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July 29: Jobless claims declined by 11,000 to 457,000

Source: Bloomberg

Washington -- The number of Americans filing first-time claims for unemployment insurance fell to 457,000 last week, a figure that signals the labor market will be slow to improve even as the economy grows. Initial jobless claims dropped by 11,000 in the week ended July 24 from a revised 468,000, Labor Department figures showed today in Washington. Applications were in line with the median forecast in a Bloomberg News survey. The number of people receiving unemployment benefits rose, while those getting extended payments declined.

Limited job gains may restrain consumer spending, underscoring forecasts the recovery will cool in the second half. A slowing in the pace of economic growth as seen by companies such as International Paper Co. may dissuade businesses from adding to payrolls. “The underlying pace of claims has not made any measurable improvement,” said Ellen Zentner, senior U.S. macro economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “Businesses are investing in equipment but other than that there’s little impetus” for them to hire, she said. See full story.

July 28: Durables show investment picking up

Source: Bloomberg

Washington -- Business investment in the U.S. picked up in the second quarter, helping sustain the economic recovery, June data on durable goods showed today. Orders for non-military capital equipment excluding aircraft climbed 0.6 percent last month after jumping 4.6 percent in May, more than previously reported, figures from the Commerce Department showed in Washington. Sales of such gear, used in calculating gross domestic product, also rose.

“Business investment remains the bright spot in an otherwise dull economic outlook,” said Jay Feldman, an economist at Credit Suisse in New York. “Corporations have actually underinvested quite dramatically in recent years and, to some extent, we are catching up.” The Federal Reserve said today that during the past two months, growth slowed in some areas as commercial real estate remained weak and home sales dropped after the expiration of a tax credit. The central bank’s so-called Beige Book business survey also indicated that while retail sales were “generally positive,” the gains were “modest.” See full story.

July 27: Job worries darken July consumer confidence

Source: Marketwatch

Washington -- Consumer confidence fell in July on concerns about jobs and business conditions, following a sharp decline in June, the Conference Board reported Tuesday. July's consumer confidence index fell to 50.4 -- the lowest level since February -- from an upwardly revised 54.3 in June. "Concerns about business conditions and the labor market are casting a dark cloud over consumers that is not likely to lift until the job market improves," said Lynn Franco, director of the Conference Board's consumer research center, in a statement. "Given consumers' heightened level of anxiety, along with their pessimistic income outlook and lackluster job growth, retailers are very likely to face a challenging back-to-school season."

July's confidence reading should be closer to 90 than 50, given how long the economy has been recovering, Dan Greenhaus, chief economic strategist with Miller Tabak, wrote in a research note. "While July provides some measure of stability for this index following the exceptionally large drop in June, by any measure, consumer confidence remains extraordinarily depressed in comparison to previous readings," Greenhaus wrote. Consumers' view of current conditions fell in July, as did their short-term outlook. See full story.

July 26: June sales of new homes climb more than forecast

Source: Bloomberg

Washington -- Sales of U.S. new homes rose in June more than forecast following an unprecedented collapse the prior month, a signal the worst of the slump triggered by the end of a government tax credit is over. Purchases increased 24 percent from May to an annual pace of 330,000, figures from the Commerce Department showed today in Washington. The rate was the second-lowest in data going back to 1963 after May’s downwardly revised 267,000 pace.

The lowest mortgage rates on record may help underpin demand, stabilizing the industry that triggered the worst recession since the 1930s. Even so, increasing foreclosures are swelling the number of unsold existing homes, putting pressure on prices and keeping buyers on the sidelines as unemployment hovers near 10 percent and the economy cools. Sales are “bouncing along the bottom,” said Eric Green, chief market economist at TD Securities Inc. in New York, who forecast an increase to 335,000. “The future is going to be dependent on job growth. There’s no demand because confidence is weak and employment is weak.”

July 23: China may switch to currency basket for forex rate

Source: Marketwatch

Los Angeles -- A top Chinese central bank official suggested switching away from the U.S. dollar as a benchmark for the yuan's foreign-exchange rate, switching instead to a basket of currencies, according to remarks published Thursday. In comments posted to the People's Bank of China Web site, the central bank's Deputy Gov. Hu Xiaolian said using a basket of currencies from the nation's top trading partners would allow the Chinese yuan to better reflect trading fundamentals.

"Compared with pegging to a single currency, the exchange-rate regime with reference to a basket of currencies will help adjust exports and imports, current account, and balance of payment in a more effective manner," she said. See full story.

July 22: Jobless claims in U.S. increased more than forecast

Source: Bloomberg

Washington -- More Americans than projected filed applications for unemployment benefits last week, a sign firings remain elevated even as the economy is expanding. Initial jobless claims jumped by 37,000 to 464,000 in the week ended July 17, exceeding the highest estimate of economists surveyed by Bloomberg News, Labor Department figures showed today in Washington. The survey median projected claims would climb to 445,000. The number of people receiving unemployment insurance and those getting extended payments dropped.

The figures underscore projections that a lack of jobs will restrain consumer spending, the biggest part of the economy, and lead to slower growth in the second half of the year. It will probably take a “significant amount of time” to restore the almost 8.5 million jobs lost in 2008 and 2009, Federal Reserve Chairman Ben S. Bernanke told Congress yesterday. “Underlying demand for labor is fairly sluggish,” said Omair Sharif, an economist at RBS Securities in Stamford, Connecticut, who had forecast claims would rise to 460,000. “If that continues, it will have an impact on wages and salaries and clearly have some negative implications for consumer spending.” See full story.

July 21: Bernanke calls economy's outlook uncertain

Source: Marketwatch

Washington -- Federal Reserve Board Chairman Ben Bernanke said Wednesday that the outlook for the U.S. economy is "unusually uncertain" and that the Fed is willing to do more if growth proved to be weaker than forecast. "We remain prepared to take further policy actions as needed to foster a return" to full employment with low and stable inflation, Bernanke said in written testimony delivered before the Senate Banking Committee.

Bernanke did not go further and elaborate on what actions the Fed might take. This disappointed the markets and Wall Street economists. The stock market sank as soon as the afternoon's earliest Bernanke headlines hit. In the question-and-answer session, when asked to elaborate on potential further actions, the Fed chairman said the central bank had begun a review of the specific policy steps it may take if the economy were to slow dramatically. "If the recovery seems to be faltering, then we at least need to review our options," he said. "We have not fully done that review." See full story.

July 20: Payrolls fall in 27 U.S. states, led by California

Source: Bloomberg

New York -- Payrolls decreased in 27 U.S. states in June, led by California and New York, signaling the slowdown in hiring is broad-based. Employers in California cut staff by 27,600 workers last month and those in New York reduced employment by 22,500, the Labor Department said today in Washington. Tennessee, Arizona and New Mexico rounded out the five states with the biggest job losses.

The U.S. lost 125,000 jobs last month as the government cut temporary workers conducting the 2010 census and private payrolls rose a less-than-forecast 83,000, according to Labor Department figures issued July 2. The data signal companies are becoming reticent to hire as the economy cools. “Businesses are looking at what’s going on in Europe and the stock outlook and people are becoming a little more skittish,” Marisa Di Natale, a director at Moody’s Economy.com in West Chester, Pennsylvania, said before the report. “We may see that for a couple of more months until we start to see some real momentum in some sector of the economy.” See full story.

July 19: Home builders' optimism falls to 15-month low

Source: Marketwatch

Washington -- U.S. home builders are turning increasingly pessimistic about their business after home sales dried up when a federal subsidy expired, according to the latest survey by the National Association of Home Builders. The NAHB/Wells Fargo housing market index fell two points to 14 in July, down from a downwardly revised 16 in June. It's the lowest since April 2009, the NAHB said Monday. At 14, the index shows that about one in seven builders has a favorable view of the housing market. And builders' views on prospective sales were the gloomiest since March 2009.

"The pause in sales following expiration of the home buyer tax credits is turning out to be longer than anticipated due to the sluggish pace of improvement in the rest of the economy," said David Crowe, chief economist for the builders' advocacy and lobbying group. The decline in the builders' index in July "reflects a number of underlying market conditions that builders are seeing, including hesitant home buyers, tight consumer credit, and continuing competition from foreclosed and distressed properties that are priced below the cost of construction," Crowe said. Still, Crowe said he expects sales to rise about 10% this year, citing low mortgage rates, affordable prices and favorable demographic trends. See full story.

July 16: U.S. July consumer sentiment plummets

Source: Marketwatch

Washington -- U.S. consumer sentiment plummeted in early July, hitting the lowest level since August, according to survey results released Friday by Reuters and the University of Michigan. The UMich index fell to 66.5 in early July from 76 in late June as consumers have been worried about weak hiring and a slowly healing economy. The June reading was the highest level in more than two years. The average level of the index is around 87. Read more about sentiment's mysterious free fall.

The reading has only dropped this much or more seven times. The data goes back to 1978. The drop of 9.5 points in early July compares with a drop of 9.7 points following the terror attacks of Sept. 11, 2001. Economists surveyed by MarketWatch had expected a July reading of 74.3. UMich will produce a final July sentiment reading later this month. Respondents are pessimistic about their future financial prospects, and the UMich results are "discouraging," wrote analysts at Barclays Capital Research in a research note. See full story.

July 15: Factories slowing in July, sentiment surveys say

Source: Marketwatch

Washington -- The manufacturing sector, which has been the strength of the U.S. economy, is slowing down, according to three separate reports released by the Federal Reserve on Thursday. The timeliest data show further weakening in July after manufacturing output fell in June for the first time in a year. "Economic growth continues to soften into the third quarter," wrote Neil Dutta, an economist for Bank of America's Merrill Lynch.

U.S. stock markets were down about 0.8% after the Philadelphia Federal Reserve Bank said the Philly Fed manufacturing sentiment survey declined to 5.1 in July from 8 in June and 21.4 in May. The reading is above zero, which shows the sector is still expanding, but the breadth of that expansion has diminished. Economists surveyed by MarketWatch were expecting a small gain in the Philly Fed to 10 in July. The Empire state index from the New York Fed also fell to 5.1 in July from 19.6 in June, compared with expectations of a drop to 19. "Today's U.S. reports revealed a remarkably weak round of July sentiment readings from both the New York and Philly Fed surveys that trumped the surprisingly firm round of industrial production figures for June, to leave a market focused on the slowing in the U.S. factory sector as we pass the mid-year mark," wrote analysts for Action Economics. See full story.

July 14: Fed to mull stimulus moves just in case

Source: Marketwatch

Washington -- Federal Reserve officials agreed in June that it would be a good idea to study what to do if the economy were to worsen severely, according to a summary of the closed-door meeting released on Wednesday. Fed officials agreed that the outlook for the recovery had softened between April and June, with financial market tension due the European fiscal crisis as the leading culprit. But officials said the changes to the outlook were "relatively modest" and "as not warranting policy accommodation beyond that already in place."

However, just as the Fed prepares for the eventual exit from its ultra-low monetary policy, Fed officials noted that "the committee would need to consider whether further policy stimulus might become appropriate if the outlook were to worsen appreciably," according to the minutes. The summary released by the Fed does not refer to any Fed officials by name. Sometimes the minutes will show whether a proposal is supported by "some" or "many" officials, but often the sentiments are expressed as if they are shared by all of the officials. With interest rates already just above zero, analysts said the Fed doesn't have too many bullets left to ease policy. "It is not clear to me that the Fed could do anything about it at this point. They don't have a lot of levers to pull," said Jerry Webman, chief economist at OppenheimerFunds. See full story.

July 13: Moody's downgrades Portugal's bond ratings by two notches

Source: LA Times

New York -- Moody's Investors Service on Tuesday downgraded Portugal's government bond ratings by two notches, citing the likelihood of further deterioration in the nation's finances and weak economic growth prospects. The firm cut the ratings to A1 from Aa2 and said the outlook was now stable, with the upside and downside risks evenly balanced. Moody's had placed the ratings on review for possible downgrade May 5. Moody's said it expected the Portuguese government's debt metrics to continue to deteriorate for at least two to three more years.

The debt-to-gross-domestic-product and debt-to-revenues ratios are likely to reach 90% and 210%, respectively, before eventually stabilizing if the budget is brought under control. "Moody's also remains concerned about the economy's medium-term growth potential," said Anthony Thomas, senior analyst in Moody's sovereign risk group, who added that Portugal's government is projected to remain highly indebted for the foreseeable future. The two other major rating firms — Standard & Poor's and Fitch Ratings — have also lowered their ratings on Portugal in recent months. In late April, S&P cut the country's rating to A-minus, and Fitch downgraded Portugal to AA-minus in March. See full story.

July 12: Deficits are biggest recovery risk for executives, Manley says

Source: Bloomberg

Ottawa -- John Manley, who chaired a meeting of global executives that coincided with the Group of 20 leaders summit last month, said there is a consensus among business chiefs worldwide that government deficits are the biggest threat to an economic recovery. Members of the so-called B-20 who met in Toronto agreed that reducing deficits is “a necessary precondition” for a lasting recovery, Manley, 60, said during a July 9 interview in Bloomberg’s Ottawa office. “There was no dissent” among representatives of companies that included HSBC Holdings Plc, Europe’s biggest lender, and OAO Severstal, Russia’s largest steelmaker.

“You just can’t keep stoking this fire,” Manley said. “Greece has gone ahead of others but others are heading in the same direction, and the sustainability of the deficits at the level they have been is very much in question.” Curbing deficits became a greater priority after concerns that countries such as Greece and Spain could default on their debts led European policy makers to offer a 750 billion euro ($948 billion) rescue package on May 10. The Markit iTraxx SovX Western Europe Index of default swaps insuring against losses on debt of 15 governments reached an all-time high last month. See full story.

July 9: Greenspan says economy may be undergoing a 'pause'

Source: Bloomberg

San Francisco -- Former Federal Reserve Chairman Alan Greenspan said the U.S. economy may be undergoing what he called a “pause,” and that he can’t rule out the possibility of a so- called double-dip recession. “Of course, there’s a possibility,” Greenspan said in an interview on CNBC today. “The trouble is there’s always a possibility in both directions.” Greenspan, who ran the central bank from 1987 to 2006, said “it’s more than likely” that a “pause” is occurring in the world’s largest economy. Inventory accumulation “has stopped” and production “has flattened out,” the 84-year-old former central banker said.

Companies added 83,000 workers to their payrolls in June, less than forecast by economists, the Labor Department report said last week. The report capped a month of data on housing and manufacturing that point to a slowdown in the economy. Stocks rose today, giving the Standard & Poor’s 500 Index its first-three day rally since April, after the Labor Department reported that claims for unemployment benefits fell last week more than forecast and the International Monetary Fund raised its estimate for global growth in 2010. “Stock market behavior over the last several days” has been “encouraging,” Greenspan said after S&P 500 index rose 0.9 percent to 1,070.25 at 4 p.m. in New York, its highest close since June 28. “Banks are scared, but, then again, so are businesses.’ See full story.

July 8: U.S. recovery gathering strength but risks remain, IMF says

Source: Marketwatch

Washington -- The U.S. economy is gathering strength but the high unemployment rate will continue to restrain consumer spending, according to a report prepared by the staff of the International Monetary Fund released Thursday. The report comes at the end of an annual checkup of the U.S. economy conducted by the IMF staff. The IMF executive board will review the report and make recommendations for actions later this summer. The general theme of the diagnosis is that the U.S. economy and financial system have improved since the Great Recession but are not out of the woods by any means. The IMF forecast GDP growth of 3.25% in 2010, decelerating a bit to 3% in 2011. Inflation will remain very low while the unemployment rate will remain above 9%.

The key task ahead for the Obama administration is to get the deficit under control without putting the recovery in jeopardy, the IMF said. The debt held by the public could reach 95% of GDP by 2020, the IMF said. Tougher budget measures are needed that are currently contemplated, the report said. There is room for stimulus in the short term but it should be carefully targeted and offset in future years. The European debt crisis has tipped the risks in the forecast to the downside, and weak economic data over the last few weeks, since the IMF report was written, have only increased that risk, IMF officials said. See full story.

July 7: Sell bonds, buy precious metals as 'refuge,' Rogers says

Source: Bloomberg

Kuala Lumpur -- Investors should sell bonds and buy commodities like silver and rice as a “refuge” as the world economy may continue having problems, Jim Rogers, chairman of Rogers Holdings said. “Bonds are not a good place to invest in,” Rogers said at a conference in Kuala Lumpur today. “You should own commodities because that’s your only refuge” whether it’s silver or rice, said Rogers, who predicted the start of the global commodities rally in 1999. Gold has gained 8.3 percent this year, leading advances in precious metals, as investors seek haven assets to protect their wealth amid concern the global economic recovery will falter. Still, commodities overall capped their worst quarter in more than a year on investors’ concern that slower growth from China to the U.S. will sap demand.

The best place to be is in commodities and other natural resources, including precious metals like silver, platinum and palladium, said Rogers, who co-founded the Quantum Hedge Fund in 1970. Commodities are good to buy as supply shortages are already developing, the Singapore-based investor said. Gold prices will rise to more than $2,000 per ounce, said Rogers, without giving a timeframe. Bullion for immediate delivery declined 0.4 percent at $1,187.85 an ounce at 6:34 p.m. in Singapore. It reached a record $1,265.30 on June 21. See full story.

July 6: Service Industries in U.S. expand less than forecast

Source: Bloomberg

Washington -- Service industries in the U.S. expanded in June at a slower pace than forecast, indicating the economy was beginning to cool entering the second half. The Institute for Supply Management’s index of non- manufacturing businesses, which covers about 90 percent of the economy, fell to a four-month low of 53.8 from 55.4 in May. The June figure was less than the median forecast of 55 in a Bloomberg News survey. Readings above 50 signal expansion. Orders slowed for a third month and employment declined.

Companies such as Bed Bath & Beyond Inc. may find it harder to boost sales without faster job growth as government stimulus wanes. Private hiring last month rose less than forecast, consumer confidence plunged and home purchases fell, indicating the recovery from the worst recession since the 1930s is vulnerable. “The economy has entered a soft patch,” said Richard DeKaser, chief economist at Woodley Park Research in Washington, whose forecast of 53.9 was the closest to today’s reading among economists in the Bloomberg survey. “Households are continuing to soldier on, albeit without much vigor.” See full story.

July 2: U.S. consumer bankruptcies rise 14% in first half

Source: Bloomberg

Washington -- U.S. consumer bankruptcy filings rose 14 percent to 770,117 in the first six months of 2010 from the same period a year earlier, the American Bankruptcy Institute reported. “Years of rising consumer debt and low savings rates” are pushing totals near the record set in 2005, when proposed changes in bankruptcy law triggered a surge in filings, ABI Executive Director Samuel J. Gerdano said in a statement.

By the end of the year, more than 1.6 million bankruptcies will have been filed, Gerdano said. The number of filings each month has declined since March, he said. The information was based on data collected by the National Bankruptcy Research Center. See full story.

July 1: Manufacturing, jobless claims point to slowdown

Source: Bloomberg

Washington -- Reports on U.S. manufacturing, employment and home sales pointed to slower growth in the second half of the year, just as government spending to stimulate the economy begins to wane. The Institute for Supply Management’s manufacturing gauge fell more than forecast to 56.2 last month from 59.7 in May. A reading greater than 50 points to expansion. Other data showed contracts to buy existing homes fell 30 percent in May, and claims for jobless benefits unexpectedly rose last week. Stocks and commodities slumped and Treasuries rose on signs the global economy is cooling after manufacturing weakened in Europe and China. The data underscore concerns of Federal Reserve policy makers that financial-market turmoil sparked by Europe’s debt crisis threatens to inhibit a self-sustaining recovery in the U.S.

“The U.S. recovery is set to have a bad start to the second half” of 2010, said David Semmens, an economist at Standard Chartered Bank in New York. The pace of growth “definitely poses concerns” and won’t improve “until the labor market picks up.” Economists at JPMorgan Chase & Co. today lowered forecasts for second- and third-quarter growth, reflecting the influence of the European debt crisis on stocks, confidence and exports. The economy grew at a 3.2 percent annual rate from April through June and will expand at a 3 percent pace the following three months, down from a prior estimate of 4 percent, Michael Feroli, JPMorgan’s chief U.S. economist in New York, said in a note to clients. See full story.

June 30: Fed's Lockhart says U.S. recovery not yet sustainable

Source: Bloomberg

Washington -- Federal Reserve Bank of Atlanta President Dennis Lockhart said the U.S. economic recovery isn’t sustainable enough yet to warrant raising interest rates or shrinking the central bank’s near-record balance sheet. There’s a “small risk of deflation,” and the rebound from the worst recession since the 1930s faces risks from Europe’s debt crisis, drops in state and local spending, commercial real estate losses and the Gulf of Mexico oil spill, Lockhart said in the text of a speech today in Baton Rouge, Louisiana. Fed policy makers last week signaled Europe’s growth crisis may harm American growth, saying “financial conditions have become less supportive,” and repeated a pledge to keep interest rates near zero “for an extended period.” The U.S. economy grew at a 2.7 percent annual rate in the first quarter, less than the 3 percent estimate issued last month, according to Commerce Department data released June 25.

“Recent developments make me even more convinced that current policy is appropriate,” Lockhart said in prepared remarks to the Rotary Club of Baton Rouge. “Financial markets and many businesses are more nervous today than a few weeks and months ago, and it’s my view that monetary policy makers should hold to a guarded policy stance and evaluate carefully the risk and reward of a change of policy.” The remarks are some of the most downbeat on the U.S. economy from a Fed official in recent months. Lockhart doesn’t vote on Federal Open Market Committee decisions this year. Kansas City Fed President Thomas Hoenig has called for an increase in the Fed’s benchmark rate within months and has dissented from four FOMC decisions this year. See full story.