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Britain and EU clinch Brexit ‘breakthrough’ with move to trade talks

Britain and EU clinch Brexit 'breakthrough' with move to trade talks

By Alastair Macdonald and Gabriela Baczynska

BRUSSELS (Reuters) – Britain and the European Union struck a divorce deal on Friday that paves the way for arduous trade talks, easing immediate pressure on Prime Minister Theresa May and boosting hopes of an orderly Brexit.

May rushed to Brussels before dawn to seal European Commission agreement that “sufficient progress” had been made to begin talks about trade and a two-year Brexit transition period that will start when Britain leaves the EU on March 29, 2019.

Negotiators in London, Brussels and Dublin worked through the night before breaking an impasse over the status of the Irish border, the last major obstacle to the opening of trade talks which EU leaders are due to bless at summit on Dec. 14-15.

Speaking before sunrise at the EU’s executive headquarters in Brussels after a hurried flight on a Royal Air Force plane, May said opening up trade talks would bring certainty for citizens and businesses about Britain’s future after quitting the EU.

“The most difficult challenge is still ahead,” European Council President Donald Tusk cautioned. “We all know that breaking up is hard. But breaking up and building a new relationship is much harder.”

May, looking weary after just a couple of hours sleep, spoke after European Commission President Jean-Claude Juncker announced the breakthrough first in English and then in German and French.

The move to trade talks 18 months after the United Kingdom’s shock vote to exit the EU allayed some fears of a disorderly Brexit that could disrupt trade between the world’s biggest trading bloc and its sixth-largest national economy.

Sterling climbed to a six-month high against the euro <EURGBP=D3> on Friday before it fell back around midday to sit broadly flat, with one euro worth 87.4 pence, while bond yields across the euro zone rose. Against the U.S. dollar <GBP=D3> the pound also weakened.

BREXIT DIVORCE?

Facing 27 other members of the bloc, May largely conceded to the EU on structure, timetable and substance of the negotiations.

Moving to talks about trade and a Brexit transition was crucial for May’s own future after her premiership was thrown into doubt when she lost the ruling Conservative Party its majority in a snap election in June, unwisely called.

“I very much welcome the prospect of moving ahead,” said May, a 61-year-old Anglican vicar’s daughter who herself voted to stay in the EU in a referendum in June 2016 but has repeatedly insisted Britain will make a success of Brexit.

One senior British banker said the deal signaled that May would stay in power for now and that Britain was heading towards a much closer post-Brexit relationship with the EU than many had feared.

Draft guidelines showed the transition period, which would start on March 29, 2019, would last around two years. During that time, Britain will remain part of the customs union and single market but will no longer take part in EU institutions or have a vote.

It will also still be subject to EU law.

Pro-Brexit Conservative lawmakers rallied around her after the overnight deal, a possible signal that the party – which has been split over EU membership for generations – was not preparing to ditch her immediately despite the June election fiasco.

British Foreign Secretary Boris Johnson, who spearheaded the Brexit campaign, congratulated May, adding that Britain would now take back control of its laws, money and borders.

Supporters of a radical Brexit were tougher.

Brexit campaigner Nigel Farage struck a jarring note saying it was extraordinary a British premier had conceded so much in the middle of the night, agreeing to all the demands of Juncker, Tusk and EU negotiator Michel Barnier.

“The British prime minister has to fly through the middle of the night to go and meet three unelected people, who condescendingly say: ‘Now jolly well done May, you’ve met every single one of our demands, thank you very much, we can now move on to the next stage’.”

“BREAKTHROUGH”

The EU had insisted it would only move to trade talks if there was enough progress on three key issues: the money Britain must pay to the EU; rights for EU citizens in Britain and British citizens in the EU; and how to avoid a hard border with Ireland.

“I believe we have now made the breakthrough we needed,” Juncker said.

The EU’s chief Brexit negotiator Michel Barnier said it was not possible to put a concrete figure on the amount of money Britain will have to pay. Britain has said the divorce bill will cost it between 35 and 39 billion pounds.

On citizens rights, London and Brussels agreed to offer equal treatment on social security, health care, employment and education and that Britain will enable its judges to ask the European Court of Justice to weigh in when necessary for eight years after Brexit.

But the crucial breakthrough was on the future of the 310-mile (500 kms) UK-EU land border on the island of Ireland. The Northern Irish party which props up May’s minority government vetoed a draft deal on Monday.

May worked through most of the night, grabbing just a couple of hours sleep, as she worked the phones from Downing Street to secure agreement from Dublin, Brussels and the Democratic Unionist Party for her deal on the border.

They agreed to avoid a hard border which might upset the peace established after decades of violence, but said the details would be agreed as part of talks about the future relationship, according to a 15-page negotiators report.

In the text, Britain agreed that should London and Brussels fail to agree a final Brexit deal, the United Kingdom will maintain “full alignment” with those rules of the internal market and customs union that help protect north-south cooperation in Ireland.

“In all circumstances, the United Kingdom will continue to ensure the same unfettered access for Northern Ireland’s businesses to the whole of the United Kingdom internal market,” it said. .

The Democratic Unionist Party gave only a conditional endorsement of the new terms, four days after 11th-hour objections from Belfast scuppered May’s attempt to sign off on an accord over the Irish border.

“We cautioned the Prime Minister about proceeding with this agreement in its present form given the issues which still need to be resolved,” Democratic Unionist Party (DUP) leader Arlene Foster said.

“Nothing is agreed until everything is agreed and how we vote on the final deal will depend on its contents.”

(Writing by Guy Faulconbridge and Kate Holton in London; Additional reporting by Alistair Smout, William James, Costas Pitas and Andrew MacAskill in London, Padraic Halpin in Dublin, and; Editing by Richard Balmforth)

U.S. private employment growth eases but manufacturing shines: ADP

U.S. private employment growth eases but manufacturing shines: ADP

NEW YORK (Reuters) – U.S. private-sector employment growth eased in November even as the manufacturing sector added the most jobs in at least 15 years, a report by a payrolls processor showed on Wednesday.

Private employers added 190,000 jobs last month, down from an unrevised 235,000 in October, the ADP National Employment Report showed. That was roughly in line with expectations for a gain of 185,000 jobs in a Reuters poll of economists, with estimates ranging from 150,000 to 240,000.

The report is jointly developed with Moody’s Analytics.

“The job market is red hot, with broad-based job gains across industries and company sizes. The only soft spots are in industries being disrupted by technology, brick-and-mortar retailing being the best example,” Mark Zandi, chief economist of Moody’s Analytics, said in a statement. “There is a mounting threat that the job market will overheat next year.”

Among goods-producing sectors, manufacturing added 40,000 jobs, the most in the ADP series history dating back more than 15 years, while construction shed 4,000.

Services-sector employment gains led the advance, with the largest increase coming in education and health services at 54,000, followed by professional and business services at 47,000.

Midsized businesses, defined as employing between 50 and 499 people, added 99,000 jobs, while small-employer employment rose by 50,000 and large companies increased their workforces by 41,000.

The ADP figures come ahead of the U.S. Labor Department’s more comprehensive non-farm payrolls report on Friday, which includes both public and private-sector employment.

Economists polled by Reuters are looking for U.S. private payroll employment to have grown by 190,000 jobs in November, down from 252,000 the month before. Total non-farm employment is expected to have risen by 200,000.

The unemployment rate is forecast to stay steady at the 4.1 percent recorded a month earlier.

(Reporting by Dan Burns; Editing by Chizu Nomiyama)

U.S. trade hits nine-month high; oil prices lift imports

U.S. trade hits nine-month high; oil prices lift imports

By Lucia Mutikani

WASHINGTON (Reuters) – The U.S. trade deficit increased to a nine-month high in October due to rising oil prices and the widening of America’s long-standing deficits with China and Mexico.

The worsening trade deficit came even as exports to China and Mexico were the strongest in more than three years, which some economists said challenged the Trump administration’s argument that the United States was being disadvantaged in its dealings with trade partners.

“This leaves the Trump economics team empty handed when it comes to its mission to improve the unfair terms of trade which sent factories offshore starting a couple of decades ago,” said Chris Rupkey, chief economist at MUFG in New York.

The Commerce Department said on Tuesday the trade gap widened 8.6 percent to $48.7 billion, the highest level since January. The politically sensitive U.S.-China trade deficit increased 1.7 percent to $35.2 billion and the deficit with Mexico surged 15.9 percent to $6.6 billion.

Economists polled by Reuters had forecast the overall trade deficit rising to $47.5 billion in October. U.S. financial markets were little moved by the large trade shortfall, which was flagged in an advance report last week.

Republican President Donald Trump has blamed the trade deficit for the massive loss of U.S. manufacturing jobs as well as moderate economic growth. Trump has ordered the renegotiation of the North American Free Trade Agreement (NAFTA), which was signed in 1994 by the United States, Canada and Mexico.

He told a group of pro-NAFTA Republican senators during lunch on Tuesday that the United States had trade deficits with “everybody.”

“And that’s going to be changing – it’s already changing – but it’s going to be changing fast,” Trump said, adding that NAFTA negotiations were “going to be very successful.”

NAFTA talks have stalled, with Mexico and Canada rejecting a U.S. proposal to raise the minimum threshold for autos to 85 percent North American content from 62.5 percent as well as to require half of vehicle content to be from the United States.

TRADE DRAG

When adjusted for inflation, the trade deficit increased to $65.3 billion, also the largest since January, from $62.2 billion in September. The so-called real trade deficit in October was above the third-quarter average of $62.0 billion, suggesting that trade could subtract from gross domestic product in the October-December quarter.

The government reported last month that trade contributed 0.43 percentage point to the economy’s 3.3 percent annualized growth pace in the third quarter. The Trump administration believes a smaller trade deficit, together with deeper tax cuts could boost annual GDP growth to 3 percent on a sustained basis.

Republicans in the U.S. Congress have approved a broad package of tax cuts, including slashing the corporate income tax rate to 20 percent from 35 percent. But the planned fiscal stimulus will come at a time when the economy is at full employment, which will boost imports and widen the trade gap.

“While U.S. domestic demand will strengthen, foreign producers will supply an increased share,” said Mickey Levy, chief economist Americas and Asia at Berenberg Capital Markets in New York. “We project the U.S. trade and current account deficits will widen.”

Imports of goods and services increased 1.6 percent to a record $244.6 billion in October. Goods imports were the highest since May 2014 amid a $1.5 billion increase in crude oil imports. Imported oil prices averaged $47.26 per barrel in October, the highest since August 2015.

The country’s import bill was also boosted by food imports, which were the highest on record. There were also increases in imports of cellphones and other goods. Imports from China and Mexico were the highest on record in October.

Exports of goods and services were unchanged at $195.9 billion in October as a surge in shipments of industrial supplies and petroleum was offset by sharp declines in and civilian aircraft exports.

Exports to China hit their highest level since December 2013, while those to Mexico were the highest in three years.

A separate report on Tuesday showed activity in the services sector slowed in November amid a sharp moderation in both new and export orders.

The Institute for Supply Management (ISM) said its non-manufacturing index fell to a reading of 57.4 last month from 60.1 in October. A reading above 50 in the ISM index indicates an expansion in the services sector, which accounts for more than two-thirds of the U.S. economy.

Last month, a gauge of new orders received by services industries dropped to 58.7 from a reading of 62.8 in October. A measure of new export orders fell 3.0 points while imports rose 0.5 point.

(Reporting By Lucia Mutikani; additional reporting by Roberta Rampton; Editing by Andrea Ricci)

China pushing billions into Iranian economy as Western firms stall

China pushing billions into Iranian economy as Western firms stall

By Mark Bendeich and Parisa Hafezi

ROME/ANKARA (Reuters) – China is financing billions of dollars worth of Chinese-led projects in Iran, making deep inroads into the economy while European competitors struggle to find banks willing to fund their ambitions, Iranian government and industry officials said.

Freed from crippling nuclear sanctions two years ago, Iran is drawing unprecedented Chinese funding for everything from railways to hospitals, they said. State-owned investment arm CITIC Group recently established a $10 billion credit line and China Development Bank is considering $15 billion more.

“They (Western firms) had better come quickly to Iran otherwise China will take over,” said Ferial Mostofi, head of the Iran Chamber of Commerce’s investment commission, speaking on the sidelines of an Iran-Italy investment meeting in Rome.

The Chinese funding, by far the largest statement of investment intent of any country in Iran, is in stark contrast with the drought facing Western investors since U.S. President Donald Trump disavowed the 2015 pact agreed by major powers, raising the threat sanctions could be reimposed.

Iranian officials say the deals are part of Beijing’s $124 billion Belt and Road initiative, which aims to build new infrastructure – from highways and railways to ports and power plants – between China and Europe to pave the way for an expansion of trade.

A source in China familiar with the CITIC credit line, which was agreed in September, called it “an agreement of strategic intent”. The source declined to give details on projects to be financed, but Iranian media reports have said they would include water management, energy, environment and transport projects.

An Iranian central bank source said loans under the credit line would be primarily extended in euros and yuan.

The China Development Bank signed a memorandum of understanding for $15 billion, Iranian state news agency IRNA said on Sept. 15.

The bank itself declined to comment, in line with many foreign investors and banks, including from China, who were reluctant to discuss their activities in Iran for this story. The web sites of banks and companies often carry little or no information on their Iran operations.

POWERHOUSE

With a population of 80 million and a large, sophisticated middle class, Iran has the potential to be a regional economic powerhouse. But with the risk of sanctions hanging in the air, more and more foreign investors want Tehran to issue sovereign guarantees to protect them in case the projects are halted.

Economic ties between Iran and Italy, its biggest European trade partner, have been affected.

Italy’s state-owned rail company, Ferrovie dello Stato, is a consultant in the building of a 415-km (260-mile) high-speed north-south rail line between Tehran to Isfahan via Qom by state-owned China Railway Engineering Corp.

The Italian firm is separately contracted to build a line from Qom west to Arak, but it needs 1.2 billion euros in financing. Though backed by the state’s export insurance agency, it says it needs a sovereign guarantee.

“We are finalizing the negotiations and we are optimistic about moving forward,” said Riccardo Monti, chairman of Italferr, the state firm’s engineering unit, adding that the financing should be finalised by March next year.

Prime Minister Matteo Renzi’s promise in Tehran last year to oil the wheels of trade with a 4 billion euro credit line from Italy’s state investment vehicle is effectively dead, a source in Italy familiar with the matter said.

Cassa Depositi e Prestiti (CDP) risked losing the confidence of its many U.S. bond-holders who could sell down their holdings if the credit line went ahead, the source said.

A few European banks have deepened trade ties with Iran this year — Austria’s Oberbank <OBER.VI> inked a financing deal with Iran in September.

South Korea has also proved a willing investor, with Seoul’s Eximbank signing an 8 billion euros credit line for projects in Iran in August, according to Chinese state news agency Xinhua.

But China is the standout.

Valerio de Molli, head of Italian think tank European House Ambrosetti, reckons China now accounts for more than double the EU’s share of Iran’s total trade.

“The time to act is now, otherwise opportunities nurtured so far will be lost,” de Molli said.

A MOVING TRAIN

Iranian officials attending this week’s meeting in Rome sought to goad European firms and their bankers into action by talking up the Chinese financing and investments.

“The train is going forward,” said Fereidun Haghbin, director general of economic affairs at Iran’s foreign ministry. “The world is a lot greater than the United States.”

Some Iranian officials remain concerned that investment could become lop-sided and are looking at creative ways to maintain investment links with the West, however.

The Iran chamber is encouraging Western firms to consider transferring technology as a way of earning equity in Iranian projects rather than focusing on capital.

It was also seeking approval to set up a 2.5-billion-euro offshore fund, perhaps in Luxembourg, as an indirect way for foreigners to invest in Iran, especially small and medium-sized Iranian enterprises, Mostofi said.

The fund would issue the financial guarantees that foreigners want in return for a fee, effectively stepping in where banks now fear to tread. Most of the fund’s capital would come from Iran, Mostofi said.

For now, however, big Western firms remain stuck.

Italian power engineering firm Ansaldo Energia, controlled by state investor CDP and part-owned by Shanghai Electric Group <601727.SS>, has been in Iran for 70 years.

Its chairman, Giuseppe Zampini, told Reuters at the Rome conference there were many opportunities for new contracts but his hands were tied for now, partly because Ansaldo bonds were also in the hands of U.S. investors.

“My heart says that we are losing something,” Zampini said.

(Additional reporting by Shu Zhang in BEIJING, Stefano Bernabei in ROME, Parisa Hafezi in ANKARA and Jonathan Saul in LONDON; Editing by Sonya Hepinstall)

Lucky 13? Stocks score longest run of monthly gains on record

Lucky 13? Stocks score longest run of monthly gains on record

By Marc Jones

LONDON (Reuters) – A dive in high-flying U.S. tech stocks on worries their boom may have peaked left investors wondering on Thursday whether the longest global equity bull run in living memory might be starting to splutter.

The caution was sparked by another Wall Street wobble involving a rotation from tech to financials which came just as the near 9-year global rally prepared to notch up another impressive milestone.

The world’s broadest equity gauge – the MSCI all-country index – was on course to finish November with its 13th straight monthly gain on Thursday – the longest winning streak in the index’s 30-year history. Lucky for some.

Though the celebrations were muffled by the tech problems – Samsung and China stocks had also taken another tumble in Asian trading [.SS] – the mood improved again in Europe.

Germany’s Dax <.GDAX> and France’s CAC 40 <.FCHI> both inched up for a third day, and though London’s FTSE <.FTSE> lagged as hopes of a breakthrough in Brexit negotiations pushed the pound higher again, Wall Street futures <ESc1> pointed to U.S. rebound later. [.N] [GBP/]

The latest Reuters global asset poll showed the majority of investors expect shares to keep rising. Robeco strategist Peter van der Welle was one of those, despite noting the market was “playing in extra time”.

“In the absence of a near-term recession trigger, current stretched equity valuations do yet not instil enough fear to change overall market direction,” he said.

Possibly feeding the tech concerns was a Morgan Stanley report earlier this week that the “super-cycle” in memory chip demand looks likely to peak soon.

Shares of Amazon.com <AMZN.O>, Apple <AAPL.O>, Google parent Alphabet <GOOGL.O> Facebook <FB.O> and Netflix <NFLX.O> slid between 2 percent and 5.5 percent on Wednesday. [.N] Asia’s bellwether Samsung <005930.KS> then slumped 4.3 percent to two-month lows.

Tech nerves were not just confined to stocks. Rocketing cryptocurrency Bitcoin <BTC=BTSP> dropped a cool $1,000 to a low of $9,250 before spending European hours pinballing between $9,700 and $10,100.

For perspective, though, the Nasdaq index is still up 26.8 percent so far this year, roughly 7 percentage points more than the MSCI world <.MIWD00000PUS>. For Bitcoin it is a mind-boggling 950 percent. http://tmsnrt.rs/2zJqD6m

“It is true that if you look at the world’s semiconductor sales on chart, their year-on-year growth appears to be peaking out,” said Hiroshi Watanabe, an economist at Sony Financial Holdings. “But if you look at what’s driving demand, it’s not just smart phones and actually a lot of things.”

DOLLAR IN THE DOLDRUMS

In the more mainstream FX markets, the U.S. dollar climbed to 112.25 yen <JPY=>, held its ground versus the euro <EUR> but fell to a two-month low of $1.3480 to the resurgent pound <GBP=>. Measured against major peers the dollar is headed for biggest monthly drop since July. [FRX]

The U.S. Senate took a step on Wednesday toward passage of tax legislation that is a top White House priority, setting up a likely decisive but finely-balanced vote later this week.

Investors also seem to have grown cautious about the outlook of the world’s biggest economy and there are growing signs that it certainly won’t be the only country raising interest rates.

J.P. Morgan Asset Management global head of rates David Tan predicted on Thursday that there will be some 1,000 rate hikes globally over the next decade.

“The current period of economic expansion has therefore been extraordinarily long, almost 10 years and counting, but we know that the days of super low global central bank rates are in the process of coming to an end,” he said.

Borrowing costs in Germany, the euro zone’s benchmark bond issuer, rose to their highest in just over two weeks. The 10-year U.S. Treasuries yield climbed too, reaching 2.3859 percent <US10YT=RR> to near this month’s high of 2.414 percent.

There was no market response after U.S. President Donald Trump nominated Carnegie Mellon University professor Marvin Goodfriend, viewed as a policy hawk, to be a member of the Federal Reserve Board of Governors.

Oil meanwhile moved higher again as OPEC meet in Vienna to debate an extension of the group’s supply-cut agreement.

While the Organization of the Petroleum Exporting Countries and key non-member Russia look set to prolong oil supply cuts until the end of 2018, they have signaled that they may review the deal when they meet again in June if the market overheats.

U.S. crude futures <CLc1> traded at $57.72 per barrel in European trade, up 1.4 percent, while Brent futures <LCOc1> rose 0.7 percent to just over $64 a barrel. [O/R]

(Reporting by Marc Jones; editing by Mark Heinrich)

Redacted Brexit reports spark new row in UK parliament

Redacted Brexit reports spark new row in UK parliament

By Elizabeth Piper

LONDON (Reuters) – Prime Minister Theresa May’s attempts to keep her Brexit plans secret provoked a new row on Tuesday when lawmakers criticized her for failing to hand over complete studies on the economic impact of Britain’s leaving the European Union.

The government had promised to share more than 50 studies on how Brexit would impact different economic sectors, but late on Monday, it gave them some of the reports with parts redacted because of what it called their sensitivity.

The lawmakers hit back, saying the government was riding roughshod over a democratically elected parliament.

“In my experience … the best decisions in life are the ones which are held up to the light and tested,” Keir Starmer, Brexit policy chief for the opposition Labour Party, told Sky News.

Arguments that the economy would suffer if it left the EU were rejected by many Britons at last year’s referendum when the country voted to leave.

But with the economy struggling with lower growth since the vote, some of those who argue that Britain should reverse its decision or at least strive for a softer Brexit that maintains close ties say knowledge of the impact could change minds.

The government has been reluctant to share its impact assessments, with May saying she has to play her cards close to her chest to win the best available deal with the EU.

Last month, parliament used an archaic rule to force the government to hand over what Brexit minister David Davis had earlier referred to as “our 57 studies (that) cover 85 percent of the economy – everything except sectors that are not affected by international trade”.

Late on Monday, Davis wrote to a parliamentary committee on Brexit that the papers had been redacted because he had not been given guarantees that lawmakers would keep the details secret.

That move, Labour and the Scottish National Party say, could place the government in contempt of parliament, which could lead to suspension or expulsion from the House of Commons.

“The government is under an obligation to pass this material to the Brexit Select Committee and, if it appears to be failing in the obligation, we intend to raise it with the Speaker,” Starmer told the BBC.

“The government could be in contempt of parliament.”

(Editing by Stephen Addison)

Black Friday, Thanksgiving online sales climb to record high

Black Friday, Thanksgiving online sales climb to record high

By Richa Naidu

CHICAGO (Reuters) – Black Friday and Thanksgiving online sales in the United States surged to record highs as shoppers bagged deep discounts and bought more on their mobile devices, heralding a promising start to the key holiday season, according to retail analytics firms.

U.S. retailers raked in a record $7.9 billion in online sales on Black Friday and Thanksgiving, up 17.9 percent from a year ago, according to Adobe Analytics, which measures transactions at the largest 100 U.S. web retailers, on Saturday.

Adobe said Cyber Monday is expected to drive $6.6 billion in internet sales, which would make it the largest U.S. online shopping day in history.

In the run-up to the holiday weekend, traditional retailers invested heavily in improving their websites and bulking up delivery options, preempting a decline in visits to brick-and-mortar stores. Several chains tightened store inventories as well, to ward off any post-holiday liquidation that would weigh on profits.

TVs, laptops, toys and gaming consoles – particularly the PlayStation 4 – were among the most heavily discounted and the biggest sellers, according to retail analysts and consultants.

Commerce marketing firm Criteo said 40 percent of Black Friday online purchases were made on mobile phones, up from 29 percent last year.

No brick-and-mortar sales data for Thanksgiving or Black Friday was immediately available, but Reuters reporters and industry analysts noted anecdotal signs of muted activity – fewer cars in mall parking lots, shoppers leaving stores without purchases in hand.

Stores offered heavy discounts, creative gimmicks and free gifts to draw bargain hunters out of their homes, but some shoppers said they were just browsing the merchandise, reserving their cash for internet purchases. There was little evidence of the delirious shopper frenzy customary of Black Fridays from past years.

However, retail research firm ShopperTrak said store traffic fell less than 1 percent on Black Friday, bucking industry predictions of a sharper decline.

“There has been a significant amount of debate surrounding the shifting importance of brick-and-mortar retail,” Brian Field, ShopperTrak’s senior director of advisory services, said.

“The fact that shopper visits remained intact on Black Friday illustrates that physical retail is still highly relevant and when done right, it is profitable.”

The National Retail Federation (NRF), which had predicted strong holiday sales helped by rising consumer confidence, said on Friday that fair weather across much of the nation had also helped draw shoppers into stores.

The NRF, whose overall industry sales data is closely watched each year, is scheduled to release Thanksgiving, Black Friday and Cyber Monday sales numbers on Tuesday.

U.S. consumer confidence has been strengthening over this past year, due to a labor market that is churning out jobs, rising home prices and stock markets that are hovering at record highs.

(Reporting by Richa NaiduEditing by Marguerita Choy)

Venezuela’s indigenous Warao decamp to uncertain future in Brazil

Venezuela's indigenous Warao decamp to uncertain future in Brazil

By Anthony Boadle

PACARAIMA, Brazil (Reuters) – An indigenous tribe that journeyed hundreds of kilometers to flee the economic crisis in Venezuela has been trapped in limbo near the border in Brazil, after it was moved off the streets of the Amazon city of Manaus.

Driven by hunger and illness from their traditional homeland on the Orinoco River delta in northeastern Venezuela, more than 1,200 members of the Warao tribe migrated to northern Brazil to live and beg on the streets.

Brazilian authorities, nongovernmental organizations and churches have helped provide temporary shelter on the border, but the Warao’s future remains uncertain. The tribe insists it will not return to Venezuela, where a deep recession has led to shortages of basic goods under President Nicolas Maduro’s socialist government.

“The children were dying in Venezuela from illness. There was no medicine, no food, no help,” said Rita Nieves, a cacique, or chief, of the matrilineal Warao.

Members of the tribe are still making the arduous journey. Nieves was wearing her best clothes to cross back into Venezuela to bury a 3-month-old Warao baby that had just died in its mother’s arms on the 1,000-km (620-mile) bus ride to Brazil.

“We are staying here because things have not changed in Venezuela,” she said, sitting in a warehouse turned into a living space for 220 Warao in the small border town of Pacaraima.

Children played among dozens of hammocks hanging from metal structures erected by U.N. refugee agency UNHCR. Outside, women cooked broth on wood fires and men sat listening to their shaman talk about the virtues of the moriche palm used to weave baskets and hammocks, as he puffed on a straw cigar.

The Warao have lived for centuries on the Orinoco delta, but some began to leave when fish supplies were depleted by the diversion of the waters to deepen shipping lanes for Venezuelan iron ore and bauxite exports.

Many went to Venezuelan cities to sell craftwork and beg on the streets. However, when the economy tipped into crisis, they began moving to Brazil last year, often just walking across the border without documents.

“They were already begging in Venezuela, but those who gave them money are themselves asking for help today,” said Sister Clara, a missionary from Brazil-based humanitarian organization Fraternidade that runs two shelters for the Warao.

“Who in today’s crisis in Venezuela is going to buy Warao arts and crafts?” she said.

SLEEPING UNDER OVERPASS

Around 500 Warao arrived on the streets of Manaus last year, where they begged from drivers and sold craftwork at traffic lights.

Many slept under a highway overpass until city authorities stopped the begging and moved them into shelters they did not like.

Some then traveled down the Amazon to Santarem and Belem, while others returned to frontier towns, from which they can go back and forth to their delta homeland when they raise enough money.

“They started staying here, sleeping in the streets, and caused a humanitarian emergency,” said Pacaraima social services secretary Isabel Davila.

The town provided an abandoned warehouse with toilets, showers and a kitchen, built with funding from the Mormon church.

Like a similar shelter in the nearby city of Boa Vista that houses 500 Warao, these are temporary landing places, where the Warao can live while they get documents to legalize their status so they can find work, Davila said.

But Chief Rita has no plans to move. Pacaraima’s mayor promised land to grow crops and materials to make Warao craft work, she said, and she wants the Warao children to learn Portuguese.

Half of the land in Roraima state is reserved for indigenous peoples, but an attempt to ask local communities to cede territory to the Warao met with a firm rebuttal.

“We think they might be here for a decade,” said Danusa Sabala, a spokeswoman for Brazil’s Indian affairs office FUNAI, which sees no short-term solution for the Warao.

Ramon Gomez, a Warao chief in the Boa Vista shelter, said their ancestral homeland in the delta was “finished” and the situation in Venezuela was deteriorating rapidly.

“When … this President Maduro took over, everything ended, food, medicine,” Gómez said. “We will be here until Venezuela changes. It will get worse before it gets better.”

(Additional reporting by Sebastian Rocandio and Nacho Doce; Editing by Daniel Flynn and Jonathan Oatis)

U.S. online sales surge, shoppers throng stores on Thanksgiving evening

U.S. online sales surge, shoppers throng stores on Thanksgiving evening

By Richa Naidu and Nandita Bose

(Reuters) – U.S. shoppers had splurged more than $1.52 billion online by Thanksgiving evening, and more bargain hunters turned up at stores this year after two weak holiday seasons as retailers opened their doors early on the eve of Black Friday.

At the start of the holiday season consumer spending rose 16.8 percent year-over-year until 5 p.m. ET on Thursday, according to Adobe Analytics, which tracked 80 percent of online transactions at the top 100 U.S. retailers.

Surging online sales and a shift away from store shopping have thinned the crowds typically seen at stores on Thanksgiving evening and the day after, Black Friday, for the past two years. But a strong labor market, rising home prices and stock markets at record highs have improved shopper appetite this year.

Crowds at stores in many locations around the country were reported to be strong, according to analysts and retail consultants monitoring shopper traffic across the U.S.

“The turnout is clearly better than the last couple of years,” said Craig Johnson, president of Customer Growth Partners. “The parking lots are full and the outlet malls are busy.”

The retail consultancy has 20 members studying customer traffic in different parts of the country.

Moody’s retail analyst Charlie O’ Shea, who was in Bucks County, Pennsylvania, reported healthy traffic at local stores including consumer electronics chain Best Buy, clothing store Old Navy and retailer Kohl’s Corp.

“The weather is cooperating and people here are out,” he said.

The National Retail Federation is projecting that sales for November and December will rise 3.6 percent to 4 percent this year, versus a 4 percent increase last year. Non-store sales, which include online sales and those from kiosks, are expected to rise 11 percent-15 percent to about $140 billion.

In New Jersey, around 50 people lined up a Macy’s at the Westfield Garden State Plaza mall before it opened and around 200 people stood outside the Best Buy store, many to pick up their online orders.

“Me and my husband have a bigger place and we need a bigger TV for the living room,” said Jenipher Gomes, who bought a 50-inch Samsung TV at Best Buy for $399.99. Shopper Hammad Farooq said he waited at the store for an hour to shop for laptops and monitors.

In Chicago, shoppers appeared to be slightly less enthusiastic to emerge from their turkey slumber and crowds were thin along the city’s popular shopping destination, State Street.

“There’s a few more people than normal but I wouldn’t call this crowded at all,” Deloitte auditor Eugenia Liew said as she shopped at discount retailer Target. “I expected a lot more people.”

The holiday season spanning November and December is crucial for retailers because it can account for as much as 40 percent of annual sales. Retailers try to attract shoppers with deep discounts.

Average discounts ranged between 10 and 16 percent with the best deals online on Thanksgiving evening available for computers, sporting goods, apparel and video games, according to date from Adobe.

The number of customers shopping on their smartphones surged, accounting for 46 percent of the traffic on retail websites, while traffic from desktop and laptop computers declined 11 percent and nearly 6 percent respectively, according to the data.

(Reporting by Richa Naidu in Chicago and Nandita Bose in West Hartford, Connecticut; Additional reporting by Jenna Zucker in New Jersey; Editing by Susan Thomas)

U.S. core capital goods orders drop; business spending strong

U.S. core capital goods orders drop; business spending strong

By Lucia Mutikani

WASHINGTON (Reuters) – New orders for key U.S.-made capital goods unexpectedly fell in October after three straight months of hefty gains, but a sustained increase in shipments pointed to robust business investment and economic momentum as the year winds down.

The economy’s prospects were bolstered by other data on Wednesday showing a decline in the number of Americans filing claims for unemployment benefits. Strong business investment and tightening labor market conditions will likely keep the Federal Reserve on track to raise interest rates next month.

“Fed policymakers will likely be impressed with the positive overall trend of business investment in equipment this year,” said Chris Rupkey, chief economist at MUFG in New York. “Interest rates do not need to be left at such low levels if the goal is to further business investment.”

The Commerce Department on Wednesday said orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, declined 0.5 percent last month. That was the biggest drop since September 2016 and followed an upwardly revised 2.1 percent increase in September.

Orders of these so-called core capital goods increased at a 14.5 percent annualized pace in the three months prior to October, the strongest since June 2013. Economists had forecast orders of core capital goods increasing 0.5 percent last month after a previously reported 1.7 percent jump in September. Core capital goods orders rose 4.4 percent on a year-on-year basis.

Shipments of core capital goods advanced 0.4 percent last month after accelerating by 1.2 percent in September, pushing the annualized three-month pace to 13.1 percent. Core capital goods shipments are used to calculate equipment spending in the government’s gross domestic product measurement.

“The solid trend for the shipments data through October suggests that the fourth quarter will be another strong quarter for equipment spending,” said Daniel Silver, an economist at JPMorgan in New York. “We see some upside risk to our real GDP growth forecast for the fourth quarter.”

Prices for U.S. Treasuries rose marginally in thin trading ahead of Thursday’s Thanksgiving holiday. The dollar <.DXY> fell against a basket of currencies. Stocks on Wall Street were little changed near record highs as a retreat in technology stocks was offset by a jump in crude prices.

Core capital goods shipments have been increasing since February, in part fueled by expectations that President Donald Trump and his fellow Republicans in Congress will push through hefty corporate tax cuts.

Republicans in the House of Representatives last week approved a broad package of tax cuts, including an immediate reduction in the corporate income tax rate to 20 percent from 35 percent. Their colleagues in the Senate are advancing their own tax bill, which would also lower corporate taxes by the same rate but delay the reduction by one year.

TIGHTENING LABOR MARKET

Business spending on equipment has buoyed economic growth for the past four quarters and is expected to make a solid contribution to GDP in the October-December period. The economy grew at a 3.0 percent annualized rate in the third quarter.

Growth estimates for the fourth quarter range from as low as a 2.5 percent pace to as high as a 3.4 percent rate.

“With the passage of a corporate tax cut becoming more possible, the likelihood is that future business capital spending should be strong,” said Joel Naroff, chief economist at Naroff Economic Advisors, in Holland, Pennsylvania.

Strong business spending on equipment is helping to boost manufacturing, which accounts for about 12 percent of the U.S. economy. Last month, there were increases in orders for machinery, electrical equipment, appliances and components, primary metals and computers and electronic products.

Overall orders for durable goods, items ranging from toasters to aircraft meant to last three years or more, fell 1.2 percent last month as demand for transportation equipment tumbled 4.3 percent. Durable goods orders increased 2.2 percent in September.

In a separate report on Wednesday, the Labor Department said initial claims for state unemployment benefits declined 13,000 to a seasonally adjusted 239,000 for the week ended Nov. 18, reversing the prior week’s increase.

Claims had risen in recent weeks as a backlog of applications from Puerto Rico was processed following repairs to infrastructure damaged by Hurricanes Irma and Maria.

Last week marked the 142nd straight week that claims remained below the 300,000 threshold, which is associated with a strong labor market. That is the longest such stretch since 1970, when the labor market was smaller.

The labor market is near full employment, with the jobless rate at a 17-year low of 4.1 percent. The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, rose 1,250 to 239,750 last week.

The claims data covered the survey period for the non-farm payrolls component of November’s employment report. The four-week average of claims fell 8,750 between the October and November survey weeks, suggesting steady job growth this month.

The economy created 261,000 jobs in October, a large chunk of which reflected a recovery after workers in Texas and Florida were temporarily displaced by hurricanes. Non-farm payrolls increased by only 18,000 in September.

(Reporting by Lucia Mutikani; Editing by Paul Simao)