U.S. economic news
U.S. manufacturing sector expands in SeptemberThe Institute for Supply Management said its purchasing managers' index expanded in September for the 14th consecutive month. The reading rose to 54.4%. The overall picture, however, was less encouraging.The U.S. new orders measure fell to 51.1 from 53.1, and the production index dropped to 56.5 from 59.9. The employment gauge fell to 56.5, the lowest in six months, and the ISM's the index of export orders dropped to 54.5, the lowest level this year.
U.S. consumers spend more for second month in row
The U.S. Department of Commerce said U.S. consumer spending rose 0.4% in August after rising the same amount in July. Incomes increased 0.5% in August after a 0.2% rise in July.
Consumer confidence dips
Consumer confidence fell in September amid mounting gloom over the outlook for jobs and wages, according to the Conference Board's Consumer Confidence Index, which declined to 48.5, the weakest level since February.
Business spending on the rise
Business spending on buildings and machinery has risen since the end of the recession. An index of capital expenditures moved up 6.5 points to 93 in the third quarter, according to the Business Roundtable's quarterly CEO Economic Outlook survey of chief executives of big companies, Any number over 50 indicates expansion. After the index hit a low of -6.7 last year, firms tapped into their stockpiles of cash for business investment instead of for hiring.
Home prices rise at a slower pace
Home prices in 20 cities rose at a slower pace in July from a year earlier, according to the Standard & Poor's/Case-Shiller Home Price Indices. The group's index of property values increased 3.2% from July 2009. Ten of the 20 cities showed a year-over-year increase in prices, led by an 11% gain in San Francisco.
U.S. and global corporate news
U.S. government to sell stake in AIGThe U.S. government will sell its stake in American International Group under a plan that could end its controversial bailout sooner than many expected. The plan would involve the U.S. Department of the Treasury selling at least $50 billion of shares to private investors over months or years. While the government has recouped and even made money on its investments in many of the nation's biggest banks, AIG has been one of the biggest contributors to the government's expected loss on the Troubled Asset Relief Program (TARP.) More than $120 billion in taxpayers' support provided to AIG remains outstanding, of which $49 billion came from the TARP program. Analysts have cautioned that the sale of AIG shares could prove difficult and that a smooth and swift exit from the giant insurer was far from certain.
Prudential Financial to buy two AIG units
Meanwhile, Prudential Financial Group has agreed to buy two life insurance units from AIG for $4.8 billion in order to expand its presence in Japan. Prudential will pay $4.2 billion in cash and take on $600 million in debt and will pay for the acquisition in part through a $1.3 billion stock sale and $1.2 billion in senior notes.
Sinopec to invest $7.1 billion in Repsol
China Petroleum and Chemical, (also known as Sinopec) which is China's second-largest oil and gas producer, will invest $7.1 billion in Repsol YPF's Brazilian unit as the Spanish oil company raises funds to develop offshore projects. The acquisition is the second-largest overseas purchase by a Chinese company, taking place as the world's largest energy consumer attempts to satisfy internal demand.
Global economic news
Ireland moves to avert bailoutIreland vowed to pump billions more euros into its hardest-hit lenders in an effort to persuade investors it would not need a European Union bailout.
Chinese manufacturing growth picks up
Growth in Chinese manufacturing picked up in September, adding to evidence that China's economic recovery remains on track. The state-affiliated China Federation of Logistics and Purchasing said its purchasing managers' index, or PMI, rose to 53.8 in September, from 51.7 in August. A number above 50 shows manufacturing activity is expanding. The index has remained above 50 for 19 straight months, after slowing in late 2008 and early 2009. September's index reflected the highest level since it hit 53.9 in May.
Tankan shows Japanese manufacturers turned more pessimistic
Japanese manufacturers turned more pessimistic in their outlook for the rest of the year because of the yen's appreciation and increased uncertainty over the global economy, according to the Bank of Japan's quarterly business sentiment survey, known as the tankan.
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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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