Tag Archives: Economy

U.S. factory orders post largest increase in seven months

FILE PHOTO: Line workers spot weld parts of the frame on the flex line at Nissan Motor Co's automobile manufacturing plant in Smyrna, Tennessee, U.S., August 23, 2018. REUTERS/William DeShazer/File Photo

WASHINGTON (Reuters) – New orders for U.S.-made goods rose by the most in seven months in March amid strong demand for transportation equipment, but rising inventories and a marginal rebound in unfilled orders pointed to slower manufacturing activity.

Factory goods orders rebounded 1.9 percent, also boosted by orders for computers and electronic products, the Commerce Department said on Thursday. That was the largest rise since August 2018. Data for February was revised up to show factory orders slipping 0.3 percent instead of falling 0.5 percent as previously reported.

Economists polled by Reuters had forecast factory orders would rise 1.5 percent in March. Factory orders increased 1.7 percent compared to March 2018.

Inventories at factories increased 0.4 percent in March. The stock of unsold goods has increased in 28 of the last 29 months. Unfilled others at factories rose 0.2 percent in March after falling 0.2 percent in February.

Manufacturing, which accounts for about 12 percent of the economy, is being pressured by sluggish global demand, continued uncertainty over trade talks between the United States and China, and a large inventory build. Fading depreciation provisions for capital equipment as a result of the Trump administration’s tax restructuring has also slowed business investment, further squeezing manufacturing.

A survey on Wednesday showed a measure of national factory activity fell to a 2-1/2-year low in April.

In March, orders for machinery edged up 0.1 percent after falling 0.9 percent in the prior month. Orders for electrical equipment, appliances and components rose 0.5 percent while those for computers and electronic products jumped 2.2 percent.

Transportation equipment orders surged 7.0 percent in March after falling 2.9 percent in the prior month. Orders for civilian aircraft and parts soared 31.0 percent. Motor vehicles and parts orders increased 1.5 percent.

The Commerce Department also said March orders for non-defense capital goods excluding aircraft, which are seen as a measure of business spending plans on equipment, increased 1.4 percent instead of the 1.3 percent jump reported last week.

Orders for these so-called core capital goods were unchanged in February. Shipments of core capital goods, which are used to calculate business equipment spending in the gross domestic product report, were unchanged in March rather than slipping 0.2 percent as previously reported.

Core capital goods shipments rose 0.3 percent in February. Business spending on equipment spending stalled in the first quarter.

(Reporting by Lucia Mutikani Editing by Paul Simao) ((Lucia.Mutikani@thomsonreuters.com; 1 202 898 8315; Reuters Messaging: lucia.mutikani.thomsonreuters.com@reuters.net)

Strong growth gives U.S. leverage in China trade talks-White House adviser

U.S. President Donald Trump talks to reporters as he departs for travel to Indianapolis, Indiana from the White House in Washington, U.S., April 26, 2019. REUTERS/Jonathan Ernst

By Jason Lange and Jeff Mason

WASHINGTON (Reuters) – Strong U.S. economic growth and modest inflation are giving Washington leverage over Beijing in trade talks, the White House’s top economic adviser said on Friday as U.S. and Chinese negotiators prepared for a new round of meetings next week.

Larry Kudlow, director of the White House’s National Economic Council, also said on CNBC television that strong growth could give the Federal Reserve room to cut interest rates.

He spoke after the Commerce Department reported that first-quarter U.S. economic growth accelerated to a 3.2 percent annualized rate, driven by a smaller trade deficit and a jump in business inventories.

U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin are headed to Beijing for talks starting next Wednesday, while Chinese Vice Premier Liu He is scheduled to return to Washington on May 8.

“I hope additional progress will be made; I’m cautiously optimistic about the outcome for a deal,” Kudlow said of next week’s talks.

“China’s economy is slumping and has been slumping for quite some time,” Kudlow added. “The U.S. economy, as I say, is in this prosperity cycle with no end in sight. So we believe that does give us some leverage if you will, but we believe also that China may be open to a lot of good trade reforms.”

U.S. President Donald Trump on Friday repeated that China trade talks were “going very well,” a day after he said that he would soon host Chinese President Xi Jinping at the White House. Trump has said he expects to finalize a deal in a meeting with Xi.

Asked about prospects for a such a meeting on Fox News Channel, Kudlow said Trump would like to meet Xi and close a deal if it is “a great one for America. … We’re not there yet.”

The world’s two largest economies have been locked in a tariff war for nearly 10 months, levying hundreds of billions of dollars in duties on each other’s goods, and are trying to negotiate a way out.

The United States is demanding that China make major changes to its economic policies to better protect American intellectual property and end cyber theft of trade secrets and policies that force U.S. companies to turn over technology to Chinese firms.

Washington also wants Beijing to curb subsidies for Chinese state enterprises, increased access to China’s markets for U.S. companies and increased purchases of U.S. agricultural, energy and manufactured products by China.

China is seeking removal of U.S. tariffs on some $250 billion worth of Chinese goods imposed by Trump.

(Reporting by Jeff Mason and Jason Lange; Writing by David Lawder and Makini Brice; Editing by Chizu Nomiyama and Jonathan Oatis)

Lower mortgage rates, prices lift U.S. new home sales to one-and-a-half-year high

FILE PHOTO: A real estate sign advertising a new home for sale is pictured in Vienna, Virginia, U.S. October 20, 2014. REUTERS/Larry Downing/File Photo

By Lucia Mutikani

WASHINGTON (Reuters) – Sales of new U.S. single-family homes rose to a near 1-1/2-year high in March, boosted by lower mortgage rates and house prices.

The third straight monthly increase reported by the Commerce Department on Tuesday suggested some recovery was under way in the housing market, which hit a soft patch last year against the backdrop of higher borrowing costs and more expensive homes.

“In this housing market, affordability for buyers is key,” said Danielle Hale, chief economist at realtor.com. “This trend supports the fact that lower mortgage rates have started to entice buyers this spring and foreshadows a potential strengthening of existing home sales in the months to come.”

New home sales increased 4.5 percent to a seasonally adjusted annual rate of 692,000 units last month, the highest level since November 2017.

February’s sales pace was revised down to 662,000 units from the previously reported 667,000 units. Economists polled by Reuters had forecast new home sales, which account for about 11.7 percent of housing market sales, decreasing 2.5 percent to a pace of 650,000 units in March.

New home sales are drawn from permits and tend to be volatile on a month-to-month basis. They increased 3.0 percent from a year ago.

The median new house price dropped 9.7 percent to $302,700 in March from a year ago, the lowest level since February 2017. A separate report on Tuesday from the Federal Housing Finance Agency (FHFA) showed its house price index rose a seasonally adjusted 4.9 percent in February from a year ago.

That followed a 5.6 percent increase in January. The FHFA’s index is calculated by using purchase prices of houses financed with mortgages sold to or guaranteed by mortgage finance companies Fannie Mae and Freddie Mac.

U.S. financial markets were little moved by the new home sales data.

New home sales have not been severely impacted by the supply problems that have plagued the market for previously owned homes. A report on Monday showed home resales tumbled in March, weighed down by a persistent shortage of lower-priced houses.

Despite the broader housing market’s struggles with supply, the fundamentals for housing are strengthening. The 30-year fixed mortgage rate has dropped by about 80 basis points since November, according to data from mortgage finance agency Freddie Mac. That followed a recent decision by the Federal Reserve to suspend its three-year monetary policy tightening campaign.

In addition, house price inflation has slowed and wage growth has picked up. Still, land and labor shortages are constraining builders’ ability to break more ground on lower- priced housing projects. Investment in homebuilding contracted 0.3 percent in 2018, the biggest drop since 2010.

New home sales in the South, which accounts for the bulk of transactions, increased 3.6 percent in March to their best level since July 2007. Sales in the Midwest soared 17.6 percent to an 11-month high, while those in the West surged 6.7 percent to their strongest level in a year.

But sales in the Northeast tumbled 22.2 percent.

There were 344,000 new homes on the market last month, down 0.3 percent from February. At March’s sales pace it would take 6.0 months to clear the supply of houses on the market, down from 6.3 months in February.

About 62 percent of the houses sold last month were either under construction or yet to be built.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

U.S. trade deficit hits eight-month low as Chinese imports drop

FILE PHOTO: A container ship is shown at port in Long Beach, California, U.S. July 16, 2018. REUTERS/Mike Blake

By Lucia Mutikani

WASHINGTON (Reuters) – The U.S. trade deficit fell to an eight-month low in February as imports from China plunged, suggesting President Donald Trump’s “America First” agenda was starting to bear fruit.

The surprise narrowing in the trade gap reported by the Commerce Department on Wednesday also implied a much stronger pace of U.S. economic growth in the first quarter than initially anticipated at the start of the year.

The 20.2 percent drop in imports from China was the main driver behind a nearly 3.4 percent improvement in the U.S. trade deficit to $49.4 billion, data from the Commerce Department showed. Economists polled by Reuters had forecast the trade shortfall would widen to $53.5 billion in February.

The politically sensitive goods trade deficit with China – a focus of the Trump administration’s protectionist trade policy – decreased 28.2 percent to $24.8 billion in February as U.S. exports to the world’s No. 2 economy jumped 18.2 percent.

But even with the improvement, the trade deficit remains large and February’s drop in Chinese imports could be temporary. The trade data have been volatile in recent months amid big swings between exports and imports, because of the United States’ conflicts with trading partners, including China.

Washington last year imposed tariffs on $250 billion worth of goods imported from China, with Beijing retaliating with duties on $110 billion worth of American products. Trump has delayed tariffs on $200 billion worth of Chinese imports and talks to end the trade impasse continue.

The U.S. goods trade deficit declined 1.7 percent to $72.0 billion in February, also the lowest level since last June.

When adjusted for inflation, the overall goods trade deficit fell $1.8 billion to $81.8 billion in February. The average goods trade deficit for January and February is below the fourth-quarter average. This suggests that trade could provide a boost to gross domestic product in the first quarter after being neutral in the October-December period.

SLOWING DOMESTIC DEMAND

Growth estimates for the January-March quarter are in a 1.5 percent to 2.3 percent annualized range, largely reflecting an accumulation of inventories amid slowing domestic demand. The economy grew at a 2.2 percent rate in the fourth quarter, slowing from the July-September period’s brisk 3.4 percent pace.

U.S. Treasury yields rose slightly after the release of the data. U.S. stock index futures were trading higher while the dollar was largely unchanged against a basket of currencies.

The trade deficit in February was pushed down by a 1.1 percent jump in exports to $209.7 billion. Exports of services were the highest on record.

Goods exports increased 1.5 percent to $139.5 billion in February. The surge in goods exports is a hopeful sign for global economic growth, which has showed signs of slowing in recent months.

Exports of motor vehicles and parts increased by $0.6 billion in February. Shipments of civilian aircraft soared by $2.2 billion in February. But commercial aircraft exports are likely to decline in the months ahead following Boeing’s decision to suspend deliveries of its troubled 737 MAX aircraft.

The MAX planes have been grounded indefinitely following two deadly crashes.

There was a modest increase in soybean exports.

In February, imports rose 0.2 percent to $259.1 billion. Consumer goods imports increased by $1.6 billion in February, led by a $2.1 billion rise in imports of cellphones and other household goods. Imports of industrial supplies and materials fell by $1.2 billion. Capital goods imports rose slightly.

Crude oil imports fell to 173.7 million barrels, the lowest since March 1992, from 223.1 million barrels in January. An increase in domestic production has seen the United States become less dependent on foreign oil.

Imported oil prices averaged $46.89 per barrel in February, up from $42.59 in January.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

U.S. producer prices post biggest rise in five months

FILE PHOTO: A customer shops for a turkey at a Walmart store in Chicago, Illinois, U.S., November 20, 2018. REUTERS/Kamil Krzaczynski/File Photo

WASHINGTON, (Reuters) – U.S. producer prices increased by the most in five months in March, but underlying wholesale inflation was tame.

The Labor Department said on Thursday its producer price index for final demand rose 0.6 percent last month, lifted by a surge in the cost of gasoline. That was the largest increase since last October and followed a 0.1 percent gain in February.

In the 12 months through March, the PPI rose 2.2 percent after advancing 1.9 percent in February. Economists polled by Reuters had forecast the PPI would climb 0.3 percent in March and increase 1.9 percent on a year-on-year basis.

A key gauge of underlying producer price pressures that excludes food, energy and trade services was unchanged last month after ticking up 0.1 percent in February. The so-called core PPI increased 2.0 percent in the 12 months through March. That was the smallest annual increase since August 2017 and followed a 2.3 percent rise in February..

Data on Wednesday showed consumer prices rose by the most in 14 months in March, driven by more expensive gasoline. But core inflation remained muted amid a plunge in the cost of apparel.

Slowing domestic and global growth are keeping inflation contained. Wage inflation has also been moderate despite a tight labor market.

Minutes of the Federal Reserve’s March 19-20 policy meeting published on Wednesday described inflation as “muted,” though officials expected it to rise to or near the U.S. central bank’s 2 percent target. The Fed’s preferred inflation measure, the core personal consumption expenditures (PCE) price index, is currently at 1.8 percent.

Last month, wholesale energy prices jumped 5.6 percent, with gasoline prices shooting up 16.0 percent, the most since August 2009. Energy prices rose 1.8 percent in February.

Gasoline accounted for over 60 percent of the 1.0 percent rise in goods prices last month. Goods prices increased 0.4 percent in February.

Wholesale food prices rose 0.3 percent in March, reversing a 0.3 percent drop in the prior month. Core goods prices rose 0.2 percent after edging up 0.1 percent in February.

The cost of services increased 0.3 percent in March after being unchanged in the prior month. Prices for healthcare services fell 0.2 percent last month. There was a sharp drop in the cost of hospital outpatient services. Those healthcare costs feed into the core PCE price index.

(Reporting by Lucia Mutikani Editing by Paul Simao) ((Lucia.Mutikani@thomsonreuters.com; 1 202 898 8315; Reuters Messaging: lucia.mutikani.thomsonreuters.com@reuters.net)

U.S. job openings hit 11-month low; quits rate stagnates

FILE PHOTO: A "Help Wanted" sign sits in the window of a shop in Harvard Square in Cambridge, Massachusetts, U.S., February 11, 2019. REUTERS/Brian Snyder/File Photo

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. job openings dropped to an 11-month low in February and hiring decreased, which could partially explain a sharp slowdown in job growth during that month.

Still, the labor market remains a pillar of support for the economy amid signs that activity was easing because of the fading boost from a $1.5 trillion tax cut package and the effects of interest rate increases over the last few years. The economy is also facing headwinds from slowing global growth and the United States’ trade war with China.

“The February job openings data reinforced that the labor market weakened in February but there isn’t any cause for concern,” said Ryan Sweet, a senior economist at Moody’s Analytics in West Chester, Pennsylvania.

Job openings, a measure of labor demand, tumbled by 538,000 to a seasonally adjusted 7.1 million, the Labor Department said in its monthly Job Openings and Labor Turnover Survey, or JOLTS, report on Tuesday. The drop was the biggest since August 2015. The level was the lowest since March 2018.

Vacancies in the accommodation and food services industry fell by 103,000 jobs in February. There were 72,000 fewer job openings in the real estate and rental and leasing sector. Job openings in the transportation, warehousing and utility sector dropped by 66,000.

Nonfarm payrolls increased by only 33,000 jobs in February, the fewest since September 2017. The near-stall in job gains was partially blamed on colder weather and also viewed as payback after robust increases in December and January.

Job growth picked up in March, with the economy creating 196,000 positions, the government reported last Friday.

WORKERS STILL SCARCE

The drop in job openings in February likely does not change the theme of labor shortages in the economy. A survey of small businesses published on Tuesday found that just over a fifth of owners reported difficulties finding qualified workers as their “single most important business problem” in March.

According to the survey from the NFIB, 39 percent of small business owners reported job openings they could not fill in March. Thirty-three percent said they had openings for skilled workers and 14 percent have vacancies for unskilled labor.

Economists expect monthly job growth to average roughly 150,000 this year, stepping down from 223,000 in 2018.

“There are still millions of help wanted signs out there in the country so we hesitate to revise our outlook for the labor market overall,” said Chris Rupkey, chief economist at MUFG in New York.

The dive in job openings in February pushed down the vacancies rate to 4.5 percent from 4.8 percent in January. Hiring fell to 5.7 million in February from 5.8 million in the prior month. The decrease in hiring was led by the construction sector, where hiring fell by 73,000.

Hiring in the nondurable goods manufacturing industry dropped by 33,000 in February. Hiring by state and local government education departments fell 22,000.

The number of workers voluntarily quitting their jobs was little changed at 3.5 million in February, keeping the quits rate at 2.3 percent for a ninth straight month.

The quits rate is viewed by policymakers and economists as a measure of job market confidence. The worker reluctance to switch jobs is despite the tight labor market conditions that are steadily driving up wages.

“This is not as many quits as you would expect in such a tight labor market, when workers are in higher demand,” said Nick Bunker, an economist at Indeed Hiring Lab. “Though perhaps this isn’t surprising in the short term given that the ratio of unemployed workers to job openings has been rising.”

Layoffs increased in February, lifting the layoffs rate to 1.2 percent from 1.1 percent in January. There were increases in layoffs in the professional and businesses services, and healthcare and social assistance sectors in February.

(Reporting By Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci)

Trump says U.S.-China trade deal may be reached in four weeks

U.S. President Donald Trump talks with with China's Vice Premier Liu He in the Oval Office of the White House in Washington, U.S., April 4, 2019. REUTERS/Jonathan Ernst

By Jeff Mason and David Lawder

WASHINGTON (Reuters) – U.S. President Donald Trump said on Thursday the United States and China were close to a trade deal that could be announced within four weeks, while warning Beijing that it would be difficult to allow trade to continue without a pact.

The two countries are engaged in intense negotiations to end a months-long trade war that has rattled global markets, but hopes of a resolution soared after both sides expressed optimism following talks in Beijing last week.

Speaking to reporters at the White House at the start of a meeting with Chinese Vice Premier Liu He, Trump said some of the tougher points of a deal had been agreed but there were still differences to be bridged.

“We’re getting very close to making a deal. That doesn’t mean a deal is made, because it’s not, but we’re certainly getting a lot closer,” Trump said in the Oval Office.

“And I would think with, oh, within the next four weeks or maybe less, maybe more, whatever it takes, something very monumental could be announced.”

Trump said he would hold a summit with Chinese President Xi Jinping if there were a deal.

Xi assured Trump that text of the China-U.S. trade could be finalized soon, in a message conveyed by Liu He.

According to state-run news agency Xinhua, Liu He told Trump that Xi believed under his and Trump’s leadership, China-U.S. relations will make new and greater progress.

Xi said that in the past month or more, the two sides’ trade teams had maintained close contact and “achieved new and substantive progress on issues in the text of two countries’ trade agreement”.

“I hope the two sides’ trade teams can continue working in the spirit of mutual respect, equality, and mutual benefit to resolve each other’s concerns, and finish negotiations on the text of the China-U.S. trade agreement soon,” Xi said to Trump through Liu.

KEEPING LEVERAGE

Trump declined to say what would happen to U.S. tariffs on $250 billion worth of goods as part of a deal. China wants the tariffs lifted, while U.S. officials are wary of giving up that leverage, at least for now.

Asked about the benefits of an agreement for China, Trump said: “It’s going to be great for China, in that China will continue to trade with the United States. I mean, otherwise, it would be very tough for us to allow that to happen.”

Goods trade between the United States and China, the world’s two largest economies, totaled $660 billion last year, according to U.S. Census Bureau data, consisting of imports of $540 billion from China and $120 billion in exports to China.

On China’s behalf, Liu cited “great progress” in the talks because of Trump’s direct involvement and expressed hope that the talks would lead to “a good result.”

U.S. SEEKS SWEEPING CHANGES

Trump has previously threatened to impose punitive tariffs on all imports from China, more than a half-trillion dollars worth of products.

U.S. Trade Representative Robert Lighthizer, who is leading the talks for the Trump administration, said there were still some “major, major issues” to resolve and praised Liu’s commitment to reform in China.

Asked about the remaining sticking points, Trump mentioned tariffs and intellectual property theft. He said he would discuss tariffs with Liu in their meeting.

“Some of the toughest things have been agreed to,” Trump said. He later said that an enforcement plan for a deal remained a sticking point as well.

“We have to make sure there’s enforcement. I think we’ll get that done. We’ve discussed it at length,” he said.

Lighthizer and Treasury Secretary Steven Mnuchin are holding talks in Washington with a Chinese delegation this week after meeting together in Beijing last week. The current round of talks is scheduled to go through Friday and possibly longer.

Hopes that the talks were moving in a positive direction have cheered financial markets in recent weeks. But U.S. stocks were mixed on Thursday as investors waited for more developments in the trade negotiations, with the Dow Jones industrial Average slightly higher, and the S&P 500 and Nasdaq Composite slightly lower. [.N]

The United States is seeking reforms to Chinese practices that it says result in the theft of U.S. intellectual property and the forced transfer of technology from U.S. companies to Chinese firms.

Administration officials initially envisioned a summit between Trump and Xi potentially taking place in March, but some U.S. lawmakers and lobbying groups have said recently they were told that the administration was now aiming for a deal in late April.

OUTSTANDING ISSUES

White House economic adviser Larry Kudlow said last week that the talks were “not time-dependent” and could be extended for weeks or even months longer.

While some reform pledges by Beijing are largely set, including an agreement to avoid currency manipulation, an enforcement mechanism to ensure that China keeps its pledges and the status of U.S. tariffs on $250 billion worth of Chinese goods must be resolved.

“China has been very clear, publicly and privately, that they would like to see all the tariffs removed,” U.S. Chamber of Commerce international affairs chief Myron Brilliant told reporters on Tuesday.

“The (Trump) administration has been equally clear that they want to keep some of the tariffs in place as a way to have leverage over China fulfilling its obligations under whatever final package is reached.”

(Reporting by Jeff Mason and David Lawder; Additional reporting by Chris Prentice and Michael Martina in BEIJING; Editing by Peter Cooney, Simon Cameron-Moore and Michael Perry)

Americans filing applications for unemployment benefits fall to lowest level since 1969

FILE PHOTO - People attend the Executive Branch Job Fair hosted by the Conservative Partnership Institute at the Dirksen Senate Office Building in Washington, U.S., June 15, 2018. REUTERS/Toya Sarno Jordan/File Photo

By Lucia Mutikani

WASHINGTON (Reuters) – The number of Americans filing applications for unemployment benefits fell to a more than 49-year low last week, pointing to sustained labor market strength despite slowing economic growth.

Other data on Thursday showed U.S.-based companies announced fewer layoffs in March, but job cuts for the first quarter were the highest since 2015. The economy is losing momentum as the stimulus from a $1.5 trillion tax cut package fades

Initial claims for state unemployment benefits declined 10,000 to a seasonally adjusted 202,000 for the week ended March 30, the lowest level since early December 1969, the Labor Department said. Data for the prior week was revised to show 1,000 more applications received than previously reported.

Economists polled by Reuters had forecast claims rising to 216,000 in the latest week. The Labor Department said only claims for California were estimated.

The claims data has shown no significant pickup in layoffs and there have been reports of companies reluctant to let go of workers amid a growing shortage of skilled labor. The scarcity of workers contributed to a recent slowdown in hiring.

Job growth has slowed from last year’s roughly 225,000 monthly average pace. The pace of increase, however, remains more than sufficient to keep up with growth in the working age population, holding down the unemployment rate.

U.S. Treasuries prices pared gains after the data, while the dollar was little changed against a basket of currencies.

The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 4,000 to 213,500 last week, the lowest level since early October 2018.

The claims data has no bearing on March’s employment report, which is scheduled for release on Friday. According to a Reuters survey of economists, nonfarm payrolls likely increased by 180,000 jobs last month after a meager 20,000 in February, which was seen as pay-back after robust gains in the prior two months.

The unemployment rate is forecast unchanged at 3.8 percent.

A separate report on Thursday from global outplacement consultancy Challenger, Gray & Christmas showed planned job cuts by U.S.-based employers dropped 21 percent to 60,587 in March.

However, layoffs in the first quarter jumped 10.3 percent to 190,410 from the last three months of 2018. That was the highest since the third quarter of 2015 and was partly blamed on “economic uncertainty and fears of an upcoming downturn.”

Retailers continued to lead job cuts, purging 46,061 positions in the first quarter. The automotive sector eliminated 8,838 jobs in March, leading to 15,887 layoffs by auto manufacturers and suppliers in the first quarter. Redundancies were also high in the energy and financial sectors.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

Erdogan fights to hold Turkey’s cities in bitter election battle

An election banner of Turkish President Tayyip Erdogan, with the Byzantine-era monument of Hagia Sophia in the background, is pictured in Istanbul, Turkey, March 28, 2019. REUTERS/Murad Sezer

By Dominic Evans and Ali Kucukgocmen

ISTANBUL (Reuters) – Less than a year after Tayyip Erdogan celebrated election triumph with fireworks in Ankara, Turkey’s all-powerful leader faces the embarrassment of losing his capital in local polls marred by bitter campaign rhetoric and economic storm clouds.

Erdogan has ruled Turkey for 16 years with an ever-tightening grip and his June 2018 national election victory vastly expanded his presidential powers, alarming Western allies who fear Turkey is drifting deeper into authoritarianism.

But the 65-year-old president could be brought down to earth on Sunday when Turks vote in municipal elections which threaten to inflict the first defeat for his Islamist-rooted AK Party in Ankara or the country’s biggest city and business hub, Istanbul.

Erdogan has portrayed the vote as an existential choice for Turkey, blasting his domestic opponents as terrorist supporters and even invoking the New Zealand mosque killings as examples of the broader threats he says Turkey faces.

“It is a matter of survival against those who want to divide this country and tear it to pieces,” he told hundreds of cheering supporters at a rally earlier this month in central Istanbul’s Eyup Sultan district, next to a 19th-century mosque.

He has toured the country for weeks speaking up to eight times a day – a punishing routine which showcased the supreme campaigning skills that have made him the most popular and powerful leader since modern Turkey’s founder, Mustafa Kemal Ataturk.

It also highlighted, his critics say, Erdogan’s growing reliance on divisive rhetoric since a currency crisis in August ended years of strong economic growth which had helped deliver successive election wins for his AKP, attracting support from well beyond its conservative Muslim core.

A steep fall in the lira last Friday revived memories of last year’s meltdown, and provoked a flurry of stop-gap measures to halt a slump on the eve of voting which could erode support.

For many Turks, the vote is all about whether Erdogan can still deliver a decent standard of living.

“A crushing majority of people – including of course voters from the government party and its partners – think the economy is the number one problem in Turkey,” said political analyst Murat Yetkin.

Some polls give the main opposition Republican People’s Party (CHP) candidate in Ankara, Mansur Yavas, a lead over his AKP rival. In Istanbul, where the AKP is fielding former prime minister Binali Yildirim, the race appears close with the CHP.

Other cities may also be seized by the secularist opposition party.

REFERENDUM ON ERDOGAN

Analysts caution against reading too much into polling data – Erdogan won a first-round presidential victory last year, defying many expectations – and even if the AKP were to lose, it would not diminish the president’s official powers.

But those very powers that he assumed last year leave him increasingly exposed when things go wrong.

“The whole system has been so centralized around one individual that even a municipal election is a referendum on Erdogan himself,” said Wolfango Piccoli, co-president of Teneo political risk advisers.

Defeat in either city would bring to an end a quarter century of rule by Erdogan’s AKP and its Islamist predecessors, and deal a symbolic blow to a leader who launched his career in local politics and served as mayor of Istanbul in the 1990s.

For two months he has addressed rally after rally, repeating well-honed presentations that include campaign songs, gifts of tea to supporters and lists of AKP achievements from garbage clearing to home building and infrastructure mega-projects.

Overwhelmingly supportive media broadcast hours of live coverage. Campaign posters proclaim that Istanbul is “a love story” for the AKP, and municipal duties are a “labour of love”.

But Erdogan also promises his political opponents he will “bury them in the ballot boxes” just as Turkey’s armed forces have killed militants from the outlawed Kurdistan Workers Party (PKK), which he regularly links to the pro-Kurdish HDP party.

In the speech in Eyup Sultan he said CHP leader Kemal Kilicdaroglu, an election ally of the HDP, was “arm in arm” with a terrorist organization. “Who is behind him? Terrorists are behind him. Mr Kemal is walking together with them”.

The CHP and HDP deny any links to the PKK.

To his passionate supporters, Erdogan is speaking a self-evident truth. “I see, I hear, and I believe what I see and hear – not just what Reis (the chief) says,” Ismail Zeybek, a 40-year-old electrician, said at the rally.

Others say that by portraying the vote as a question of survival, the president is splitting his country. “What kind of relation could there be between local elections and existence? He is trying to win votes by polarizing,” said Mert Efe, a resident of Istanbul’s Besiktas district, a CHP stronghold.

When a lone gunman opened fire in two mosques in New Zealand a fortnight ago, Erdogan said if anyone tried to come to Turkey to do harm they would be sent back “in caskets” like Australian and New Zealand troops who fought Ottoman soldiers in Gallipoli a century ago.

He repeatedly showed extracts from the gunman’s manifesto, which he said threatened Turkey and Erdogan himself, as well as blurred footage from the shooting itself – even after New Zealand’s foreign minister flew to Turkey to ask him to stop.

“Looking at the rhetoric he is using, we have never seen this before on a municipal level. It’s unprecedented,” Piccoli said. “This concentration of power is running short of ideas, that is why he is pushing more and more this nationalist, religious agenda.”

In the final days of campaigning Erdogan also revived calls for Istanbul’s Hagia Sophia museum – the foremost cathedral in Christendom for 900 years and then one of Islam’s greatest mosques for 500 years until 1935 – to become a mosque again.

FOUR MORE YEARS?

After winning a 2017 referendum on his powerful executive presidency, and then last year’s hard-fought parliamentary and presidential elections, Erdogan could in theory enjoy the next four years free from electoral challenge.

A poor showing on Sunday, however, would strain his parliamentary alliance with the nationalist MHP party, raising the possibility that Erdogan could be back on the campaign trail sooner than the next scheduled national elections in 2023.

If the AKP suffers a “large-scale shock” involving the loss of both Ankara and Istanbul, or saw the share of the vote taken by the AKP/MHP alliance fall well below 50 percent, it would be a clear sign that Erdogan’s party is on the wane, said Sinan Ulgen, a former Turkish diplomat and analyst at Carnegie Europe.

“That would have consequences over time. It would make it more difficult to hold onto power through 2023, especially given that this perceived political weakness would be combined with the economic slowdown,” Ulgen said.

If the vote does not go the way Erdogan hopes, he will be faced with a more immediate decision on Sunday night.

Asked whether he plans to address supporters again as he did triumphantly from his AKP headquarters in Ankara last June, Erdogan said his balcony speech had become an election night tradition.

“We did this in every election. I think it would not be right if we didn’t do it at this election. But we have not sat down with colleagues to make this decision yet.”

(Additional reporting by Omer Berberoglu and Daren Butler; Editing by Pravin Char)

U.S. weekly jobless claims unexpectedly fall

FILE PHOTO: A man looks over employment opportunities at a jobs center in San Francisco, California, in this February 4, 2010 file photo. REUTERS/Robert Galbraith/Files

WASHINGTON (Reuters) – The number of Americans filing applications for unemployment benefits unexpectedly fell last week, suggesting labor market conditions remained solid, despite slowing job growth.

Initial claims for state unemployment benefits dropped 5,000 to a seasonally adjusted 211,000 for the week ended March 23, the Labor Department said on Thursday. Data for the prior week was revised to show 5,000 fewer applications received than previously reported.

Economists polled by Reuters had forecast claims rising to 225,000 in the latest week. The Labor Department said no states were estimated. The government revised the claims data and the so-called seasonal factors from 2014 through 2018. It also updated the seasonal factor for 2019.

The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 3,250 to 217,250 last week.

Job growth has slowed after last year’s robust gain. The pace, however, remains more than enough to keep up with growth in the working age population. The unemployment rate is currently at 3.8 percent. The moderation in job growth also reflecting a shortage of workers and softening economic growth as the stimulus from a $1.5 trillion tax cut package fades.

Thursday’s claims report showed the number of people receiving benefits after an initial week of aid rose 13,000 to 1.76 million for the week ended March 16. The four-week moving average of the so-called continuing claims fell 4,250 to 1.75 million.

The continuing claims data covered the survey week for March’s unemployment rate. The four-week average of continuing claims rose slightly between the February and March survey periods, suggesting little change in the unemployment rate.

(Reporting By Lucia Mutikani; Editing by Andrea Ricci)