Tag Archives: Economy

Trump touts Ford investment in three Michigan plants

U.S. President Donald Trump greets Ford Motor Company CEO Mark Fields as he hosts a meeting with U.S. auto industry CEOs at the White House in Washington January 24, 2017. REUTERS/Kevin Lamarque

By Nick Carey and Susan Heavey

DETROIT/WASHINGTON (Reuters) – U.S. President Donald Trump on Tuesday touted an expected announcement from Ford Motor Co <F.N> about investments and jobs at U.S. plants, saying the automaker would make a major investment in three Michigan facilities.

The company is expected to make an announcement later on Tuesday morning. In January, Ford scrapped plans to build a $1.6 billion car factory in Mexico and instead added 700 jobs in Michigan following Trumps criticism.

A person briefed on the matter said Ford is announcing new investments in existing Michigan plants and some new jobs on Tuesday but it is not clear if these jobs were previously expected.

The move comes at a time when U.S. new car and truck sales are at an all-time high and investors are watching closely for signs of a possible downturn in the highly-cyclical industry.

The planned announcement comes less than two weeks after Trump visited Detroit to promise more auto jobs for Michigan and other Midwestern U.S. states.

At times Trump has promoted job announcements at the White House that had been previously planned or announced. Last week he praised an investment decision by Charter Communications Inc <CHTR.O> that the company announced before he was elected.

Ford will announce investments at its Michigan plants in Wayne, Flat Rock and Romeo, the Detroit News reported, citing three sources familiar with the plans. The newspaper said it was unclear how many jobs Ford would create or the amount it would invest.

Last week, Ford said it expected higher investments, as well as other spending, to weigh on 2017 earnings.

U.S. sales of new cars and trucks hit a record high of 17.55 million units in 2016. On Friday, industry consultants J.D. Power and LMC Automotive maintained their 2017 sales forecast of 17.6 million vehicles, an increase of 0.2 percent from 2016.

But they said automakers’ incentive spending in the United States in the first half of March had hit a record for the month, breaking the previously set mark in March 2009 during the height of the Great Recession.

On Monday, Moody’s Investors service said it expected U.S. new vehicle sales to dip in 2017 and warned of a “significant credit risk” for auto lenders as competition for loans intensifies.

Trump has focused on U.S. automotive jobs, meeting with company executives as well as pressuring – and praising – them on Twitter. Executives have also said they hope his administration will pursue tax and regulatory policies that would benefit U.S. manufacturers.

(Reporting by Susan Heavey; Editing by Lisa Von Ahn, Bernard Orr)

Mexico inflation rises at fastest pace in nearly eight years

MEXICO CITY (Reuters) – Mexican annual inflation rose at its fastest pace in nearly 8 years in early March, prompting central bank chief Agustin Carstens to hint at higher interest rates to combat an inflation “bubble” he said would subside later in the year.

The headline inflation rate for the year through mid-March was 5.29 percent <MXCPHI=ECI>, the national statistics institute said on Thursday. The figure was the highest since the second half of February 2009, and was above expectations of economists polled by Reuters for 5.25 percent.

Mexico’s central bank raised its benchmark interest rate last month to a nearly eight-year high after a steep hike in gasoline prices and weakness in the peso sparked by Donald Trump’s election as U.S. president.

Just after the data was published, Carstens said the central bank had room to continue adjusting rates.

The peso has recovered as U.S. officials have taken a more conciliatory tone toward Mexico and the U.S. Federal Reserve said it would stick to gradual interest-rate increases.

Still, many analysts expect the central bank to lift rates again on March 30 following the Fed as inflation climbs.

The core price index <MXCPIC=ECI>, which strips out some volatile food and energy prices, rose 4.32 percent in the 12-month period to mid-March.

The figure was above the 4.29 percent forecast in a Reuters poll.

In the first half of March, consumer prices rose 0.35 percent <MXCPIF=ECI> while the core price index <MXCPIH=ECI> climbed 0.31 percent.

(Reporting By Alexandra Alper and Miguel Angel Gutierrez; Editing by Bernadette Baum)

U.S. new home sales hit seven-month high; jobless claims rise

A job seeker fills out an application at the King Soopers grocery store table at a job fair at the Denver Workforce Center in Denver, Colorado, U.S. February 15, 2017. REUTERS/Rick Wilking

By Lucia Mutikani

WASHINGTON (Reuters) – New U.S. single-family home sales jumped to a seven-month high in February, suggesting the housing market recovery continued to gain momentum despite the challenges of high prices and tight inventories.

Other data on Thursday showed an unexpected increase in the number of Americans filing for unemployment benefits last week. Still, the labor market continues to tighten, which together with the strength in housing, should underpin economic growth.

The Commerce Department said new home sales increased 6.1 percent to a seasonally adjusted annual rate of 592,000 units last month, the highest level since July 2016. Sales have now recouped the sharp drop suffered in December.

Economists had forecast new home sales, which account for about 9.7 percent of the overall market, rising 0.7 percent to a rate of 565,000 units in February. Sales were up 12.8 percent compared to the same month last year, showing the housing market’s resilience.

Last month’s sales were likely partially buoyed by unseasonably warm weather. Although mortgage rates have risen and may go higher, most economists see a limited impact on housing because a tightening labor market is improving employment opportunities for young adults.

In a separate report, the Labor Department said initial claims for state unemployment benefits increased 15,000 to a seasonally adjusted 258,000 for the week ended March 18.

Claims have now been below 300,000, a threshold associated with a healthy labor market for 80 straight weeks. That is the longest stretch since 1970 when the labor market was smaller. The job market is currently near full employment.

The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, rose only 1,000 to 240,000 last week.

U.S. stocks were mostly flat as investors focused on whether the House of Representatives would pass a Republican-sponsored bill to begin dismantling Obamacare, which is seen as the first significant policy test for President Donald Trump.

Prices of U.S. Treasuries were trading lower while the dollar <.DXY> was stronger against a basket of currencies.

LABOR MARKET FIRMING

The claims data covered the period during which the government surveyed employers for March’s nonfarm payrolls report. The four-week average of claims fell 7,750 between the February and March survey weeks, suggesting another month of strong job gains.

Job growth has averaged 209,000 per month over the past three months and the unemployment rate is at 4.7 percent, close to the nine-year low of 4.6 percent hit last November. Tightening labor market conditions and rising inflation enabled the Federal Reserve to raise interest rates last week.

The market for new houses is benefiting from a shortage of properties for sale. A report on Wednesday showed a 3.7 percent drop in sales of existing homes in February amid tight inventories and rising house prices. The 30-year fixed mortgage rate is currently around 4.30 percent.

Last month, new single-family homes sales surged 30.9 percent to their highest level since November 2007 in the Midwest and increased 3.6 percent in the South. They jumped 7.5 percent in the West but slumped 21.4 percent in the Northeast.

The inventory of new homes on the market increased 1.5 percent to 266,000 units last month, still less than half of what it was at its peak during the housing boom in 2006.

At February’s sales pace it would take 5.4 months to clear the supply of houses on the market, down from 5.6 months in January.

A six-month supply is viewed as a healthy balance between supply and demand. The median price for a new home fell 4.9 percent to $296,200 in February from a year ago.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

Wall St. set to open lower as ‘Trump trade’ fizzles

Traders work on the floor of the New York Stock Exchange (NYSE) shortly after the opening bell in New York, U.S., March 21, 2017. REUTERS/Lucas Jackson

By Tanya Agrawal

(Reuters) – U.S. stocks looked set to open slightly lower on Wednesday, a day after Wall Street posted its biggest one-day fall since the November election, as investors fret about potential delays to President Donald Trump’s pro-growth policies.

Trump on Tuesday tried to rally Republican lawmakers behind a plan to dismantle Obamacare, his first major legislation since assuming office in January.

Republican leaders aim to move the controversial legislation to the House floor for debate as early as Thursday, amid concerns over support from party lawmakers.

Some investors fear that if the healthcare reform act runs into trouble or takes longer-than-expected to pass, then Trump’s tax reform policies may face setbacks.

“The markets were reminded yesterday the ‘Trump trade’ is not a one-way trade and there’s room for disappointment as actions on tax cuts and infrastructure spending might not materializes as quickly as we want,” said Anastasia Amoroso, global market strategist at J.P. Morgan Private Bank in Houston.

“The pronounced fall in yields across the world is not helping market sentiment at the moment either.”

U.S. 10-year Treasury yields fell to three-week lows on Tuesday and the gap between U.S. and German 10-year government borrowing costs hit its narrowest since November.

The S&amp;P 500 has run up about 10 percent since the election in November, spurred mainly by Trump’s agenda of tax cuts and infrastructure spending, but valuations have emerged as a concern.

The benchmark index is trading at about 18 times forward earnings estimates against the long-term average of 15, according to Thomson Reuters data.

The last time the S&amp;P 500 lost 1 percent or more in a day was on October 11.

“Given the full valuation and the long time that’s passed since we’ve had a one percent down day, let alone a correction, a forward correction is a real possibility,” said Amoroso.

Dow e-minis &lt;1YMc1&gt; were down 32 points, or 0.16 percent, with 45,088 contracts changing hands at 8:25 a.m. ET.

S&amp;P 500 e-minis &lt;ESc1&gt; were down 0.75 points, or 0.03 percent, with 243,649 contracts traded.

Nasdaq 100 e-minis &lt;NQc1&gt; were down 2.25 points, or 0.04 percent, on volume of 45,312 contracts.

Oil prices also dipped and slipped back to three-month lows after data showed U.S. crude inventories rising faster than expected. [O/R]

Gold prices rose to a three-week high and the dollar index &lt;.DXY&gt;, which measures the greenback against a basket of currencies, was at 99.87, near the six-week low of 99.64 reached on Tuesday.

Shares of financials, which suffered their worst daily drop since June, were lower in premarket trading. Bank of America &lt;BAC.N&gt;, Goldman Sachs &lt;GS.N&gt;, JPMorgan &lt;JPM.N&gt;, Citigroup &lt;C.N&gt; and Wells Fargo &lt;WFC.N&gt; were all down. The financial sector has been the best performing of the 11 major S&amp;P sectors since Trump’s election, up 18 percent.

Sears Holdings &lt;SHLD.O&gt; slumped 14.8 percent to $7.75 after the retailer warned on Tuesday about its ability to continue as a going concern after years of losses and declining sales.

Dow-component Nike &lt;NKE.N&gt; was down 5.3 percent at $54.91, a day after the world’s largest footwear maker’s quarterly revenue missed expectations.

FedEx &lt;FDX.N&gt; rose 2.9 percent to $197.87 after the package delivery company posted an optimistic outlook for margins in the near-term.

(Reporting by Tanya Agrawal; Editing by Sriraj Kalluvila)

Japan Feb exports jump, surplus with U.S. raises fears of trade tensions

Shipping containers are seen at a port in Tokyo, Japan, March 22, 2017. REUTERS/Issei Kato

By Tetsushi Kajimoto

TOKYO (Reuters) – Japan’s exports grew the most in more than two years in February, rebounding from a Lunar New Year slowdown in January, as a widening trade surplus with the United States potentially raises tensions in the face of rising U.S. protectionism.

Annual export growth of 11.3 percent topped a 10.6 percent increase expected by economists in a Reuters poll and followed a 1.3 percent rise in January, marking the biggest gain since January 2015, Ministry of Finance data showed on Wednesday.

Exports to the United States rose 0.4 percent in February from a year ago, largely from bigger shipments of cars and auto parts.

Any rise in Japan’s trade surplus with the United States could be a cause of concern for Japanese policymakers, given that U.S. President Donald Trump has singled out Japan, China and Germany for their high net exports into the U.S. market.

“Japanese policymakers must be sensitive about trade surplus with the United States. The trade surplus is not at an alarming level, but is historically very low. However, such a logical argument may not get across to Trump,” said Tomoyuki Ota, head of the economic research department at Mizuho Research Institute.

“The fact that the trade surplus with the United States has been driven by rising car exports may cause Trump to pile pressure on Japanese carmakers to boost investment in America.”

Japan and the United States will start a high-level economic dialogue in mid-April, with Tokyo seeking ways to avoid trade friction on issues such as car exports by proposing an agenda focused on investment in U.S. infrastructure.

Japan’s trade surplus with the United States rose an annual 1.5 percent to 611.3 billion yen ($5.48 billion), posting the first increase since November although it had dropped a revised 26.5 percent in January.

EXPORT-LED RECOVERY

The trade data highlighted an economic recovery led by overseas demand although the rebound from a Lunar New Year slowdown in China and other parts of Asia in January played a large part.

Exports to China, Japan’s largest trading partner, rose 28.2 percent year-on-year in February, accelerating from a 3.1 percent gain in the previous month.

Demand for auto parts from China and for electronics components from Hong Kong contributed to export growth in February.This performance helped Japan log a surplus of 111.8 billion yen with China – its first in five years.

Analysts said February’s 8.3 percent growth in the volume of exports, and average export volume growth of around 4 percent in January and February, was a positive sign for Japan’s export-reliant economy in the current quarter.

(Reporting by Tetsushi Kajimoto; Editing by Chris Gallagher and Eric Meijer)

Dollar loses more ground; yen up on safe-haven demand

FILE PHOTO: U.S. dollar notes are seen in this November 7, 2016 picture illustration. REUTERS/Dado Ruvic/Illustration/File Photo

By Saqib Iqbal Ahmed

NEW YORK (Reuters) – The dollar dipped to a near-four month low against the Japanese yen on Tuesday as concerns about how quickly the Trump administration can implement pro-growth policies pushed stocks lower and kindled safe-haven demand for the Japanese currency.

The dollar fell 0.86 percent to 111.58 yen <JPY=>, its lowest since Nov. 28. The dollar index, which measures the greenback against a basket of six major currencies, dipped below the 100 level for the first time since Feb. 7.

“The current and ongoing breakdown in the U.S. dollar is representative, driving some short-term and nascent deleveraging of legacy ‘reflation’ trades, with DXY through the psychological 100 level,” said Charlie McElligott, managing director and head of U.S. cross-asset strategy at RBC Capital Markets.

The S&P 500 <.SPX> S&P 500 dropped more than 1 percent for the first time since October. U.S. Treasury yields fell to three-week lows. [nL2N1GY1E5]

“There is certainly some interplay between all these factors that is supporting the yen,” said Erik Nelson, a currency analyst at Wells Fargo in New York.

The greenback has been under pressure after comments from the U.S. Federal Reserve last week disappointed dollar bulls.

“It’s probably going to take some sort of meaningful change in expectations around monetary or fiscal policy to revive the dollar and set it back on a strengthening trend,” Nelson said.

The upcoming French elections helped the euro and weighed on the dollar after centrist Emmanuel Macron’s performance in a televised debate boosted a view that he would win the presidential race over the far-right’s Marine Le Pen.

Bullish bets on the dollar spurred by Donald Trump’s U.S. presidential win and his pledge on tax cuts, deregulation and infrastructure spending last November have been fully unwound, Bank of America Merrill Lynch currency strategist Myria Kyriacou said in a note.

The euro rose to its highest level since Feb. 2, and was last up 0.69 percent to $1.0812.

The prospect of anti-European Union, far-right candidate Le Pen delivering a surprise election win has rattled French bond markets this year and is a key source of political uncertainty for the euro.

“Any news between now and the French election next month that suggests fading risk of a Le Pen victory would probably be supportive of the euro,” said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.

Sterling jumped 1.1 percent to its highest level in three weeks, after data showed British inflation in February above the Bank of England’s 2 percent target for the first time since the end of 2013. This was seen as boosting chances for a rate hike from the BoE.

(Reporting by Saqib Iqbal Ahmed; Editing by Leslie Adler and Lisa Shumaker)

Weaker dollar helps lift oil, supply worries persist

An oil derrick and wind turbines stand above the plains north of Amarillo, Texas, U.S., March 14, 2017. REUTERS/Lucas Jackson

By Sabina Zawadzki

LONDON (Reuters) – Oil prices rose on Friday, helped by a weaker dollar, as investors weighed the impact of OPEC production cuts against rising U.S. shale oil output and persistently high inventories.

Saudi Energy Minister Khalid al-Falih said on Thursday oil output cuts by the Organization of the Petroleum Exporting Countries and non-OPEC producers could be extended beyond June if oil stocks stayed above a long-term average.

But analysts said the comments gave limited support because Riyadh has said it needs cooperation to rebalance the market and non-OPEC producers, such as Russia, have yet to deliver fully on reduction commitments in the first half of 2017.

Brent crude was up 31 cents at $52.05 a barrel by 1102 GMT. U.S. light crude was up 33 cents at $49.08.

“The market remains relatively calm today with concerns about having to extend the production cut deal being offset by a weaker dollar,” said Saxo Bank head of commodity strategy Ole Hansen.

Oil prices, which lost ground earlier on Friday, have found some support from dollar weakness after the U.S. Federal Reserve indicated it would not accelerate plans for rate rises. The fall in the greenback boosted dollar-denominated crude.

Investors will also look for more direction from data due later on Friday. The Baker Hughes weekly rig count will indicate activity in the U.S. shale industry and the U.S. Commodity Futures Trading Commission releases calculations of net long and short positions in the crude futures market.

Oil prices fell sharply last week on concerns that OPEC-led production cuts were not reducing the global supply overhang as quickly as expected in the face of increased U.S. output.

OPEC and non-OPEC members reached agreement last year to cut output by a combined 1.8 million barrels per day (bpd) in the first half of 2017.

But OPEC’s monthly report showed global oil inventories rose in January to 278 million barrels above the five-year average.

Investors took some comfort from a dip in U.S. stockpiles in the week to March 10, after nine weekly rises. However, the fall in U.S. inventories was a modest 237,000 barrels, leaving 528 million barrels in storage, close to record highs. [EIA/S]

In a further sign that OPEC’s efforts have had little impact so far, oil shipments to Asia have increased 3 percent since the OPEC supply cut deal was made.

(Additional reporting by Jane Chung; Editing by Edmund Blair)

GM will rehire 500 Michigan workers slated for layoffs

The GM logo is seen in Warren, Michigan, U.S. on October 26, 2015. REUTERS/Rebecca Cook/File Photo

By David Shepardson

WASHINGTON (Reuters) – General Motors Co plans next year to rehire 500 Michigan assembly plant workers who are to be laid off in May, citing increased demand for larger vehicles, the company said on Wednesday.

GM said last week it planned to lay off 1,100 workers in May at its Lansing Delta Township assembly plant in Michigan. The company is moving production of the GMC Acadia mid-size SUV to Spring Hill, Tennessee, from the factory, which will build just two models, the Chevrolet Traverse and Buick Enclave SUVs.

The company said that when it begins full production of the new versions of the two models in 2018, it would “bring back approximately 500 jobs to give the company flexibility to meet market demand.”

GM also said it would add 220 jobs at a plant in Romulus, Michigan, that is building 10-speed automatic transmissions, and it would retain 180 jobs by shifting Lansing workers to a Flint assembly plant to support pickup truck production.

The news comes as U.S. President Donald Trump is set to visit Michigan later on Wednesday to announce that his administration will reopen a review of fuel efficiency standards, a move that could help automakers sell more of their larger models. GM did not credit Trump with the decision to add jobs.

“We haven’t fundamentally changed any of our plans, but we continue to look for ways to improve our operations and find ways to help the country, grow jobs and support economic growth,” spokesman Pat Morrissey said.

He said Trump’s visit “gave us a positive venue to share good news for the state of Michigan – and specifically for our plants and people in Flint, Romulus and Lansing.”

The Detroit automaker in recent months has announced other U.S. job cuts and new investments. GM said in January it would invest another $1 billion in its U.S. factories.

Trump has urged GM and other automakers to build more cars in the United States as part of his pledge to boost the nation’s manufacturing jobs and discourage the industry from investing in Mexico.

GM said in November it would cut about 2,000 jobs when it ended the third shift at its Lordstown, Ohio, and Lansing Grand River plants in January. In December, it said it planned to cancel the second shift and cut nearly 1,300 jobs from its Detroit-Hamtramck assembly plant in March.

(Reporting by David Shepardson; Editing by Lisa Von Ahn)

Brazil workers protest against pension reform, disrupt transport

Protestors partially block the main avenue during a strike against Brazilian Social Welfare reform project from government, in Sao Paulo, Brazil March 15, 2017. REUTERS/Paulo Whitaker

SAO PAULO (Reuters) – Brazilian civil servants, rural workers and labor confederations staged nationwide demonstrations on Wednesday against President Michel Temer’s pension reform plan, with hundreds of protesters occupying the premises of the finance ministry in the capital Brasilia.

Bus and subway services were partially disrupted in São Paulo and Rio de Janeiro, the country’s most populous cities. Drivers remained stranded because of small street demonstrations across several major avenues in São Paulo’s eastern, southern and northern corners.

In Brasilia, more than 1,500 people from peasant and homeless groups held protests at the finance ministry, the Landless Peasant Movement said in a statement.

Finance Minister Henrique Meirelles said some damage occurred inside the ministry, without providing details.

“Several floors of the building were invaded because of this strike,” Meirelles told reporters in Brasilia.

The demonstrations reflect the deep ideological divide among Brazilians as Temer seeks to pass the nation’s most ambitious platform of economic reforms in two decades.

Leaders in Temer’s 22-party alliance say capping pension benefits would be a key step to pull the country out of its worst recession on record.

Last week, Temer acknowledged that his administration would have to negotiate with Congress to win passage of the pension reform, which would establish a minimum age of retirement and scale back benefits for civil servants.

Still, senior lawmakers have said there is not much room for changes to Temer’s original proposal if the country wants to reduce a record budget deficit that is putting the brakes on an economic recovery and hampering investor confidence.

Public transport workers in the cities of Recife, Curitiba and Belo Horizonte were also striking.

(Reporting by Guillermo Parra-Bernal; Additional reporting bY Marcela Ayres iN Brasilia; Editing by W Simon and Lisa Von Ahn)