rio Tinto profits more than triple
Toyota Motor raised its profit forecast for its fiscal year and posted its highest quarterly net profit in two years after it was able to improve its U.S. finance division and reduce costs. Rio Tinto's profits more than tripled in the first half, and the company made plans to increase output in Australia and Africa.
Newsweek sold; Barnes and Noble on block
The Washington Post Company agreed to sell the 77-year-old Newsweek magazine to stereo tycoon Sidney Harman. Barnes and Noble put itself up for sale as digital books eroded its traditional business.
Global economic news
Global manufacturing activity slowsGrowth in manufacturing activity slowed in many of the world's major economies in July; the weaker pace indicates that factories will not be the strong driver of growth that they were earlier in the year. Growth slowed in a large portion of Asia, with China's manufacturing activity expanding at the slowest pace in 17 months amid tightening measures and uncertain global demand. In Europe, however, activity strengthened.
ECB and BOE keep rates steady
The European Central Bank and Bank of England kept their main interest rates unchanged this week. ECB President Jean-Claude Trichet said Europe is recovering faster than forecast and money markets are improving. Markets saw these remarks as an indication that the ECB is looking for ways to phase out liquidity tools put in place to fight the financial crisis.
Wheat prices rise after Russia bans exports
Wheat futures prices in Europe and the United States soared to their highest levels in 23 months after Russia said it would ban grain exports because of a severe drought. That move has heightened concerns about global supplies of grain and the possible impact on food prices. Russia's troubles are all the more problematic because many of the world's wheat exporters have also experienced crop problems. Canada has been hit with heavy rains, Australia has battled locusts, and part of the wheat-growing region in the European Union has, like Russia, been hit by drought.
Greece hits austerity targets
Greece met European Union and International Monetary Fund austerity targets, but monitors warned of overspending at local levels.
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Sources: MFS research; The Wall Street Journal; The Wall Street Journal Online; Bloomberg News; Financial Times; boston.com.
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