Tag Archives: Economy

U.S. jobless claims hit more than 44-year low

By Lucia Mutikani

WASHINGTON (Reuters) – The number of Americans filing for unemployment benefits dropped to its lowest level in more than 44 years last week, pointing to a rebound in job growth after a hurricane-related decline in employment in September.

The labor market outlook was also bolstered by another report on Thursday showing a measure of factory employment in the mid-Atlantic region rising to a record high in October. The signs of labor market strength could cement expectations that the Federal Reserve will raise interest rates in December.

Initial claims for state unemployment benefits fell 22,000 to a seasonally adjusted 222,000 for the week ended Oct. 14, the lowest level since March 1973, the Labor Department said.

But the decrease in claims, which was the largest since April, was probably exaggerated by the Columbus Day holiday on Monday.

Claims are declining as the effects of Hurricanes Harvey and Irma wash out of the data. The hurricanes, which lashed Texas and Florida, boosted claims to 298,000 in early September.

A Labor Department official said claims for the Virgin Islands and Puerto Rico continued to be impacted by Irma and Hurricane Maria, which destroyed infrastructure. As a result the Labor Department continued to estimate claims for the islands.

Nonfarm payrolls dropped by 33,000 jobs in September as Hurricanes Irma and Harvey left more than 100,000 restaurant workers temporarily unemployed. The Virgin Islands and Puerto Rico are not included in nonfarm payrolls.

Economists had forecast claims falling to 240,000 in the latest week. The dollar pared losses against a basket of currencies after the data, while prices for U.S. Treasuries were unchanged.

LABOR MARKET TIGHTENING

Last week marked the 137th consecutive 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 more than 16-1/2-year low of 4.2 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, fell 9,500 to 248,250 last week.

The claims data covered the survey week for October nonfarm payrolls. The four-week average of claims fell 20,500 between the September and October survey periods, supporting views of a rebound in job growth this month.

In a separate report on Thursday, the Philadelphia Fed said its measure of factory employment in the mid-Atlantic region soared 24 points to a record high reading of 30.6 in October.

The average workweek index also increased 8 points to a reading of 19.4. It said no firms reported decreases in employment this month. The robust labor market readings helped to lift the Philadelphia Fed’s current manufacturing activity index four points to a five-month high of 27.9 in October, offsetting declines in new orders and shipments measures.

The claims report also showed the number of people still receiving benefits after an initial week of aid decreased 16,000 to 1.89 million in the week ended Oct. 7, the lowest level since December 1973.

The so-called continuing claims have now been below the 2 million mark for 27 straight weeks, pointing to diminishing labor market slack. The four-week moving average of

continuing claims dropped 22,750 to 1.91 million, the lowest level since January 1974. That was the 25th consecutive week that this measure remained below the 2 million market.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

Canada’s oil sands survive, but can’t thrive in a $50 oil world

FILE PHOTO - Giant dump trucks dump raw tar sands for processing at the Suncor tar sands mining operations near Fort McMurray, Alberta, Canada on September 17, 2014. REUTERS/Todd Korol/File Photo

By Nia Williams

CALGARY, Alberta (Reuters) – Canada’s oil sands producers are stuck in a rut.

The nation’s oil firms are retrenching, with large producers planning little or no further expansion and some smaller projects struggling even to cover their operating costs.

As the era of large new projects comes to a close, many mid-sized producers – those with fewer assets and producing less than 100,000 barrels of oil a day in the oil sands – have shelved expansion plans, unable to earn back the high start-up costs with crude at around $50 per barrel. Larger Canadian producers, meanwhile, focus on projects that in the past were associated with smaller names.

The last three years have seen dozens of new projects mothballed and expansions put on hold, meaning millions of barrels of crude from the world’s third-largest reserves may never be extracted.

Where industry groups in 2014 expected Canada’s oil sands output to more than double to nearly 5 million barrels per day (bpd) by 2030, that forecast has been knocked down to 3.7 million bpd.

This follows a spell of consolidation that has seen foreign majors sell off more than $23 billion in Canadian assets in a year and turn to U.S. shale patches such as the Permian basin in Texas, which produce returns more quickly and where proximity to refiners means the barrels fetch a better price.

“We cannot compete with that huge sucking noise to the south that is called the Permian. Investment dollars are spiraling away down there,” Derek Evans, chief executive of small oil sands producer Pengrowth Energy <PGF.TO> told Reuters in an interview.

Permian production rose 21 percent in 12 months through July compared to a 9 percent increase in Alberta’s oil sands, according to Canadian and U.S. government data.

COSTLY STARTUP PHASE

Mid-sized producers are hurting the most, due to start-up costs that far exceed those in other major producing areas. Oil sands producers have slashed operating costs by a third since 2014, but building a new thermal project – in which steam is pumped as deep as one kilometer (1094 yards)underground to liquefy tar-like bitumen and bring it to the surface – requires U.S. crude benchmark at around $60 a barrel to break even, analysts estimate.

The North American benchmark West Texas Intermediate crude <CLc1> has traded between $42 and $55 a barrel so far this year. The U.S. Energy Information Administration forecasts it will average $49.69 a barrel in 2017 and $50.57 a barrel next year.

There are around half a dozen thermal projects in the costly start-up phase, when engineers steadily increase steam pressure to bring a reservoir’s production up to full capacity.

One of those is Athabasca Oil Corp’s <ATH.TO> Hangingstone project. It was originally conceived as a 80,000 bpd project, but instead will bring output to only 12,000 bpd from the current 9,000 bpd. The project can break even with U.S. crude prices of at least $53 a barrel, meaning right now Athabasca keeps losing money on Hangingstone production. Size is crucial in the oil sands; the more bitumen a company can squeeze out of a plant, the lower fixed costs per barrel will be.

“(Athabasca) was a company built when oil was $100 a barrel. In those days we were going to find funding for joint ventures and build greenfield projects to a massive size. The reality is the world changed,” chief executive Rob Broen told Reuters.

Quarterly filings show why smaller players are struggling. Transportation and marketing costs at Hangingstone, along with the cost of natural gas used to produce steam to extract oil, and other operating costs are much higher compared with Cenovus Energy’s <CVE.TO> Christina Lake project, one of the highest-quality and biggest bitumen reservoirs in the oil sands.

Pengrowth’s development plans are on hold as well, Evans said, because the company needs U.S. crude to stay at $55 for a sustained period to justify investment in its 14,000 bpd Lindbergh thermal project, at one point intended to grow as large as 40,000 bpd.

THE BIG GO SMALL

Large producers have pulled back in response to lower global prices as well. For example, Suncor Energy’s <SU.TO> 194,000 bpd Fort Hills mine, due to start producing oil by the end of this year, is the company’s last megaproject.

Canadian Natural <CNQ.TO> restarted construction on its 40,000 bpd Kirby North project last November, one of a handful of smaller projects to start producing in 2019.

Other companies like MEG Energy <MEG.TO> are planning expansions at existing sites in 20,000 bpd “modules” rather than starting large new projects from scratch. But even such more modest investments are out of reach for smaller companies like Athabasca and Pengrowth.

“It’s very hard (for a small company) to drag itself out of the financing black hole it would have to get in to build a project to start with,” said Nick Lupick, an analyst at AltaCorp Capital. “A large company can take that on their balance sheet without having to leverage too highly.”

(Reporting by Nia Williams; Editing by David Gaffen and Tomasz Janowski)

Dow tops 23,000-mark for the first time on strong earnings

Dow tops 23,000-mark for the first time on strong earnings

By Sruthi Shankar

(Reuters) – The Dow Jones Industrial Average breached the 23,000-mark for the first time on Tuesday, powered by strong earnings from UnitedHealth and Johnson & Johnson.

The blue-chip index has surpassed four similar 1,000-point milestones this year, indicating investor faith in the bull-run despite lofty stock valuations.

The broader market, however, was weighed down by losses in industrial, financial and technology stocks.

Shares of the largest U.S. health insurer <UNH.N> touched a life high, rising as much as 5.83 percent, after the company reported a stronger-than-expected profit and raised its full-year earnings forecast.

That, along with a 2.6 percent rise in Johnson & Johnson <JNJ.N>, led a 1 percent gain in the S&P healthcare sector <.SPXHC>.

Goldman Sachs <GS.N> dipped 2.07 percent despite reporting a profit beat and smaller-than-expected trading revenue fall. Morgan Stanley <MS.N> rose 0.92 percent as its wealth management business insulated the bank from weakness in trading revenue.

“There was some good earnings, real good economic data in spite of the hurricanes,” said Peter Cardillo, chief market economist at First Standard Financial in New York.

“We’re not seeing a market that’s galloping along here. The market from a technical perspective is tired. What you’re seeing is some hesitancy but not any major declines.”

Treasury yields and dollar gained after a report that U.S. President Donald Trump was impressed by his meeting with economist John Taylor, who is considered to favor higher interest rates than current Federal Reserve Chair Janet Yellen.

The equity market, however, was not impacted by a report that Trump is likely to announce his choice before going to Asia in early November.

At 12:33 a.m. ET, the S&P 500 <.SPX> was down 1.1 points, or 0.04 percent, at 2,556.54 and the Nasdaq Composite <.IXIC> was down 2.98 points, or 0.05 percent, at 6,621.02.

The Dow Jones Industrial Average <.DJI> was up 19.47 points, or 0.08 percent, at 22,976.43, after briefly hitting the 23,000 mark, when only eight of its 30 components were making gains.

Nine of the 11 major S&P indexes were lower, led by a 0.42 percent drop in industrials <.SPLRCI> index.

General Electric’s <GE.N> 1.15 percent fall led losses in the industrial sector, while drop in shares of Microsoft <MSFT.O> and Intel <INTC.O> weighed on the tech sector.

Netflix <NFLX.O> slipped 1.15 percent after touching a record high as more subscribers signed up for its popular original content in the latest quarter.

(ht Reporting by Sruthi Shankar in Bengaluru; Editing by Arun Koyyur)

U.S. jobless claims fall to more than one-month low

Pedestrians pass a sign advertising a sale and a job opening at a shop on Newbury Street in Boston, Massachusetts, U.S., October 11, 2017. REUTERS/Brian Snyder

WASHINGTON (Reuters) – The number of Americans filing for unemployment benefits fell to more than a one-month low last week as claims in Texas and Florida continued to decline after being boosted by Hurricanes Harvey and Irma.

Initial claims for state unemployment benefits decreased 15,000 to a seasonally adjusted 243,000 for the week ended Oct. 7, the lowest level since late August, the Labor Department said on Thursday. Data for the prior week was revised to show 2,000 fewer applications received than previously reported.

A Labor Department official said Harvey and Irma along with Hurricane Maria affected claims for Texas, Florida, South Carolina, Puerto Rico and the Virgin Islands. In addition, claims for Virginia were estimated.

Economists polled by Reuters had forecast claims falling to 251,000 in the latest week. Claims have been declining since surging to an almost three-year high of 298,000 at the start of September as workers displaced by the hurricanes were left temporarily unemployed.

As a result of Harvey and Irma, nonfarm payrolls dropped by 33,000 jobs last month, the first decrease in employment in seven years. A rebound in job growth is expected in October, boosted by the return of the dislocated workers as well as the start of rebuilding and clean-up efforts in storm-ravaged areas.

Underscoring the labor market’s underlying strength, claims have now been below the 300,000 threshold, which is associated with a robust labor market, for 136 straight weeks. 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 more than a 16-1/2-year low of 4.2 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, fell 9,500 to 257,500 last week.

The claims report also showed the number of people still receiving benefits after an initial week of aid dropped 32,000 to 1.89 million in the week ended Sept. 30, the lowest level since December 1973.

The so-called unadjusted continuing claims for Texas and Florida fell, suggesting some of the workers affected by Harvey and Irma had returned to their jobs. The unemployment rate among people receiving jobless benefits fell one-tenth of a percentage point to 1.3 percent.

Overall continuing claims have now been below the 2 million mark for 26 straight weeks, indicating that labor market slack continues to diminish. The four-week moving average of continuing claims fell 11,500 to 1.93 million, remaining below the 2 million level for the 24th consecutive week.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

EU lawmakers give tentative nod to Brexit clearing law that could clobber Britain

European Commission President Jean-Claude Juncker addresses the European Parliament during a debate on The State of the European Union in Strasbourg, France, September 13, 2017. REUTERS/Christian Hartmann

By Huw Jones

LONDON (Reuters) – European Union lawmakers on Tuesday gave broad support to a law that could end the City of London’s global dominance in clearing euro-denominated financial contracts after Brexit.

The plan has raised hackles in Britain, where it threatens both job losses and tax revenues.

The draft EU law proposes that a foreign clearing house — which stands between two sides of a transaction to ensure its smooth completion — must be subject to more intense supervision by the bloc’s regulators if it wants to serve customers in the EU.

But if a clearing house is systemically important to the euro zone, then euro-denominated business with EU based customers must move to the bloc.

The draft law is anathema to Britain, which voted to leave the EU in a referendum last year.

It is home to LCH, an arm of the London Stock Exchange that clears most euro-denominated swaps in Europe. Financial services represent Britain’s biggest tax earning sector and the LSE has warned that thousands of jobs could leave the UK if euro clearing was forced out.

In the first debate in the European Parliament on Tuesday, lawmakers from the two biggest parties, the center right European People’s Party and the center-left Progressive Alliance of Socialists and Democrats, gave broad backing to the draft law, but called for some changes.

“It’s a good proposal from the European Commission,” Polish center-right MEP Danuta Huebner told parliament’s economic affairs committee.

“In principle, I support the proposal, which I find necessary,” added Roberto Gualtieri, an Italian center-left lawmaker who chairs the committee.

The European Parliament and EU states have final say on the reform, with changes expected during the approval process.

No timetable has been agreed for approving the law and, separately, there has been scant agreement on any new relationship between the EU and Britain.

That means LCH’s European customers don’t know at the moment if they can continue using the London clearer after Brexit.

Exploit this uncertainty, Frankfurt-based Eurex unveiled a “Brexit-proof” package of sweeteners on Monday to woo LCH customers.

BREXIT PROTECTIONISM

Huebner said parts of the draft law were too complex, creating uncertainty over how exactly EU regulators and the European Central Bank would decide when euro clearing conducted outside the bloc must move to the EU.

“We have to do everything to avoid potential inconsistency in decision-making,” Huebner said. “We must not politicize the whole process.”

Gualtieri said there was a need to “upgrade” EU supervision of clearing, but lawmakers should be “very cautious, reflective and in a listening mood” given the potential consequences.

Others said there was need to avoid protectionism or using clearing as a stick to beat Britain given that the UK was already “fighting with itself”.

Kay Swinburne, a British center-right lawmaker, a lone voice in outright opposition, said a regional restriction on a global currency is the wrong approach.

“There is a reason why we have done so much work at the global level, and I really hope that we are not going to throw all of that away to have some protectionism with regards to a Brexit decision,” Swinburne added.

Banks and the LSE have warned that forcing out some clearing would split markets and bump up costs for EU companies who use swaps to insure against adverse moves in borrowing costs, raw material prices, and currency swings.

(Reporting by Huw Jones Editing by Jeremy Gaunt)

Venezuela’s January-September inflation 536 percent: National Assembly

People buy food and other staple goods inside a supermarket in Caracas, Venezuela, July 25, 2017. REUTERS/Ueslei Marcelino

CARACAS (Reuters) – Inflation in Venezuela’s crisis-hit economy was 536.2 percent in the nine months to September, largely due to the rapid depreciation of the local currency on the black market, the opposition-controlled National Assembly said on Friday.

The government stopped releasing price data more than a year ago, but congress has published its own figures since January and they have been close to private economists’ estimates.

As well as the alarming Jan-Sept cumulative rise, the legislative body – which has been sidelined by President Nicolas Maduro’s government – put monthly inflation at 36.3 percent for September, compared with 34 percent in August.

Opponents say Maduro and his predecessor, Hugo Chavez, have wrecked a once-prosperous economy with 18 years of state-led socialist policies from nationalizations to currency controls.

The government says it is victim of an “economic war”, including speculation and hoarding, by pro-opposition businessmen.

The country’s bolivar currency has weakened sharply in recent weeks on the widely-watched black market rate.

On Friday, $1 was worth nearly 27,000 bolivars on the black market, versus 22 when Maduro took power in April 2013 and 18,500 at the start of September this year.

Opposition lawmaker and economist Angel Alvarado said the government’s restriction of dollars available via official currency exchange mechanisms had pressured prices in September.

“The government strategy is only making Venezuelans poorer by the day,” he said, adding that families were now spending 80 percent of income on food.

Prices in Venezuela, which has long had one of the highest inflation rates in the world, rose 180.9 percent in 2015 and 274 percent in 2016, according to official figures, although many economists believe the real data was worse.

(Reporting by Caracas newsroom; Editing by Jonathan Oatis)

Discord among Republicans already weighs on Trump’s tax plan

U.S. President Donald Trump meets with a bipartisan group of members of Congress, including U.S. Representative Josh Gottheimer (D-NJ) (L) and Representative Tom Reed (R-NY) (R), at the White House in Washington, U.S. September 13, 2017. REUTERS/Jonathan Ernst

By Amanda Becker and David Morgan

WASHINGTON (Reuters) – Disagreement among U.S. congressional Republicans is already swirling around a tax cut plan unveiled days ago by President Donald Trump, who has proposed repealing the tax on inheritances and eliminating a deduction for state and local tax payments.

The discord shows the difficulty of overhauling the complex U.S. tax code. This task has defied Washington since 1986, the last time a comprehensive rewrite was completed despite lobbyists who defend each tax break.

Trump has yet to score a major legislative win since taking office in January and is pushing hard for a tax code revamp. But his plan is meeting the same internal Republican tensions between moderates and conservatives that have sunk his efforts this year to repeal the Obamacare health law.

“There’s a lot of give and take,” Trump economic adviser Gary Cohn told Fox Business Network on Friday.

Members of the administration “have been meeting everyday with the tax writers trying to figure out where they need to end up to get the votes … we’re going to make sure the president gets what he asks for,” he added.

One obstacle is the projected fiscal impact of the plan, which would slash U.S. revenues and expand the federal deficit and the national debt, which now exceeds $20 trillion.

Republican lawmakers from high-tax states such as New York exited meetings this week with Kevin Brady, chairman of the House of Representatives’ tax-writing committee, saying there would be some sort of compromise on repealing the deduction for state and local tax payments.

Separately, some Republican senators were questioning the repeal of a 40 percent inheritance tax levied on estate assets worth more than $5.5 million, or $11 million for married couples. That tax affects only about 0.2 percent of estates, according to the Tax Policy Center, a Washington think tank.

“That is not a priority for me as we seek to craft this tax bill,” Senator Susan Collins, who has often been a key Republican vote, said in a statement on Thursday.

Republicans want to use a procedure known as budget reconciliation to pass eventual tax legislation, which allows passage with a simple majority in the 100-seat Senate. Republicans hold 52 Senate seats and can only afford to lose support from two senators, with Vice President Mike Pence able to cast a tie-breaking vote. Democrats will likely oppose the legislation.

One Republican fiscal hawk, Senator Bob Corker, has already said he cannot support tax legislation that adds to the annual federal deficit.

“We remain very bearish on any tax legislation passing this year – or next,” Cowen and Co analyst Chris Krueger said in a Friday research note.

The Trump plan, made public last week, calls for up to $6 trillion in tax cuts over 10 years. Without accompanying spending reductions, the budget would hugely expand the deficit, according to some estimates.

The administration contends tax cuts would spur so much economic growth that the resulting new revenues would help offset the cost.

In addition, Republicans are proposing “revenue raisers,” such as ending the deduction for payments of state and local tax, known as SALT. Doing that would raise about $1.3 trillion over a decade, the Tax Policy Center said.

Almost 30 percent of taxpayers currently deduct state and local taxes. In New Jersey, for example, 41 percent of tax filers, meaning individuals or married couples, claimed the deduction, which averaged $17,850, according to a Government Finance Officers Association analysis of Internal Revenue Service data.

Although the deduction disproportionately benefits people in high-tax states and localities, individuals in all states claim it. In Georgia, for example, 33 percent of tax filers claim an average deduction of $9,158, the report said.

Republican Representative Chris Collins of New York, a Trump ally, told reporters earlier this week that lawmakers from high-tax states, such as his own, were discussing “ways to level the playing field,” including capping the amount of the deduction or putting other limits on it.

“There are many districts with Republican members where state and local deduction is used by a large portion of the taxpayers,” said Frank Sammartino, a senior fellow at the Tax Policy Center. “So it’s not surprising that it’s not strictly a blue state/red state thing.”

Senate Democratic leader Chuck Schumer called the state and local tax deduction the “Achilles’ heel” of tax reform and said his party would oppose any move to repeal it. He dismissed compromise plans as unfeasible.

Brady said on Thursday that at this point there has been no change to the framework, but tax writers are “listening very carefully” to lawmakers’ concerns.

“It’s got to be frustrating when you’re in a state where local and state officials really put the screws to taxpayers,” Brady told reporters. “We are determined to provide tax relief to every American, regardless of where they live.”

(Additional reporting by Richard Cowan; Writing by Amanda Becker; Editing by Leslie Adler and Lisa Von Ahn)

Hurricanes Harvey, Irma sink U.S. payrolls in September

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. employment fell in September for the first time in seven years as Hurricanes Harvey and Irma left displaced workers temporarily unemployed and delayed hiring, the latest indication that the storms undercut economic activity in the third quarter.

The Labor Department said on Friday nonfarm payrolls decreased by 33,000 jobs last month amid a record drop in employment in the leisure and hospitality sector.

The decline in payrolls was the first since September 2010. The Department said its analysis suggested that the net effect of Harvey and Irma, which wreaked havoc in Texas and Florida in late August and early September, was to “reduce the estimate of total nonfarm payroll employment for September.”

Economists had forecast payrolls increasing by 90,000 jobs last month. Payrolls are calculated from a survey of employers, which treats any worker who was not paid for any part of the pay period that includes the 12th of the month as unemployed.

Many of the dislocated people will probably return to work. That, together with rebuilding and clean-up is expected to boost job growth in the coming months. Leisure and hospitality payrolls dived 111,000, the most since records started in 1939, after being unchanged in August.

There were also decreases in retail and manufacturing employment last month. Stripping out the effects of the hurricanes, the labor market remains strong. The government revised data for August to show 169,000 jobs created that month instead of the previously reported 156,000.

Harvey and Irma did not have an impact on the unemployment rate, which fell two-tenths of a percentage point to 4.2 percent, the lowest since February 2001. The smaller survey of households from which the jobless rate is derived treats a person as employed regardless of whether they missed work during the reference week and were unpaid as result.

The decrease in the unemployment rate reflected an increase in household employment. It also came despite more people entering the labor force.

The dollar rose against a basket of currencies after the data, while prices for U.S. Treasuries fell. U.S. stock index futures were trading lower.

DISRUPTIONS BOOST WAGES

Underscoring the disruptive impact of the hurricanes, the household survey showed 1.5 million people stayed at home in September because of the bad weather, the most since January 1996. About 2.9 million people worked part-time, the largest number since February 2014.

The length of the average workweek was unchanged at 34.4 hours. With the hurricane-driven temporary unemployment concentrated in low-paying industries like retail and leisure and hospitality, average hourly earnings increased 12 cents or 0.5 percent in September after rising 0.2 percent in August.

That pushed the annual increase in wages to 2.9 percent, the largest gain since December 2016, from 2.7 percent in August. Annual wage growth of at least 3.0 percent is need to raise inflation to the Fed’s 2 percent target, analysts say

The mixed employment report should not change views the Federal Reserve will raise interest rates in December. Fed Chair Janet Yellen cautioned last month that the hurricanes could “substantially” weigh on September job growth, but expected the effects would “unwind relatively quickly.”

The U.S. central bank said last month it expected “labor market conditions will strengthen somewhat further.” The Fed left interest rates unchanged in September, but signaled it expected one more hike by the end of the year. It has increased borrowing costs twice this year.

The employment report added to August consumer spending, industrial production, homebuilding and home sales data in suggesting that the hurricanes will dent economic growth in the third quarter.

Economists estimate that the back-to-back storms, including Hurricane Maria which destroyed infrastructure in Puerto Rico last month, could shave at least six-tenths of a percentage point from third-quarter gross domestic product.

Growth estimates for the July-September period are as low as a 1.8 percent annualized rate. The economy grew at a 3.1 percent rate in the second quarter.

Private payrolls fell by 40,000 jobs, the biggest drop since February 2010. Manufacturing employment slipped by 1,000 jobs pulled down by declines at motor vehicle assembly and chemical plants as well as textile mills.

Retail employment fell by 2,900 jobs as food stores payrolls tumbled 6,900. There were also declines in employment at department stores. Construction payrolls rose 8,000 in September as a 3,900 drop in jobs at homebuilding sites was offset by increases elsewhere.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

Russia throws North Korea lifeline to stymie regime change

Russia throws North Korea lifeline to stymie regime change

By Andrew Osborn

MOSCOW (Reuters) – Russia is quietly boosting economic support for North Korea to try to stymie any U.S.-led push to oust Kim Jong Un as Moscow fears his fall would sap its regional clout and allow U.S. troops to deploy on Russia’s eastern border.

Though Moscow wants to try to improve battered U.S.-Russia relations in the increasingly slim hope of relief from Western sanctions over Ukraine, it remains strongly opposed to what it sees as Washington’s meddling in other countries’ affairs.

Russia is already angry about a build-up of U.S.-led NATO forces on its western borders in Europe and does not want any replication on its Asian flank.

Yet while Russia has an interest in protecting North Korea, which started life as a Soviet satellite state, it is not giving Pyongyang a free pass: it backed tougher United Nations sanctions against North Korea over its nuclear tests last month.

But Moscow is also playing a fraught double game, by quietly offering North Korea a slender lifeline to help insulate it from U.S.-led efforts to isolate it economically.

A Russian company began routing North Korean internet traffic this month, giving Pyongyang a second connection with the outside world besides China. Bilateral trade more than doubled to $31.4 million in the first quarter of 2017, due mainly to what Moscow said was higher oil product exports.

At least eight North Korean ships that left Russia with fuel cargoes this year have returned home despite officially declaring other destinations, a ploy U.S. officials say is often used to undermine sanctions against Pyongyang.

And Russia, which shares a short land border with North Korea, has also resisted U.S.-led efforts to repatriate tens of thousands of North Korean workers whose remittances help keep the country’s hard line leadership afloat.

“The Kremlin really believes the North Korean leadership should get additional assurances and confidence that the United States is not in the regime change business,” Andrey Kortunov, head of the Russian International Affairs Council, a think-tank close to the Russian Foreign Ministry, told Reuters.

“The prospect of regime change is a serious concern. The Kremlin understands that (U.S. President Donald) Trump is unpredictable. They felt more secure with Barack Obama that he would not take any action that would explode the situation, but with Trump they don’t know.”

Trump, who mocks North Korean leader Kim Jong Un as a “rocket man” on a suicide mission, told the United Nations General Assembly last month he would “totally destroy” the country if necessary.

He has also said Kim Jong Un and his foreign minister “won’t be around much longer” if they made good on a threat to develop a nuclear-tipped missile capable of reaching the United States.

STRATEGIC BORDER

To be sure, Beijing’s economic ties to Pyongyang still dwarf Moscow’s and China remains a more powerful player in the unfolding nuclear crisis. But while Beijing is cutting back trade as it toughens its line on its neighbor’s ballistic missile and nuclear program, Russia is increasing its support.

People familiar with elements of Kremlin thinking say that is because Russia flatly opposes regime change in North Korea.

Russian politicians have repeatedly accused the United States of plotting so-called color revolutions across the former Soviet Union and any U.S. talk of unseating any leader for whatever reason is politically toxic in Moscow.

Russia’s joint military exercises with neighboring Belarus last month gamed a scenario where Russian forces put down a Western-backed attempt for part of Belarus to break away.

With Russia due to hold a presidential election in March, politicians are again starting to fret about Western meddling.

In 2011, President Vladimir Putin accused then U.S. Secretary of State Hillary Clinton of trying to stir up unrest in Russia and he has made clear that he wants the United States to leave Kim Jong Un alone.

While condemning Pyongyang for what he called provocative nuclear tests, Putin told a forum last month in the eastern Russian port of Vladivostok that he understood North Korea’s security concerns about the United States and South Korea.

Vladivostok, a strategic port city of 600,000 people and headquarters to Russia’s Pacific Fleet, is only about 100 km (60 miles) from Russia’s border with North Korea.

Russia would be fiercely opposed to any U.S. forces deploying nearby in a reunited Korea.

“(The North Koreans) know exactly how the situation developed in Iraq,” Putin told the economic forum, saying Washington had used the false pretext that Baghdad had weapons of mass destruction to destroy the country and its leadership.

“They know all that and see the possession of nuclear weapons and missile technology as their only form of self-defense. Do you think they’re going to give that up?”

Analysts say Russia’s view is that North Korea’s transformation into a nuclear state, though incomplete, is permanent and irreversible and the best the West can hope for is for Pyongyang to freeze elements of its program.

NOTHING PERSONAL

Kortunov, the think-tank chief close to the Russian Foreign Ministry, said he did not think the Kremlin’s defense of Kim Jong Un was based on any personal affection or support for North Korea’s leadership, likening Moscow’s pragmatic backing to that it has given Syria’s President Bashar al-Assad.

Moscow’s position was motivated by a belief the status quo made Russia a powerful geopolitical player in the crisis because of its close ties to Pyongyang, Kortunov said, just as Russia’s support for Assad has gifted it greater Middle East clout.

He said Moscow knew it would lose regional leverage if Kim Jong Un fell, much as its Middle East influence was threatened when Islamist militants looked like they might overthrow Assad in 2015.

“It’s a very delicate balancing act,” said Kortunov.

“On the one hand, Russia doesn’t want to deviate from the line of its partners and mostly from China’s position on North Korea which is getting tougher. But on the other hand, politicians in Moscow understand that the current situation and level of interaction between Moscow and Pyongyang puts Russia in a league of its own compared to China.”

If the United States were to remove Kim Jong Un by force, he said Russia could face a refugee and humanitarian crisis on its border, while the weapons and technology Pyongyang is developing could fall into even more dangerous non-state hands.

So despite Russia giving lukewarm backing to tighter sanctions on Pyongyang, Putin wants to help its economy grow and is advocating bringing it into joint projects with other countries in the region.

“We need to gradually integrate North Korea into regional cooperation,” Putin told the Vladivostok summit last month.

(Editing by David Clarke)

Wall Street at new record highs as tech, auto advance

A trader works inside a stall on the floor of the New York Stock Exchange (NYSE) in New York, U.S., October 3, 2017. REUTERS/Brendan McDermid

By Ankur Banerjee and Gayathree Ganesan

(Reuters) – All the three main U.S. stock indexes hit fresh record highs on Tuesday, buoyed by a rally in tech stocks and gains in Ford Motor <F.N> and General Motors <GM.N> after the carmakers reported strong September sales.

Seven of the 11 major S&P indexes were higher, led by technology <.SPLRCT> and consumer discretionary <.SPLRCD> sectors.

Major automakers posted higher U.S. new vehicle sales in September, as consumers in hurricane-hit parts of the country rushed to replace flood-damaged cars.

However, the market traded in a narrow range as investors awaited upcoming quarterly earnings from big names to help justify the lofty valuations.

Third-quarter earnings for S&P 500 companies are expected to increase 5.5 percent from a year earlier, according to Thomson Reuters research, after rising a better-than-expected 12.3 percent in the second quarter.

“Tech has been in leadership for the first nine months of this year,” said Art Hogan, chief market strategist at Wunderlich Securities in New York.

The sector is stabilizing as seasonal rotation ends and investors are looking at the stocks as opportunities now, he said.

The markets have been scaling new highs and on Monday found support from factory data that pointed to underlying strength in the U.S. economy.

The encouraging data helped world shares touch their latest record highs on Tuesday, while lifting the dollar to its loftiest in 1-1/2 months.

“The first two days of October seem to be a continuation of what happened in the last two weeks of September … we’re gradually grinding higher in the month of October,” said Hogan.

At 11:07 a.m. EDT, the Dow Jones Industrial Average <.DJI> was up 61.05 points, or 0.27 percent, at 22,618.65, while the S&P 500 <.SPX> was up 0.97 points, or 0.04 percent, at 2,530.09.

The Nasdaq Composite <.IXIC> was up 3.25 points, or 0.05 percent, at 6,519.97.

General Motors’ shares rose 3.7 percent to a record high of $43.32 in morning trading, while Ford’s stock was up 2.05 percent at $12.34.

But rival Tesla Inc <TSLA.O> was down 2 percent after the luxury electric vehicle maker said its planned ramp-up for the new Model 3 mass-market sedan faced production bottlenecks.

Lennar Corp’s <LEN.N> shares rose about 3 percent following a higher-than-expected quarterly profit from the No.2 U.S. homebuilder.

Declining issues outnumbered advancers on the NYSE by 1,455 to 1,286. On the Nasdaq, 1,368 issues rose and 1,358 fell.

(Reporting by Ankur Banerjee in Bengaluru; Editing by Sriraj Kalluvila)