Tag Archives: Economy

Americans report stronger finances in Trump’s first year: Federal Reserve

FILE PHOTO: The Federal Reserve headquarters in Washington, U.S., September 16, 2015. REUTERS/Kevin Lamarque/File Photo

WASHINGTON (Reuters) – The share of Americans who report they are doing “at least okay” financially rose in President Donald Trump’s first year in office, according to Federal Reserve data published on Tuesday.

The data was in line with other readings detailing America’s long recovery from the 2007-09 recession, including years of mostly steady job growth and a more recent uptick in wages.

The U.S. central bank said 74 percent of U.S. adults said their finances were at least okay in 2017, four percentage points higher than in 2016. Improvement was strongest in lower income households.

Still, about two in five adults faced a high likelihood of material hardship, such as an inability to afford sufficient food, medical treatment, housing or utilities, according to the Fed’s report, which was based on a survey of 12,246 people last year.

Also, about one in five people reported they personally knew someone who had been addicted to opioids. White adults were about twice as likely to be personally exposed to opioid addiction than blacks or Hispanics, regardless of education levels, the Fed said.

People exposed to opioid addiction also gave more dismal assessments of the local and national economies, although jobless rates in their areas were not higher than in areas where people were less exposed to opioids, the Fed said in the report.

“This analysis suggests the need to look beyond economic conditions to understand the roots of the current opioid epidemic,” according to the report.

The Fed has conducted the survey since 2013, although last year was the first time people were asked about opioid addiction.

Trump took office in January 2017 after a presidential election campaign that included promises to boost the economy and fight opioid addiction.

While the U.S. unemployment rate had been falling for several years before Trump assumed office, it has continued to fall and is currently at a 17-year low at 3.9 percent.

(Reporting by Jason Lange; Editing by Susan Thomas)

After re-election, Venezuela’s Maduro faces overseas condemnation

Venezuela's President Nicolas Maduro raises a finger as he is surrounded by supporters while speaking during a gathering after the results of the election were released, outside of the Miraflores Palace in Caracas, Venezuela, May 20, 2018. REUTERS/Carlos Garcia Rawlins

By Alexandra Ulmer and Vivian Sequera

CARACAS (Reuters) – Venezuela’s socialist President Nicolas Maduro faced international condemnation on Monday after his re-election in a vote foes denounced as a farce that cemented autocracy in the crisis-stricken oil-producing nation.

Maduro, 55, hailed his win in Sunday’s vote as a victory against “imperialism,” but his main rival alleged irregularities and refused to recognize the result.

Venezuela’s mainstream opposition boycotted the election, given that two of its most popular leaders were barred from running, authorities had banned the coalition and various of its parties from using their names, and the election board is run by Maduro loyalists. Turnout was under 50 percent.

Thousands of Maduro supporters, many wearing red berets, hugged and danced outside the Miraflores presidential palace, showered in confetti in the yellow, blue and red colors of the Venezuelan national flag.

“The revolution is here to stay!” a jubilant Maduro told the crowd, promising to prioritize economic recovery after five years of recession in the OPEC nation of 30 million people.

“Let’s go, Nico!” his supporters chanted until after midnight during party scenes in downtown Caracas.

“We mustn’t cave to any empire, or go running to the International Monetary Fund as Argentina did. The opposition must leave us alone to govern,” said government supporter Ingrid Sequera, 51. She wore a T-shirt with a logo featuring the eyes of Maduro’s socialist predecessor, the late Hugo Chavez.

Senior U.S. State Department officials declared Sunday’s vote a “sham” and repeated threats to impose sanctions on Venezuela’s all-important oil sector, which is already reeling from falling output, a brain-drain and creaking infrastructure.

Spain, which has led European Union criticism of Maduro, also weighed in. “Venezuela’s electoral process has not respected the most basic democratic standards. Spain and its European partners will study appropriate measures and continue to work to alleviate Venezuelans’ suffering,” tweeted Prime Minister Mariano Rajoy.

In a blistering statement, the 14-nation “Lima Group” of countries in the Americas from Canada to Brazil, said it did not recognize the legitimacy of the vote and would be downgrading diplomatic relations.

The group deplored Venezuela’s “grave humanitarian situation” behind a migrant exodus, and promised to help coordinate with international financial bodies to crack down on corruption and block loans to the government.

However, regional leftist allies of Venezuela, from Cuba to Bolivia, sent their congratulations. China and Russia, which have both poured money into Venezuela in recent years, were also unlikely to join in the international condemnation.

‘TRAGIC CYCLE’ FOR VENEZUELA

The election board said Maduro won 5.8 million votes, versus 1.8 million for his chief challenger Henri Falcon, a former governor who broke with the opposition boycott to stand.

Turnout was 46 percent, the election board said, way down from the 80 percent at the last presidential vote in 2013. Suggesting turnout was even lower, an electoral board source told Reuters 32.3 percent of eligible voters cast ballots by 6 p.m. (2200 GMT) as most polls shut.

The government used ample state resources during the campaign and state workers were pressured to vote.

Falcon called for a new vote, complaining about the government’s placing of nearly 13,000 pro-government stands called “red spots” close to polling stations nationwide.

Mainly poor Venezuelans lined up to scan state-issued “fatherland cards” at red tents after voting, in hope of receiving a “prize” promised by Maduro.

The “fatherland cards” are required to receive benefits including food boxes and money transfers.

Some anti-government activists said the opposition coalition should have fielded a candidate regardless of how uneven the playing field might be. But the opposition coalition, which has been divided for most of the duration of the ‘Chavismo’ movement founded by Chavez after he took office in 1999, appeared united after the vote and said its boycott strategy had paid off.

“I implore Venezuelans not to become demoralized, today Maduro is weaker than ever before. We’re in the final phase of a tragic cycle for our country. The fraud has been exposed and today the world will reject it,” tweeted opposition leader Julio Borges.

It was not yet clear what strategy the opposition would now adopt, but major protests seem unlikely given widespread disillusionment and fatigue. Caracas was calm and many of its streets were empty on Monday morning.

Protesters did, however, barricade some streets in the southern city of Puerto Ordaz, drawing teargas from National Guard soldiers, witnesses said.

ECONOMIC PRESSURES

Maduro, who faces a colossal task turning around Venezuela’s moribund economy, has offered no specifics on changes to two decades of state-led policies. The bolivar currency is down 99 percent over the past year and inflation is at an annual 14,000 percent, according to the National Assembly.

Furthermore, Venezuela’s multiple creditors are considering accelerating claims on unpaid foreign debt, while oil major ConocoPhillips has been taking aggressive action in recent weeks against state oil company PDVSA, as part of its claim for compensation over a 2007 nationalization of its assets in Venezuela.

Though increasingly shunned in the West, Maduro can at least count on the support of China and Russia, which have provided billions of dollars’ funding in recent years.

In Beijing, foreign ministry spokesman Lu Kang said China believed the Venezuelan government and people could handle their own affairs and that everyone should respect the choice of the Venezuelan people.

Asked if China had sent congratulations to Maduro, he said China would “handle this in accordance with diplomatic convention,” but did not elaborate.

 

 

(Reporting by Aexandra Ulmer and Vivian Sequera in Caracas; Additional reporting by Maria Ramirez in Ciudad Guayana; Luc Cohen in Caracas; Felipe Iturrieta in Santiago; Marco Aquino in Lima; and Ben Blanchard in Beijing; Writing by Angus Berwick and Alexandra Ulmer; Editing by Andrew Cawthorne and Frances Kerry)

Maersk latest company to shun Iran as EU scrambles to save nuclear deal

FILE PHOTO: The Maersk ship Adrian Maersk is seen as it departs from New York Harbor in New York City, U.S., June 27, 2017. REUTERS/Brendan McDermid/File Phot

COPENHAGEN (Reuters) – Shipping group A.P. Moller-Maersk on Thursday joined a growing list of companies preparing to call a halt to doing business with Iran, casting doubts on whether European leaders can keep alive a nuclear deal with Tehran.

Maersk’s move comes a day after French energy group Total and other European companies signaled they could exit Iran ahead of a reimposition of sanctions following the United States’ decision to pull out of the Iran accord.

French President Emmanuel Macron said on Thursday that the European Union must protect European Union companies doing business with Iran from U.S. sanctions.

But Macron, joining EU leaders for a summit in Bulgaria, also said he recognized that big companies would want to protect their own interests.

“International companies with interests in many countries make their own choices according to their own interests. They should continue to have this freedom,” he said.

U.S. President Donald Trump’s decision to abandon the 2015 nuclear accord with Iran means European countries that have since invested in the country will be at risk once new sanctions come into effect.

Maersk Chief Executive Soren Skou said: “With the sanctions the Americans are to impose, you can’t do business in Iran if you also have business in the U.S., and we have that on a large scale.”

“I don’t know the exact timing details, but I am certain that we’re also going to shut down (in Iran),” Skou told Reuters in an interview following Maersk’s first-quarter earnings.

MSC, the world’s second biggest container shipping group after Maersk, said on Wednesday it would stop taking new booking for Iran.

Other companies which have warned they would wind down business in Iran following reinstated sanctions include German insurer Allianz, Siemens and Danish oil product tanker operator Maersk Tankers, previously owned by the Maersk conglomerate.

Maersk’s Skou said higher oil prices which followed the U.S. withdrawal were hitting its container shipping business because of higher bunker fuel prices.

Oil prices hit their highest level since November 2014 on Thursday, with Brent crude creeping ever closer to $80 per barrel. [O/R]

(Reporting by Stine Jacobsen and Jacob Gronholt-Pedersen; Editing by Jon Boyle and Jane Merriman)

Erdogan’s policies driving Turkey to the edge, challenger says

FILE PHOTO: The President of Turkey, Recep Tayyip Erdogan, speaks at Chatham House in central London, Britain May 14, 2018. REUTERS/Henry Nicholls/File Photo

By Dominic Evans and Birsen Altayli

ISTANBUL (Reuters) – President Tayyip Erdogan is driving Turkey “to the cliff” through ideological politics and a determination to control the central bank, the main opposition party’s presidential candidate said on Wednesday as the lira hit new record lows.

Muharrem Ince, who seeks to end Erdogan’s 15-year hold on power in next month’s elections, said the central bank and other economic institutions must be able to operate independently.

Erdogan said this week he plans to take greater control of the economy after the June 24 presidential and parliamentary polls, comments which drove the lira to fresh record lows. It is down 15 percent against the dollar this year.

“He’s taking the country to the cliff. The central bank needs to be independent, and the other economic bodies need to be autonomous. The rules need to operate,” Ince told Reuters in an interview.

The victor in next month’s election, held under a state of emergency imposed after a failed coup in 2016, will exercise sweeping new executive powers after Turks narrowly approved a constitutional overhaul in a referendum last year. The changes come into effect after the June vote.

Polls show Erdogan is comfortably the strongest candidate, though he could face a challenge if the presidential vote goes to a second round in July and his opponents rally around the other remaining candidate.

Ince, 54, a combative parliamentarian and former physics teacher, has energized his secularist opposition Republican People’s Party (CHP) since he started campaigning and may emerge as the leading opposition candidate – although he faces competition from former interior minister Meral Aksener.

Aksener’s nationalist Iyi (Good) Party and the CHP have joined with two other smaller parties in an opposition alliance for the parliamentary election. She and Ince are competing separately in the presidential vote.

“WIND OF CHANGE”

Ince said the president was driven by “ideological obsessions” and pushing Turkey in the wrong direction.

Erdogan, a self-described “enemy of interest rates”, wants lower borrowing costs to boost credit and new construction, and has said the central bank will not be able to ignore the president’s wishes. That has fueled concerns about the bank’s ability to fight double-digit inflation.

Since his Islamist-rooted AK Party swept to power in 2002, Erdogan has dominated Turkish politics. His power is reinforced by a near-monopoly of broadcast media coverage. Most TV channels show nearly all his campaign rallies, but rarely offer a platform to his opponents.

“The state of the media is heartbreaking. They have surrendered, they have kneeled,” Ince said, adding he had told broadcasters that unless they started to cover his speeches, he would hold a rally directly outside their offices to shame them.

If elected, Ince pledged to reverse some of the powers granted to the new presidency, saying it handed total control of the budget, judiciary and executive to one person.

Several European Union countries have expressed alarm that those changes are pushing Turkey deeper into authoritarian rule. Turkey is still a candidate for EU membership, though negotiations have stalled over rights concerns and other issues.

Erdogan says the increased powers are necessary to tackle security threats following the failed coup and conflict on Turkey’s southern borders with Syria and Iraq.

“No mortal should be given such authority,” Ince said. “It shouldn’t be given to me either.”

Against Erdogan, a skilled campaigner, the CHP has struggled to win support beyond its core base of secular-minded voters. In the last parliamentary election in November 2015 it took 25.3 percent of the vote.

Ince has pledged to be a non-partisan leader if elected, styling himself as “everyone’s president” and promising not to live in the 1,000-room palace built by Erdogan in Ankara.

“I see that a wind of change is blowing,” he said, pointing to what he described as a new atmosphere at his political rallies compared to last year’s referendum campaign.

“The momentum I have garnered is very different – there is a strong wind and people feel excitement,” he said.

(Additional reporting by Ali Kucukgocmen and Gulsen Solaker in Ankara; Editing by David Dolan and Gareth Jones)

U.S. ‘looking for a deal’ with China on trade: White House adviser

FILE PHOTO: Chinese and U.S. flags are set up for a meeting during a visit by U.S. Secretary of Transportation Elaine Chao at China's Ministry of Transport in Beijing, China April 27, 2018. REUTERS/Jason Lee

By Susan Heavey and Leika Kihara

WASHINGTON/TOKYO (Reuters) – The United States is seeking to make a trade deal with China, White House economic adviser Larry Kudlow said on Tuesday as bilateral talks between the world’s two economic powerhouses resume in Washington this week.

Kudlow, speaking in a live interview with Politico news outlet, said he backed U.S. Treasury Secretary Steven Mnuchin’s efforts to reach an agreement with Beijing and that both countries must take action.

“He is looking for a deal, I support him on that, wholeheartedly, assuming it’s a good deal. He has my support,” Kudlow said, adding that no agreement had been reached yet.

“Both sides should try to lower tariffs as much as possible … and to take down non-tariff barriers wherever they are,” he told Politico. “Free and open trade, I think that’s the solution. I think that’s where we are as a group.”

His comments come as U.S. President Donald Trump’s top trade and economic officials prepare to meet with Chinese Vice Premier Liu He to discuss trade concerns ranging from intellectual property protections to farm goods to steel capacity.

Trump has long-promised to crack down on China and raised concerns about an all-out trade war after threatening $150 billion in tariffs and prompting China to retaliate.

But he offered an olive branch in calling on U.S. officials to revisit penalties for Chinese company ZTE Corp for flouting U.S. sanctions on trade with Iran and North Korea.

“Trade negotiations are continuing with China. They have been making hundreds of billions of dollars a year from the U.S., for many years. Stay tuned!” Trump tweeted on Tuesday.

Kudlow told Politico that the United States was not looking for a trade war with China and that it was not clear what action the United States would take toward ZTE.

This week’s meetings follow U.S.-China trade talks in Beijing earlier this month where the two countries failed to reach an agreement on the long list of U.S. demands.

U.S. Ambassador to China Terry Branstad, who was at the Beijing talks, said earlier on Tuesday the United States wants a timetable on how China will open up its markets to U.S. exports as the two countries are still not close to resolving trade frictions.

“VERY FAR APART”

Washington and Beijing have proposed tens of billions of dollars in tariffs in recent weeks, fanning worries of a full-blown trade war that could hurt global supply chains and dent business investment plans.

Branstad, speaking at a conference in Tokyo, said the Chinese appeared “taken back” by the significance of the list.

“The Chinese have said ‘we want to see the specifics.’ We gave them all the specifics in terms of trade issues. So they can’t say they don’t know what we’re asking for,” he said.

Branstad said China has not met pledges to open up its insurance and financial services area, as well as reduce auto tariffs, and that Trump would like to see a “dramatic increase” in food exports to China.

“We’re still very far apart,” he said.

Branstad said the United States could rescind the “Section 301” tariffs if China opened its agriculture and auto markets.

Increasing U.S. exports of liquefied natural gas could also be an area where the two countries could agree, he said.

“The United States and China are the two biggest economies in the world. The more we can work things out, the better it’s going to be not just for U.S. and China, but for the entire world economy,” he said.

(Reporting by Leika Kihara in Tokyo, and Susan Heavey and Doina Chiacu in Washington; Editing by Chris Gallagher, Darren Schuettler and Susan Thomas)

Iraqis voting in first election since Islamic State

An Iraqi security member casts his vote at a polling station two days before polls open to the public in a parliamentary election in Baghdad, Iraq May 10, 2018. REUTERS/Thaier al-Sudani

By Ahmed Aboulenein

BAGHDAD (Reuters) – For the first time since driving out Islamic State, Iraqis go to the polls on Saturday in an election that will shape attempts to heal the country’s deep divisions and could shift the regional balance of power.

Iraq’s three main ethnic and religious groups, the majority Shi’ite Arabs and the minority Sunni Arabs and Kurds, have been at loggerheads for decades and the sectarian rifts are as apparent as ever 15 years after the fall of Saddam Hussein.

The election of a new prime minister and parliament also takes place the same week U.S. President Donald Trump announced he was pulling out of the Iran nuclear deal, raising tensions between Iraq’s two main allies: Tehran and Washington.

A female security member casts her vote at a polling station two days before polls open to the public in a parliamentary election in Baghdad, Iraq May 10, 2018. REUTERS/Thaier al-Sudani

A female security member casts her vote at a polling station two days before polls open to the public in a parliamentary election in Baghdad, Iraq May 10, 2018. REUTERS/Thaier al-Sudani

Whoever wins the May 12 election will face the challenge of rebuilding Iraq after four years of war with Islamic State, jump-starting a flagging economy, balancing the interests of powerful foreign patrons and maintaining the country’s fragile unity in the face of sectarian and separatist tensions.

“We want security. We have killings, theft, kidnappings. We never had this before. In the past 15 years the people have been destroyed,” said 29-year-old Khalid Radi, a laborer in Baghdad.

Incumbent Prime Minister Haider al-Abadi is considered by analysts to be marginally ahead but victory is far from certain.

Even though he announced Islamic State’s defeat during his first four-year term, diffused sectarian tensions enflamed by his predecessor, and maintained Iraq’s unity in the face of a Kurdish independence bid, he faces a tough battle.

THREE-WAY RACE

Abadi has faced criticism about persistent government corruption, tough economic conditions and the austerity measures his cabinet introduced after the slide in global oil prices and to help pay for the fight against Islamic State.

He also cannot rely solely on votes from his community as the majority Shi’ite voter base is unusually split this year. Instead, he is looking to draw upon support from other groups.

Many, but not all, Sunnis see Abadi as a less sectarian alternative to his two main Shi’ite rivals and credit him with liberating their areas from Islamic State.

There’s bad blood between Abadi and the Kurds, however, after Baghdad imposed sanctions on the semi-autonomous Kurdistan region following its failed independence bid last year.

Even if Abadi’s Victory Alliance list wins the most seats he still has to navigate the long-winded and complicated backroom negotiations required to form a coalition government.

His two main challengers are his predecessor Nuri al-Maliki and Iranian-backed Shi’ite militia commander Hadi al-Amiri.

Both have a more passionate voter base than Abadi, who is mostly appealing to more pragmatic voters who see him as having better relations with the outside world and a cross-sectarian appeal needed to avoid further bloodshed and attract investment.

Like Abadi, Amiri is running on a platform highlighting the victory against Islamic State, though the militia leader’s narrative is more compelling as he was a frontline commander and is viewed as war hero by many Shi’ites.

Maliki, who was sidelined after eight years in office in 2014 after losing a third of the country to Islamic State, is looking to make a political comeback.

In contrast to the cross-sectarian message of Abadi, Maliki is again posing as Iraq’s Shi’ite champion and is proposing to do away with the country’s unofficial power-sharing model in which all the main parties have cabinet representatives.

COALITION HORSE-TRADING

Ever since Saddam fell in 2003, ending decades of dominance by the Sunni minority, senior government positions have been unofficially split between the country’s main groups.

The post of prime minister has been reserved for a Shi’ite, the speaker for a Sunni, and the ceremonial presidency has gone to a Kurd – with all three being chosen by parliament.

More than 7,000 candidates in 18 provinces, or governorates, are running this year for 329 parliamentary seats.

The Iraqi constitution sets a 90-day deadline for forming a government after the election results are formally announced and the horse-trading can be protracted.

The new government will also have to cope with the simmering tension between the United States and Iran.

As prime minister, Abadi has won praise for his deft juggling of the competing and colliding interests of his two main backers. While his government maintains good relations with Iran, he is seen as balanced and Western diplomats say he would be the easiest candidate to work with.

Maliki, who pushed for U.S. troop withdrawals and Amiri, who speaks fluent Farsi and spent years in exile in Iran during the Saddam Hussein era, are both seen as much closer to Tehran.

DIVISIONS ALL ROUND

The election is also taking place in an atmosphere of division and disillusionment within Iraq’s three main groups.

The Shi’ite vote is split as many are unhappy with their leaders after 15 years in power that have only yielded violence and unemployment and left the country’s infrastructure crumbling.

But if the Shi’ites are split because they have too many leaders, Sunni Arabs are divided because they have none.

Sunnis are at their lowest point yet. Millions languish in displacement camps, many are out of pocket and trying to rebuild destroyed homes in cities reduced to rubble – and they feel collectively branded as Islamic State sympathizers.

The Sunni politicians that have held positions in government are largely discredited and there is no national Sunni leadership or party structure.

Iraq’s Kurds, meanwhile, blame their leaders for gambling away hard-won autonomy in the failed independence referendum and might punish them by voting for non-traditional parties, which in turn could undermine the historically unified Kurdish bloc’s position as kingmakers in parliament.

Voters go to the polls on Saturday, though security forces and Iraqis abroad started voting on Thursday. The electoral commission has said results will come “hours” after polls close.

Islamic State has threatened to attack polling stations amid a recent uptick in security incidents in areas retaken from the militants while many voters simply do not feel the election will bring any change.

“I propose the state just cancel parliament. Shake it and uproot it,” said 27-year-old mechanic Mustafa Tabbar using a popular Iraqi phrase meaning radical change.

(Reporting by Ahmed Aboulenein; editing by David Clarke)

U.S. job openings jump to record high in March US-USA-ECONOMY-JOBS

FILE PHOTO: Job seekers line up at TechFair in Los Angeles, California, U.S. March 8, 2018. REUTERS/Monica Almeida/File Photo

WASHINGTON (Reuters) – U.S. job openings surged to a record high in March, suggesting that a recent slowdown in hiring was probably the result of employers having difficulties finding qualified workers.

Job openings, a measure of labor demand, increased by 472,000 to a seasonally adjusted 6.6 million, the Labor Department said on Tuesday in its monthly Job Openings and Labor Turnover Survey, or JOLTS.

March’s job openings were the highest since the data series started in December 2000 and pushed the job openings rate up three-tenths of a percentage point to 4.2 percent. Job growth slowed in March and April after an outsized gain in February.

(Reporting By Lucia Mutikani; Editing by Andrea Ricci)

U.S. job growth picks up; unemployment rate drops to 3.9 percent

A help wanted sign is posted at a taco stand in Solana Beach, California, U.S., July 17, 2017. REUTERS/Mike Blake

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. job growth increased less than expected in April and the unemployment rate dropped to near a 17-1/2-year low of 3.9 percent as some out-of-work Americans left the labor force.

The Labor Department’s closely watched employment report on Friday also showed wages barely rose last month, which may ease concerns that inflation pressures are rapidly building up, likely keeping the Federal Reserve on a gradual path of monetary policy tightening.

“Fed officials can rest easy that there is not any wage-based inflation on the horizon,” said Chris Rupkey, chief economist at MUFG in New York. “There is no need to speed up the path of interest rates because inflation isn’t heating up in a worrisome manner.”

Nonfarm payrolls increased by 164,000 jobs last month, the Labor Department reported. Data for March was revised up to show the economy adding 135,000 jobs instead of the previously reported 103,000. That was the fewest amount of jobs created in six months and followed an outsized gain of 324,000 in February.

While cold weather in March and April probably held back job growth, hiring is moderating as the labor market hits full employment. Employers, especially in the construction and manufacturing sectors, are increasingly reporting difficulties finding qualified workers.

The drop of two-tenths of a percentage point in the unemployment rate from 4.1 percent in March pushed it to a level last seen in December 2000 and within striking distance of the Fed’s forecast of 3.8 percent by the end of this year. It was the first time in six months that the jobless rate dropped.

But 236,000 people left the labor force in April, adding to the 158,000 who quit in March. The labor force participation rate, or the proportion of working-age Americans who have a job or are looking for one, fell to 62.8 percent last month from 62.9 percent in March. It was the second straight monthly drop in the participation rate.

Economists polled by Reuters had forecast payrolls to rise by 192,000 jobs in April and the unemployment rate to fall to 4.0 percent. Average hourly earnings rose 0.1 percent last month after a 0.2 percent gain in March. That left the annual increase in average hourly earnings at 2.6 percent.

The dollar shrugged off the employment data, rising to its highest level this year against a basket of currencies. Prices of U.S. Treasuries fell and U.S. stocks rose.

Sluggish wage growth and a slowdown in hiring threaten to undercut the Trump administration’s argument that its $1.5 trillion income tax cut package, which came into effect in January and is highlighted by a sharp drop in the corporate income tax rate, would boost wages and hiring.

Companies like Apple have used their tax windfall for share buybacks and dividends.

President Donald Trump cheered the drop in the unemployment rate on Friday.

“I thought the jobs report was very good. The big thing to me was cracking 4,” Trump told reporters. “That hasn’t been done in a long time … we’re at full employment. We’re doing great.”

Democrats, however, reiterated their criticism of the tax cuts, saying more than $390 billion in share buybacks had been announced since the passage of the tax bill.

“President Trump promised American families that they would see a $4,000 annual raise after the tax plan, so far, average weekly wages have increased $11.69,” Democratic Senator Martin Heinrich said.

‘SUSTAINABLE PACE’

But average hourly earnings could be understating wage inflation. The Employment Cost Index, widely viewed by policymakers and economists as one of the better measures of labor market slack, showed wages rising at their fastest pace in 11 years during the period.

Inflation is flirting with the Fed’s 2 percent target.

The Fed’s preferred inflation measure, the personal consumption expenditures price index excluding food and energy, was up 1.9 percent year-on-year in March after a 1.6 percent rise in February.

The U.S. central bank on Wednesday left interest rates unchanged and said it expected annual inflation to run close to its “symmetric” 2 percent target over the medium term.

Economists interpreted symmetric to mean policymakers would not be too concerned with inflation overshooting the target. The Fed hiked rates in March and has forecast at least two more increases for this year.

Economists expect the unemployment rate will drop to 3.5 percent by the end of the year. Monthly job gains have averaged about 200,000 this year, more than the roughly 120,000 needed to keep up with growth in the working-age population. Though the decline in the labor force accounted for the drop in the unemployment rate last month, labor market slack is diminishing.

A broader measure of unemployment, which includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment, dropped to 7.8 percent last month, the lowest level since July 2001, from 8.0 percent in March.

Construction payrolls rebounded by 17,000 jobs last month after recording their first drop in eight months in March. Manufacturing employment increased by 24,000 jobs in April after a gain of 22,000 positions in March.

Payrolls for temporary help, seen as a harbinger of future permanent hiring, rose by 10,300 after falling by 2,100 in March. There was a modest gain in leisure and hospitality employment while wholesale traders laid off workers.

Government payrolls fell 4,000 in April amid a decline in education employment at state governments.

“The moderation in job gains over the past two months may mark the beginning of the slow deceleration to a sustainable pace of job gains, which we estimate to be around or a little below 100,000 per month,” said Michael Feroli, an economist at JPMorgan in New York.

(Reporting by Lucia Mutikani; Additional reporting by Roberta Rampton; Editing by Paul Simao)

Too many cancer drugs? Crowded market gives investors pause

FILE PHOTO: A scientist prepares protein samples for analysis in a lab at the Institute of Cancer Research in Sutton, July 15, 2013. REUTERS/Stefan Wermuth/File Photo

By Ben Hirschler

LONDON (Reuters) – In London’s world-famous Great Ormond Street children’s hospital, Dr. Karin Straathof is excited about a new cell-based medicine that offers hope for toddlers with incurable nerve tissue cancer.

Her progress with a handful of children for whom standard care does not work reveals the promise of modern cancer drugs, an increasingly crowded pharmaceuticals field from which investors must try to select future winners.

The new therapy using engineered white blood cells has shown anti-tumor activity in the hardest to treat neuroblastoma patients.

“The beauty is that it is very specific in targeting the cancer cells, while leaving healthy tissue unharmed,” Straathof told Reuters, after presenting her early findings at a science meeting in Chicago in April. “It’s an important step forward.”

Autolus – the small British biotech company developing the chimeric antigen receptor T-cell or CAR-T treatment – is equally excited, and is planning a potential IPO on Nasdaq.

But Autolus is far from alone in pursuing CAR-T therapy. In fact, CAR-T treatment – part of the wider field of cancer immunotherapy – is one of the hottest areas of drug research today, with multiple firms piling in.

The biotech dollars are flooding in not only in Europe and the United States but also in China which, with 162 clinical trials, now boasts more CAR-T studies than the United States, according to a Reuters analysis of the latest data.

With over 2,000 drugs in the cancer immunotherapy space, the competitive landscape has never been more crowded as each firm seeks its own proprietary version of often similar drugs.

Overall, researchers are working on more than 5,200 cancer drugs, up 7.6 percent from a year ago, according to the Pharmaprojects database. The sheer number is stretching the ability of scientists to find enough patients to test them on.

Cancer now makes up 34.1 percent of the total drug industry pipeline, up from 26.8 percent in 2010, as companies divert resources into a promising sector where new treatments can often fetch more than $100,000 a year.

‘MORE CIRCUMSPECT’

With the first two CAR-T treatments from Novartis and Gilead Sciences winning U.S. approval last year for rare blood cancers, the promise of such smart medicine is real and life-changing – especially if it can be made to work in solid tumors, as Straathof’s work suggests is possible.

However, the wholesale rush by pharmaceutical and biotech companies into the cancer area poses a dilemma for investors.

A flood of similar products makes it hard for investors to pick those companies that will achieve commercial success.

“More competition means you should be more circumspect,” said Nooman Haque, head of life sciences at Silicon Valley Bank in London, which provides financing for start-ups and venture capitalists.

“The traditional investment thesis in biotech is to have a differentiated medicine with not many competitors, which helps drive value. Here the problem is that even if there is a big patient benefit, there are questions as to how long your advantage lasts and what your commercial edge will be.”

Pharmaceutical executives are not blind to the issue, although each hopes to find a winning formula in immunotherapy – the fastest-growing part of the $100 billion-a-year cancer drug market, with sales expected to top $25 billion by 2021, according to analyst forecasts compiled by Thomson Reuters.

Roche <ROG.S> CEO Severin Schwan, head of the world’s top cancer company, says he expects “an enormous drop-out”, while Sanofi’s  outgoing research head Elias Zerhouni warned analysts last week that duplication of effort would shrink the time available for drugmakers to recoup their  investments.

“The cycle of innovation has been shortened significantly,” agrees Aiman Shalabi, chief medical officer at the non-profit Cancer Research Institute. “There is no doubt we are seeing fast follow-on and many identical agents hitting the same targets.”

The good news for society is that patients will find out much faster than in the past if new approaches work. But that means doctors can rapidly switch to alternatives, leading to increased product churn and uncertainty over future sales.

COMBINATION STUDIES

Twenty years ago, when Roche launched its state-of-the-art cancer drugs Herceptin and Rituxan, it enjoyed years without rivals. Today, there are multiple versions of new drugs targeting molecular pathways with acronyms such as PD-1/L1, PARP and CDK, as well as CAR-T.

“You’re either first or you’re best or you’re nowhere because it has become such a race,” said Paul Major, an investment manager at BB Healthcare Trust, who is cautious about investing in cancer immunotherapy.

Lydia Haueter at Pictet Asset Management is also wary, pointing out there are already five PD-1/L1 drugs on the market – from Merck, Bristol-Myers Squibb, Roche, AstraZeneca and Pfizer – and more are coming.

“It seems everybody has a PD-1, so we especially don’t go for those kind of cancer companies,” she said.

Some drugmakers like GlaxoSmithKline <GSK.L> and Novartis that missed the initial PD-1/L1 wave are trying to make a virtue of looking ahead to the next phase of cancer immunotherapy, particularly drug combinations.

Yet last month’s failure of a combination study using a next-generation drug from Incyte with Merck’s PD-1 Keytruda shows that adding a new agent is no slam dunk for expanding the reach of immune-boosting medicine.

At Great Ormond Street, Straathof is less concerned about doubling up on research and more focused on getting effective, affordable cures – and she hopes automated processes will eventually bring down today’s sky-high drug prices.

“I’m not too worried about duplication. It’s important to not ask the same question in two trials but I think there are a lot of questions to be addressed because there is a lot of nuance in the system.”

(Reporting by Ben Hirschler; Editing by Pravin Char)

Nasdaq surges at open after strong Amazon, Microsoft earnings

(Reuters) – The tech-heavy Nasdaq opened 1 percent higher on Friday after stellar results from Amazon, Microsoft and Intel, while a 3 percent drop in Exxon weighed on the Dow and S&P.

The Dow Jones Industrial Average rose 19.80 points, or 0.08 percent, at the open to 24,342.14. The S&P 500 opened higher by 8.53 points, or 0.32 percent, at 2,675.47. The Nasdaq Composite gained 76.84 points, or 1.08 percent, to 7,195.52 at the opening bell.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Shounak Dasgupta)