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Household Wealth in U.S. Increases at a Slower Pace as Home Values Decline

by on March 11, 2010

By Timothy R. Homan March 11 (Bloomberg) — Household wealth in the U.S. grew in the fourth quarter at a slower pace, limited by a drop in home values that indicates the recovery in consumer spending will take time to gain speed. Net worth for households and non-profit groups rose by $700 billion to $54.2 trillion, marking a third consecutive gain, according to the Federal Reserve’s Flow of Funds report issued today in Washington. Wealth increased by $2.78 trillion in the third quarter. American consumers cut borrowing at a record pace last year, the figures showed, in a bid to repair the damage from overextended balance sheets and the loss of wealth during the recession. The need to replenish savings combined with the loss of 8.4 million jobs means spending, the biggest part of the economy, will be restrained. “We’re probably feeling a little bit of a hangover from the decline in real-estate markets,” Guy LeBas , chief fixed- income strategist at Janney Montgomery Scott LLC in Philadelphia, said before the report. “It’s hard to justify higher spending if you don’t have income coming in the door.” The Standard & Poor’s 500 Index increased 5.5 percent in the last three months of 2009, compared with a 15 percent gain the previous quarter. Household real-estate holdings fell in value by $109.8 billion in the last three months of 2009, the first decrease in three quarters, according to the Fed’s report. Stocks Fall The S&P 500 decreased 0.3 percent to 1,142.52 at 12:18 p.m. in New York, depressed by concern that faster inflation in China will lead to higher interest rates that will slow the global recovery. Since the recession began in December 2007, Americans have been constrained by periods of falling home and stock prices, tight credit and rising unemployment. While stocks have gained and home prices began stabilizing last year, borrowing standards have tightened and unemployment remains near a 26- year high. The jobless rate , which has not increased since October, held at 9.7 percent last month, according to a March 5 report from the Labor Department. The rate reached 10.1 percent in October, the highest level since 1982. Owners’ equity as a share of their total real-estate holdings increased to 38.1 percent last quarter from 37.6 percent in the third quarter, today’s Fed report showed. Less Borrowing Consumer debt dropped at a 1.2 percent annual pace in the fourth quarter, a seventh consecutive decline. For all of 2009, borrowing decreased 1.7 percent, the first decline since records began in 1952. Mortgage borrowing declined at a 0.8 percent pace from October through December, while other forms of consumer credit fell at a 5.8 percent rate, the Fed’s report showed. Total borrowing by consumers, businesses and government agencies increased at an annual rate of 1.6 percent last quarter, led by a 13 percent advance by the federal government. Borrowing by businesses decreased at a 3.2 percent rate. Borrowing by the federal government reflected, in part, spending linked to President Barack Obama ’s stimulus plan. State and local government borrowing climbed at a 4.7 percent pace. The economy grew at a 5.9 percent rate in the last three months of 2009, the fastest pace in six years. Economists surveyed by Bloomberg News this month forecast the expansion will slow to a 2.8 percent pace in the first quarter of 2010. To contact the report on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

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Household Wealth in U.S. Increases at a Slower Pace as Home Values Decline

U.S. Consumer Credit Falls for 11th Straight Month Amid Lack of Job Growth

by on February 5, 2010

By Vincent Del Giudice Feb. 5 (Bloomberg) — Consumer credit in the U.S. declined in December for an 11th straight month, signaling a lack of job growth and limited bank lending are discouraging borrowing. The $1.7 billion drop in credit , less than economists anticipated, followed a record $21.8 billion slump in November that was larger than first estimated, according to a Federal Reserve report released today in Washington. The figures track credit card debt and non-revolving loans, such as those to buy autos. The series of declines is the longest on record and indicates consumer spending, which accounts for about 70 percent of the economy, will be restrained with Americans unwilling to take on more debt until hiring picks up. Fed policy makers, citing “tight credit” by banks, held the rate for overnight loans among banks near zero at their meeting last week. “The jobs situation is unknown and people are not going to go out and borrow when they are worried,” Win Thin , senior currency strategist at Brown Brothers Harriman & Co. in New York, said before the report. The drop in credit is “both a supply and demand problem,” he said. The economy unexpectedly lost 20,000 jobs in January after a 150,000 decline a month earlier, figures from the Labor Department in Washington showed earlier today. Revisions to previous data increased the number of jobs lost in the recession to 8.4 million. Economists had forecast consumer credit would drop by $10 billion in December, according to the median of 33 estimates in a Bloomberg News survey. Projections ranged from a decline of $13 billion to an increase of $5 billion. The Fed initially reported that consumer credit plunged $17.5 billion in November. Credit Cards Revolving debt , such as credit cards, fell by $8.5 billion in December, according to the Fed’s statistics. Revolving credit has decreased 15 straight months, the longest series of declines since the Fed began keeping those records in 1968. Non-revolving debt , including auto loans and mobile-home loans, rose by $6.8 billion as car sales increased during the month. The Fed’s report doesn’t cover borrowing secured by real estate. Auto sales in the U.S. increased in December to a seasonally adjusted annual rate of 11.23 million, the strongest since 14.09 million in August, when Americans took advantage of government incentives. The pace slowed last month, to 10.8 million. Consumer spending in the fourth quarter increased at a 2 percent annual rate after a 2.8 percent pace in the prior three months, Commerce Department figures showed on Jan. 29. The gain contributed to economic growth of 5.7 percent at an annual rate, the fastest in six years, from October through December. Lending Standards A Fed report on Feb. 1 showed fewer banks tightened standards for loans to consumers and companies last quarter as the economy improved. Banks continued to tighten the terms of loans they did make, and demand for both business and household loans weakened further over the past three months, the Fed said in its quarterly survey of senior loan officers. There is some indication Americans are getting their balance sheets in better order, and today’s jobs report produced some signs the labor market may be poised to climb out of its deepest slump since World War II. The unemployment rate fell 9.7 percent in January, the lowest since August, and manufacturers hired for the first time in three years, Labor Department figures showed. Credit-card delinquencies fell in December, Moody’s Investors Service reported Jan. 25. Card Issuers All of the “Big-6” U.S. card issuers, including Bank of America Corp., Citigroup Inc. and American Express Co., reported fewer early-stage delinquencies. JPMorgan Chase & Co., the nation’s biggest card lender, was the only one to report higher overall late loans due to a “payment holiday” the company offered customers. “We still face the challenge of high unemployment levels, depressed real estate values and shrunken household balance sheets, but the overall economy and our company are in stronger shape than they were a year ago,” Kenneth I. Chenault , chief executive officer of American Express , said Jan. 21 in a press release. New York-based AmEx is the biggest U.S. credit-card issuer by purchases. “While the economic recovery now under way is likely to be modest, we expect it to continue,” Chenault said. Consumer spending is also being threatened by rising home foreclosures that are projected to reach 3 million this year compared with a record 2.82 million last year, according to Irvine, California-based data provider RealtyTrac Inc. To contact the reporter on this story: Vincent Del Giudice in Washington vdelgiudice@bloomberg.net

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U.S. Consumer Credit Falls for 11th Straight Month Amid Lack of Job Growth

Yuan Appreciation Pressure to Fuel `Huge’ Capital Inflows, Commission Says

January 4, 2010

By Bloomberg News Jan. 5 (Bloomberg) — China may see “huge” inflows of speculative capital as foreign investors step up bets on yuan gains, making it difficult to manage liquidity, said Zhang Xiaoqiang , deputy head of the nation’s top planning agency. Loose monetary polices in developed countries, a weakening U.S. dollar and China’s economic recovery will put renewed pressure on the yuan to appreciate, Zhang, from the National Development and Reform Commission, said in a statement on its Web site today. Overseas investment is estimated to have increased in 2009 and the country is becoming more reliant on foreign economies, he said. China’s foreign-exchange reserves climbed 17 percent in the first nine months of 2009 to $2.27 trillion, the world’s largest holdings, as the central bank bought dollars to prevent yuan gains. Rallies in Asian currencies last year put other nations in the region at a disadvantage in global trade because strength in their currencies pushes up prices of goods for export. “There will be more calls for a stronger yuan from emerging-market countries when their currencies continue to gain against the dollar this year,” said Xing Ziqiang , a Beijing- based economist at China International Capital Corp. “There may be a 25 percent increase in the amount of hot money.” Dollar Slump China has effectively pegged the yuan at about 6.83 per dollar since July 2008 to help exporters weather a slump in demand triggered by the global financial crisis. Premier Wen Jiabao said on Dec. 27 that the nation will “absolutely not” yield to international calls for renewed appreciation. The U.S. currency will slump 6 percent in the first quarter as investors buy emerging-market assets, according to SJS Markets Ltd. The Dollar Index , which tracks the greenback against those of six major trading partners, rallied 4 percent in December. The Indonesian rupiah and South Korea’s won have advanced more than 15 percent over the past year. Twelve-month non-deliverable yuan forwards rose 0.17 percent to 6.6410 per dollar as of 1:52 p.m. in Hong Kong, indicating brokerages are betting on a 2.8 percent appreciation in the currency in a year. In the spot market, the yuan was unchanged at 6.8273, according to China Foreign Exchange Trade System. The yuan may rise 3 percent to 5 percent against the dollar this year, CICC’s Xing said. The Chinese currency advanced 21 percent in the three years after a peg was scrapped in July 2005. — Judy Chen , Alfred Cang. With assistance from Anil Varma in Mumbai and Zhe Huang in Beijing. Editors: Simon Harvey , Sandy Hendry To contact Bloomberg News staff for this story: Judy Chen in Shanghai at +86-21-6104-7047 or Xchen45@bloomberg.net ; Alfred Cang in Shanghai at +86-21-6104-7015 or acang@bloomberg.net .

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Economy in U.S. Expanded at Less-Than-Forecast 2.2% Rate in Third Quarter

December 22, 2009

By Timothy R. Homan Dec. 22 (Bloomberg) — The economy in the U.S. expanded in the third quarter at a slower pace than anticipated as companies curbed spending and cut inventories at an even faster pace, reductions that have set the stage for acceleration in growth. The 2.2 percent increase in gross domestic product from July through September compares with a 2.8 percent gain previously reported by the Commerce Department in Washington. Improved consumer spending combined with a record drop in stockpiles this year will promote increases in production that may keep the world’s largest economy growing well into 2010. At the same time, companies such as Dell Inc. point to gains in business investment that signal growing confidence the expansion will continue. “We are really starting to see the mechanisms for a sustained recovery come into place,” said Robert Dye, a senior economist at PNC Financial Services Group in Pittsburgh. “We are starting to see investment numbers come back.” Stock-index futures trimmed earlier gains after the report. The contract on the Standard & Poor’s 500 Index rose 0.3 percent to 1,111.5 at 9:00 a.m. in New York after having been up as much as 0.6 percent. The 2.8 percent projected pace of growth was based on the median estimate of 73 economists in a Bloomberg News survey. Estimates ranged from gains of 2.5 percent to 3.7 percent. The GDP report is the third and final for the quarter. The government’s advance estimate two months ago was 3.5 percent. Economic Slump The economy shrank 3.8 percent in the 12 months to June, the worst performance in seven decades. The four consecutive decreases through the second quarter mark the longest stretch of declines since quarterly records began in 1947. This month’s revisions also showed a bigger gain in earnings than first estimated. Third-quarter corporate profits increased 10.8 percent rather than 10.6 percent, marking the biggest gain in more than five years. Productivity gains have boosted company earnings as payrolls are reduced. Labor costs fell at a 2.5 percent rate last quarter, capping the biggest 12-month drop in seven years, Labor Department figures showed earlier this month. Productivity , a measure of employee output per hour, surged at an 8.1 percent pace percent in the third quarter, the fastest pace in six years. The economy has lost 7.2 million jobs since the recession began in December 2007. Payroll cuts peaked at 741,000 in January before receding to 11,000 in November. Unemployment Forecast The unemployment rate last month fell to 10 percent, from a 26-year high of 10.2 percent in October. Economists surveyed by Bloomberg this month forecast the jobless rate will remain above 10 percent through the first half of next year. The elevated jobless rate is one reason Federal Reserve policy makers said last week they would keep their benchmark interest rate low for an “extended period.” Another reason was that prices aren’t accelerating. The Fed’s preferred inflation gauge, increased less than forecast. The measure, which is tied to consumer spending and strips out food and energy costs, rose at a 1.2 percent annual pace following a 2 percent increase in the prior quarter. Consumer spending, which accounts for about 70 percent of the economy, rose at a 2.8 percent pace last quarter, compared with the 2.9 percent rate forecast by economists and a 0.9 percent decline the previous three months. Spending added 2 percentage points to third-quarter growth. Using Discounts Retailers such as Best Buy Co. are using discounts to boost holiday sales. A report tomorrow is projected to show household purchases rose 0.7 percent in November for a second month. Today’s report showed business fixed investment dropped at a 1.3 percent pace last quarter compared with a previously estimated 0.3 percent increase. Purchases of equipment and software increased at a 1.5 percent pace, less than the Commerce Department estimated last month. The drop in commercial construction was larger than estimated last month. “Overall commercial spending is looking better than what we had hoped for,” Steve Felice, president of Round Rock, Texas- based Dell’s small- and medium-business division, said yesterday in a Bloomberg Television interview. “We’re coming into this holiday season much more optimistic than a year ago.” Inventories dropped at a $139.2 billion annual pace, more than previously estimated. The decrease was smaller than the record $160.2 billion decline in the second quarter, adding 0.7 percentage point to growth. Housing Stabilizing Residential construction jumped at an 18.9 percent pace last quarter, the most in six year and adding 0.4 percentage point to growth. Recent reports indicate the housing slump, which helped trigger the financial crisis, is showing signs of continued improvement. Home sales have been supported in part by tax credits for homebuyers and Fed purchases of mortgage-backed securities that have helped lower borrowing costs. The economy will likely expand at a 3 percent annual rate from October through December, the median forecast in a survey earlier this month showed. Since then, economists at Credit Suisse and JPMorgan Chase & Co. in New York have boosted their projections from 3.5 percent to 4.5 percent as inventories began to grow in October and exports rose. Trade subtracted 0.8 percentage point from third-quarter GDP. The gap between exports and imports climbed to $357.4 billion at an annual pace from $330.4 billion. To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

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GDP Up 2.2% In 3Q, But Recovery Is Much Slower Than Previously Thought

December 22, 2009

WASHINGTON — All signs suggest the economic recovery will end the year on firmer footing despite a report Tuesday that the economy grew at a 2.2 percent pace in the third quarter, less than previously thought. The Commerce Department’s new reading on gross domestic product for the July-to-September quarter was weaker than the 2.8 percent growth rate estimated a month ago. Economists had predicted this figure would remain the same in the final estimate of the quarter’s GDP – the value of all goods and services produced in the United States. The main factors behind the downgrade were that consumers didn’t spend as much, commercial construction was weaker, business investment in equipment and software was softer and companies cut back more on their stockpiles of goods. Even so, the economy managed to return to growth during the quarter, after a record four straight quarters of decline. That signaled that the deepest and longest recession since the 1930s had ended and the economy had entered a new fragile phase of recovery. And many analysts still think the economy is on track for a better finish in the current quarter. One sign was a separate report Tuesday that home resales surged last month to their highest level in nearly three years, thanks to an extraordinary level of federal support. The report added to evidence that the housing market, which led the country into recession, is on the mend. The economy is probably growing at nearly 4 percent in the October-to-December quarter, analysts say. A few peg it closer to 5 percent. If they’re right, that would mark the strongest showing since 5.4 percent growth in the first quarter of 2006 – well before the recession began. The government will release its first estimate of fourth-quarter economic activity on Jan. 29. Growth in the final quarter is expected to be driven mainly by companies restocking depleted inventories. Stocks of goods were slashed at a record pace during the recession. So even the smallest pickup in customer demand will force factories to step up production and boost overall economic activity in the final quarter. Stronger sales of exports to foreign customers, as well as spending by U.S. consumers and businesses, also will help underpin fourth-quarter growth. “We expect a better performance in the fourth quarter, but the core problems for the economy – bust banks and a massively overleveraged consumer – have not gone away,” said Ian Shepherdson, chief economist at High Frequency Economics. That’s why many economists predict growth will slow to a pace of around 2 or 3 percent in the first three months of 2010. Consumers are likely to stay frugal. And the big lift from inventory restocking isn’t expected to last. With unemployment high and credit tight, growth won’t likely be as energetic as in the early phases of previous recoveries. The unemployment rate, now at 10 percent, is expected to remain high. The economy has been on a wild ride this year. In the first three months, it shrank at a pace of 6.4 percent – its worst slide in 27 years. The recession eased in the second quarter, with the economy dipping at a pace of just 0.7 percent. The economy returned to growth in the third quarter. Much of the third quarter’s growth was supported by government stimulus spending. The Cash for Clunkers rebates and a tax credit for first-time home buyers buoyed sales of cars and homes. The clunkers program ended in August, though the tax credit has been extended and expanded beyond first-time buyers. The government makes three estimates of GDP each quarter. Each estimate is based on more complete data. The government’s initial estimate for the third quarter was more energetic, showing the economy’s growth at a 3.5 percent pace. But subsequent estimates showed the recovery was actually slower. Tuesday’s report showed consumer spending grew at a 2.8 percent pace. That was slightly weaker than the 2.9 percent pace previously estimated and was one of the factors behind the lower overall reading. Retail sales, though, showed momentum in October and November. That raised hopes that holiday sales would fare better than last year’s season, the worst in nearly four decades. Still, unlike in previous recoveries, consumers, whose spending accounts for 70 percent of overall economic activity, aren’t expected to power this one alone. Businesses and the government are having to contribute more. It’s unclear how much the recovery might weaken once the government withdraws stimulus programs put in place to combat the financial crisis and the recession. If consumers pull back on spending, the economy could tip back into recession. Economists at Capital Economics predict the recovery will slow, with the economy’s growth fading to just 1.5 percent in 2011. Against that backdrop, the Federal Reserve pledged last week to keep interest rates at a record low to help the recovery gain traction. Faced with the prospects of high unemployment well into the 2012 presidential election year, President Barack Obama wants the government to take further steps to put Americans back to work. The House last week passed some provisions that Obama has pushed to aid job growth. But it didn’t include new tax breaks for small businesses that hire. The administration credits its $787 billion package of tax cuts and increased government spending with improving employment, though Republicans argue it did not help much.

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Trade Gap in U.S. Unexpectedly Narrows as Exports Advance on Weaker Dollar

December 10, 2009

By Courtney Schlisserman Dec. 10 (Bloomberg) — The trade deficit in the U.S. unexpectedly narrowed in October as rebounding economies overseas and a weaker dollar pushed exports up for a sixth consecutive month. The gap shrank 7.6 percent to $32.9 billion from a revised $35.7 billion in September, Commerce Department data showed today in Washington. Exports were up 2.6 percent, reaching the highest level since November 2008. A plunge in demand for petroleum checked the gain in imports. FedEx Corp. and United Parcel Service Inc. are among companies benefiting from growing sales as a 12 percent drop in the dollar since March and recovery from the worst global economic slump in the post-World War II era propel sales overseas. A manufacturing rebound from the U.S. to China may sustain the expansion into 2010 as companies strive to prevent inventories from evaporating. “The pace of exports should outgrow the pace of imports over the next few months just because the dollar puts U.S. products in a better position,” Russell Price, a senior economist at Ameriprise Financial in Detroit, said before the report. “The economy is still subdued on a global basis but we’re optimistic about the balance going forward.” The trade gap was projected to widen to $36.8 billion from an initially reported $36.5 billion in September, according to the median forecast in a Bloomberg News survey of 75 economists. Projections ranged from deficits of $32 billion to $41.3 billion. Exports Rise Exports climbed to $136.8 billion in October, reflecting increasing demand overseas for American-made semiconductors, aircraft and autos. The dollar is down since early March against a basket of currencies from the nation’s biggest trading partners. “The economy is now growing and growth seems to be gradually strengthening,” Treasury Secretary Timothy Geithner said in a Bloomberg Television interview last week. ‘You see pockets of real strength now in technology and exports and I think they are hopeful signs of progress.” Manufacturing in the U.S. expanded in November for a fourth months and factories in China churned out goods at the fastest pace in five years, reports earlier this month showed. Trade with China is a source of tension among global leaders as the country refuses to bow to calls to allow its currency, the yuan, to appreciate. The nation has effectively pegged the yuan to the U.S. currency since July last year to shield its exporters from the global recession. Gap With China The gap with China widened to $22.7 billion in October, the highest since November 2008. Even so, exports to that nation climbed to a record $6.9 billion. Trade with countries in South and Central America swung to a $1.16 billion surplus in October, the best performance since October 1998. The U.S. showed a $789 million deficit in September. The U.S. economy expanded for the first time in more than a year in the third quarter, growing at a 2.8 percent annual rate, according to data from the Commerce Department. Even so, the trade gap subtracted 0.8 percentage point from growth as imports overwhelmed the gain in exports. Investors have turned to higher-risk assets such as stocks, spurning the relative safety of the dollar, on mounting evidence that growth will be sustained. The Standard & Poor’s 500 Index is up 30 percent since reaching a 12-year low on March 9. Imports Climb Imports rose 0.4 percent in October to $169.8 billion. Purchases of foreign crude oil dropped to 8.35 million barrels a day on average, the fewest since January 2000. The plunge in petroleum overshadowed gains in demand for computers, automobiles and semiconductors from overseas manufacturers. After eliminating the influence of prices, which are the figures used to calculate gross domestic product, the trade gap narrowed to $38 billion in October. Compared with an average of $39.4 billion a month in the third quarter, the decrease signals trade may contribute to economic growth in the last three months of the year. FedEx Corp. said Dec. 7 its fiscal second-quarter profit exceeded its forecast as international and ground shipments rose. The world’s largest cargo airline flies goods ranging from industrial parts to electronic equipment to financial documents, making its business a proxy for overseas commerce. “A lot of the packages are going to the U.S. and Europe, which means consumers here are buying things like computers and iPods,” UPS Chief Executive Officer Scott Davis said in an interview on Bloomberg Television last week. UPS, the world’s largest package-delivery company, is considered a bellwether for the economy because it handles goods ranging from auto parts to electronics to clothing. To contact the reporter on this story: Courtney Schlisserman in Washington at cschlisserma@bloomberg.net

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Recession May Be Over, Too Soon to Cite a Precise Month, NBER’s Hall Says

December 4, 2009

By Steve Matthews Dec. 4 (Bloomberg) — The improving labor market indicates the deepest U.S. recession since the 1930s may have ended, though it is too soon to say precisely what month it stopped, said the head of the group charged with making the call. Payrolls fell by 11,000 workers, less than the most optimistic forecast among economists surveyed by Bloomberg News, figures from the Labor Department showed today in Washington. The jobless rate declined to 10 percent. “Today’s report makes it seem that the trough in employment will be around this month,” Robert Hall , who heads the National Bureau of Economic Research’s Business Cycle Dating Committee, said in an interview. “The trough in output was probably some time in the summer. The committee will need to balance the midyear date for output against the end-of-year date for employment.” Among the top indicators the group uses is payrolls, according to its Web site . In the third quarter, the economy expanded at a 2.8 percent annual pace after a yearlong contraction. Choosing between the dates “will take some time,” Hall said. “We act deliberately.” The recession began in December 2007, the group said in December 2008. It usually takes six to 18 months to confirm a contraction’s start or finish, according to the panel. Declaring the 2001 downturn over was complicated by ongoing job losses. The group took until July 2003 to say that slump had ended, 20 months after the fact. Hall said he couldn’t rule out a further decline that would complicate any dating. “Both of these guesses presume that there won’t be any new adverse shock,” Hall said. “There are some horror-story scenarios that could stand in the way, so I don’t see the point of forecasting. We just wait until we are ready.” To contact the reporter on this story: Steve Matthews in Atlanta at smatthews@bloomberg.net ;

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U.S. Unemployment Rate Drops to 10% as November Payrolls Decline by 11,000

December 4, 2009

By Timothy R. Homan Dec. 4 (Bloomberg) — Employers in the U.S. cut the fewest jobs in November since the recession began and the unemployment rate unexpectedly fell, signaling the recovery is lifting the labor market out of the worst slump since World War II. Payrolls fell by 11,000 workers, less than the most optimistic forecast among economists surveyed by Bloomberg News, figures from the Labor Department showed today in Washington. The jobless rate declined to 10 percent. Stocks soared, the dollar strengthened and Treasuries declined as the report indicated companies may start hiring again after the labor market shrank by 7.2 million jobs since the recession began in December 2007. Hours worked, wages and staffing at temporary employment agencies all rose. “With firms seeing profits improving we’re starting to see a much brighter labor market,” said Stefane Marion , chief economist at National Bank Financial in Montreal, whose forecast for a 30,000 decline was the most accurate. “Confidence has been restored and firms now have started to redeploy their cash.” The Standard & Poor’s 500 Index was up 1.2 percent to 1,112.5 at 9:32 a.m. in New York. The dollar gained to 89.58 yen from 88.26 yesterday. The yield on the government’s 10-year note increased to 3.48 percent from 3.39 percent. Traders increased bets that the Federal Reserve would tighten monetary policy in the third quarter of next year. Yields on the September federal funds futures contract rose by 9.5 basis points. A basis point is 0.01 percentage point. Record Low Rates Federal Reserve Chairman Ben S. Bernanke has pledged to maintain record-low interest rates until joblessness subsides, even as a recovery takes hold. Revisions added 159,000 to payroll figures previously reported for October and September. The October reading was revised to show a 111,000 drop in jobs compared with an initially reported 190,000 decline. Payrolls were forecast to decline 125,000, according to the median estimate of 82 economists surveyed by Bloomberg News. Estimates ranged from decreases of 30,000 to 180,000. The jobless rate was projected to hold at 10.2 percent. Forecasts ranged from 9.9 percent to 10.4 percent. The number of temporary workers increased 52,000 in November, the biggest since October 2004 and the fourth straight rise. Payrolls at temporary-help agencies often turn up before total employment because companies prefer to see a steady increase in demand before taking on permanent staff. The average work week grew to 33.2 hours in November from 33 hours, the biggest rise since March 2003. Average weekly earnings rose to $622.17. Software Exporter Some companies are adding workers. Infosys Technologies Ltd., India’s second-largest software exporter by revenue, plans to add 1,000 employees in the U.S. in the next four to five quarters, said Chief Financial Officer V. Balakrishnan. Government adjustments subtracted 91,000 jobs from the unadjusted November payroll number, about in line with the historical figure. This indicates the seasonal adjustment issue may not have played much of a role in last month’s data. Today’s report showed factory payrolls fell 41,000 after decreasing 51,000 in the prior month. The median forecast by economists called for a drop of 45,000. The decline included a drop of 6,300 jobs in auto manufacturing and parts industries. Sales of cars and light trucks increased for a second consecutive month in November after plunging in the wake of the government’s so-called cash-for-clunkers incentive plan. Vehicles sold at a 10.9 million annual pace last month, up from a 10.5 million rate in October. Builder Payrolls Payrolls at builders declined 27,000 after falling 56,000. Financial firms decreased payrolls by 10,000 for a second month. Service industries, which include banks, insurance companies, restaurants and retailers, added 58,000 workers after adding 2,000. Retail payrolls decreased by 14,500 after a 44,200 drop. Angela Renee Elliott, a 40-year-old accountant and bookkeeper from Wyoming, Ohio, said she’s sent between 100 and 150 resumes after losing her job in April. This is the first time she’s been unemployed in her 17-year career. “I’m feeling pretty good and have seven interviews” already completed or planned, Elliott said in an interview, after posting her resume online on Nov. 21. “I believe I’m going to have a full-time. I’m keeping my fingers crossed.” Even so, “it’s going to get worse before it gets better,” she said of the national job market and economy. Government payrolls increased by 7,000 after a 46,000 rise in the prior month. Underemployment Rate The so-called underemployment rate — which includes part- time workers who’d prefer a full-time position and people who want work but have given up looking — fell to 17.2 percent from 17.5 percent. Economists surveyed by Bloomberg last month projected the jobless rate will exceed 10 percent through the middle of next year even as the economy expands 2.6 percent in 2010. The U.S. economy expanded last quarter for the first time in a year, growing at a 2.8 percent pace as government incentives spurred consumers to spend more on homes and automobiles. Some companies such as Harley-Davidson Inc. are among those continuing to trim staff to wring out additional cost savings and stem losses. The biggest U.S. motorcycle maker yesterday approved a restructuring plan at its largest plant, in York, Pennsylvania, which will result in the loss of about 950 union jobs. “A restructured York operation will enable the plant to be competitive and sustainable for the future, and the new labor agreement is critical,” Chief Executive Officer Keith Wandell said in a statement. The Milwaukee-based manufacturer is cutting costs after nine straight quarterly losses. To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

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Jobless Rate in U.S. Unexpectedly Drops to 10% as Payrolls Fall by 11,000

December 4, 2009

By Timothy R. Homan Dec. 4 (Bloomberg) — Employers in the U.S. cut the fewest jobs in November since the recession began and the unemployment rate unexpectedly fell, signaling the recovery is lifting the labor market out of the worst slump since World War II. Payrolls fell by 11,000 workers, less than the most optimistic forecast among economists surveyed by Bloomberg News, figures from the Labor Department showed today in Washington. The jobless rate declined to 10 percent. Stocks soared, the dollar strengthened and Treasuries declined as the report indicated companies may start hiring again after the labor market shrank by 7.2 million jobs since the recession began in December 2007. Hours worked, wages and staffing at temporary employment agencies all rose. “With firms seeing profits improving we’re starting to see a much brighter labor market,” said Stefane Marion , chief economist at National Bank Financial in Montreal, whose forecast for a 30,000 decline was the most accurate. “Confidence has been restored and firms now have started to redeploy their cash.” The Standard & Poor’s 500 Index was up 1.2 percent to 1,112.5 at 9:32 a.m. in New York. The dollar gained to 89.58 yen from 88.26 yesterday. The yield on the government’s 10-year note increased to 3.48 percent from 3.39 percent. Traders increased bets that the Federal Reserve would tighten monetary policy in the third quarter of next year. Yields on the September federal funds futures contract rose by 9.5 basis points. A basis point is 0.01 percentage point. Record Low Rates Federal Reserve Chairman Ben S. Bernanke has pledged to maintain record-low interest rates until joblessness subsides, even as a recovery takes hold. Revisions added 159,000 to payroll figures previously reported for October and September. The October reading was revised to show a 111,000 drop in jobs compared with an initially reported 190,000 decline. Payrolls were forecast to decline 125,000, according to the median estimate of 82 economists surveyed by Bloomberg News. Estimates ranged from decreases of 30,000 to 180,000. The jobless rate was projected to hold at 10.2 percent. Forecasts ranged from 9.9 percent to 10.4 percent. The number of temporary workers increased 52,000 in November, the biggest since October 2004 and the fourth straight rise. Payrolls at temporary-help agencies often turn up before total employment because companies prefer to see a steady increase in demand before taking on permanent staff. The average work week grew to 33.2 hours in November from 33 hours, the biggest rise since March 2003. Average weekly earnings rose to $622.17. Software Exporter Some companies are adding workers. Infosys Technologies Ltd., India’s second-largest software exporter by revenue, plans to add 1,000 employees in the U.S. in the next four to five quarters, said Chief Financial Officer V. Balakrishnan. Government adjustments subtracted 91,000 jobs from the unadjusted November payroll number, about in line with the historical figure. This indicates the seasonal adjustment issue may not have played much of a role in last month’s data. Today’s report showed factory payrolls fell 41,000 after decreasing 51,000 in the prior month. The median forecast by economists called for a drop of 45,000. The decline included a drop of 6,300 jobs in auto manufacturing and parts industries. Sales of cars and light trucks increased for a second consecutive month in November after plunging in the wake of the government’s so-called cash-for-clunkers incentive plan. Vehicles sold at a 10.9 million annual pace last month, up from a 10.5 million rate in October. Builder Payrolls Payrolls at builders declined 27,000 after falling 56,000. Financial firms decreased payrolls by 10,000 for a second month. Service industries, which include banks, insurance companies, restaurants and retailers, added 58,000 workers after adding 2,000. Retail payrolls decreased by 14,500 after a 44,200 drop. Angela Renee Elliott, a 40-year-old accountant and bookkeeper from Wyoming, Ohio, said she’s sent between 100 and 150 resumes after losing her job in April. This is the first time she’s been unemployed in her 17-year career. “I’m feeling pretty good and have seven interviews” already completed or planned, Elliott said in an interview, after posting her resume online on Nov. 21. “I believe I’m going to have a full-time. I’m keeping my fingers crossed.” Even so, “it’s going to get worse before it gets better,” she said of the national job market and economy. Government payrolls increased by 7,000 after a 46,000 rise in the prior month. Underemployment Rate The so-called underemployment rate — which includes part- time workers who’d prefer a full-time position and people who want work but have given up looking — fell to 17.2 percent from 17.5 percent. Economists surveyed by Bloomberg last month projected the jobless rate will exceed 10 percent through the middle of next year even as the economy expands 2.6 percent in 2010. The U.S. economy expanded last quarter for the first time in a year, growing at a 2.8 percent pace as government incentives spurred consumers to spend more on homes and automobiles. Some companies such as Harley-Davidson Inc. are among those continuing to trim staff to wring out additional cost savings and stem losses. The biggest U.S. motorcycle maker yesterday approved a restructuring plan at its largest plant, in York, Pennsylvania, which will result in the loss of about 950 union jobs. “A restructured York operation will enable the plant to be competitive and sustainable for the future, and the new labor agreement is critical,” Chief Executive Officer Keith Wandell said in a statement. The Milwaukee-based manufacturer is cutting costs after nine straight quarterly losses. To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

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Dollar Strengthens Against Euro Before U.S. Holiday; Japan’s Yen Advances

November 23, 2009

By Yasuhiko Seki Nov. 24 (Bloomberg) — The dollar and yen rose, reversing earlier losses, as traders pulled out of bets against the two funding currencies before the U.S. Thanksgiving holiday season starts. The dollar also rose against 14 out of 16 most-active currencies tracked by Bloomberg before a release today of revised gross domestic product data forecast to show the U.S. economy expanded at a slower than initially expected pace in the third quarter. The yen advanced against 15 of 16 counterparts as local stocks slumped, reviving demand for the Japanese currency as a refuge from risk aversion. “People now have a strong urge to close out short positions before Thanksgiving,” said Toshiya Yamauchi , manager of the foreign-exchange margin-trading department at Ueda Harlow Ltd. in Tokyo. “The approaching holiday season also makes traders more sensitive to bad figures.” A short position is a bet that asset price will decline. The greenback traded at $1.4944 per euro at 9:50 a.m. in Tokyo from $1.4961 yesterday in New York. The yen was at 132.82 versus the euro from 133.11 yen yesterday. The Japanese currency was at 88.88 per dollar from 88.97 in New York. The U.S. government’s revised figures for third-quarter gross domestic product, due today, may show the world’s largest economy expanded at a 2.8 percent annual rate, compared with the 3.5 percent estimated last month, according to the survey. The revision will reflect a bigger trade gap and weaker retail sales in September, economists said. To contact the reporters on this story: Yasuhiko Seki in Tokyo at yseki5@bloomberg.net ;

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Ally Bank: Is GMAC’s Rebranded Bank Using Bailout To Offer High-Interest CDs?

November 9, 2009

NEW YORK — Its TV and print ads poke fun at the bait-and-switch tactics of other banks. Its interest rates on CDs have been the most generous in the industry. Ally Bank’s tactics have drawn in customers, but they’ve also irked rivals and gotten the attention of regulators. As the rebranded banking unit of GMAC Financial Services, Ally Bank has the backing of billions of dollars loaned to GMAC by the federal government. After the name change in May, Ally offered a 2.8 percent interest rate on 1-year CDs. That was more than double the national average of 1.23 percent, according to Bankrate.com. Federal regulators have since intervened, after an industry group expressed concerns about Ally’s ability to afford to pay such rates for deposits. Still, company executives note that Ally’s rates remain competitive. Ally currently pays 1.93 percent on a 1-year CD, much closer to the national average of 1.72 percent. And the bank continues to burnish its populist image in a national media campaign. GMAC Financial spokeswoman Gina Proia said the online bank’s lower cost structure is a key reason it can offer competitive rates and service. For its third quarter, Ally said retail deposits hit $15.9 billion. That’s up from $14.5 billion, $11 billion and $7.2 billion in the previous quarters. Deposits are critical to GMAC, which uses them to fund auto loans and mortgages. Yet Ally’s growing deposits aren’t sitting well with some. In a May 27 letter to the Federal Deposit Insurance Corp., the American Bankers Association complained that Ally’s rates could end up compounding its problems. The bank had just posted a first-quarter loss of $675 million. The letter also pointed out that Ally’s strategy was possible only because of the government bailout of GMAC. “When you don’t have a lot of skin in the game, it increases the willingness to take chances,” said Wayne Abernathy, vice president of regulatory affairs for the ABA. Troubled banks often go after deposits to “grow out of their problems,” Abernathy said. For the plan to work, however, the loans and other investments the bank makes need to pan out, meaning low default and charge-off rates. “It’s a thin margin. Sometimes it works, sometimes it doesn’t,” Abernathy said. The ABA wasn’t alone in its concerns. Proia declined to give specifics on Ally’s dealings with the FDIC. In June, however, the agency sent GMAC a letter that referenced the company’s agreement to “focus on reducing Ally Bank’s overall deposit costs.” GMAC’s incentive to follow the FDIC’s recommendations was strong. The agency in late May backed $7.4 billion in GMAC-issued debt – a rare move by the FDIC for a junk-rated company. The June letter from the FDIC also cited GMAC’s agreement to provide updates on how Ally’s interest rates compare to national averages, and where they rank among the country’s top 10 banks. Meanwhile, Ally executives are staying on message. Sanjay Gupta, Ally’s chief marketing officer, unfailingly cites the bank’s unusually consumer-friendly approach. “People always appreciate a good rate. But they’re also looking for a bank they can count on,” Gupta said. It’s a role Ally is eager to fill. In one of its TV ads, a banker gives a little girl a bike, but only lets her ride it on a small cardboard square. The ad is meant to criticize the teaser rates and fine print that often accompany financial products. Ally’s approach is also apparent on its minimalist Web site. Its phone number is atop each page, along with the estimated wait time. But that doesn’t mean you don’t have to go through the usual system of prompts to connect with a service representative.

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Jobless Recovery in U.S. May Boost Company Profits as Productivity Surges

September 4, 2009

By Carlos Torres Sept. 5 (Bloomberg) — Employers kept Americans’ working hours near a record low in August, signaling that economic growth is poised to reward companies with added profits while postponing any recovery in the job market. The average workweek held at 33.1 hours, six minutes from the 33 hours in June that was the lowest since records began in 1964, the Labor Department said yesterday. The report also showed that while payrolls fell by the least since August 2008, the unemployment rate rose to a 26-year high of 9.7 percent. The preconditions for gains in payrolls, including giving the army of part-timers longer hours and taking on additional temporary employees, weren’t met last month. At the same time, with economic growth forecast to resume this quarter, the figures set the stage for a surge in worker productivity and drop in labor costs that will stoke corporate profits. “It’s disappointing and it tells us that we are not quite there yet,” said Michael Feroli , an economist at JPMorgan Chase & Co. in New York who used to work at the Federal Reserve. “It’s great for business and terrible for households” for coming months, Feroli said. There were almost 9.1 million Americans working part-time last month who would rather have a full-time job, up 278,000 from July, yesterday’s report showed. It almost matched May’s reading, when it reached the highest level since records began in 1955. Total Hours The index of total hours worked, which takes into account changes in payrolls and the workweek, fell 0.3 percent last month to the lowest level since 2003. “It tells us payrolls aren’t turning positive any time soon,” Joseph LaVorgna , chief U.S. economist at Deutsche Bank Securities Inc. in New York, said on a conference call yesterday, referring to the workweek figures. “This wasn’t a friendly report.” A measure of unemployment, which includes the part-time workers who would prefer a full-time position and people who want work but have given up looking, reached 16.8 percent last month, the highest level in data going back to 1994. The workweek for factory employees, which held at 39.8 hours last month, leads total payrolls by about three months, LaVorgna said. Once it reaches at least 41 hours and once payrolls for temporary workers stabilize, then an increase in total employment can be expected months later, he said. Payrolls for temporary workers started turning down in January 2007, 11 months before the recession began. They dropped by another 6,500 workers in August, the government’s report showed yesterday. On the Mend At the same time, the report did underscore that the economy is on the mend and pulling out of the deepest recession since the 1930s. The drop in payrolls slowed for the sixth time in seven months, to 216,000 in August. Declines in temporary jobs have also slowed in recent months. Companies cut 90,400 temporary staff in November of last year. It’s a step in the right direction, Tig Gilliam , chief executive officer of Adecco Group North America, said in an interview. “That has to happen first,” he said. “That is a pre-indicator for improvement in the overall market.” Adecco SA, based in Glattbrugg, Switzerland, is the world’s largest supplier of temporary workers. Gilliam projects the U.S. economy will not start adding jobs until early 2010 and that unemployment will reach at least 10 percent next year. The jobless rate climbed to 9.7 percent last month, the highest level since 1983, from 9.4 percent in July, yesterday’s report showed. Total Hours Total hours worked are down at a 2.8 percent annual pace so far this quarter, according to calculations by Ian Morris , chief U.S. economist at HSBC Securities USA Inc. in New York. Morris, who projects the economy will expand at a 4 percent to 6 percent pace this quarter, says that means worker productivity may exceed the second quarter’s 6.6 percent jump, which was the biggest gain in almost six years. “This is set to flow straight into the corporate bottom line,” he said in an e-mail to clients. That indicates the “strong” earnings for companies in the Standard & Poor’s 500 Index in the three months to June will continue this quarter, he said. To contact the reporter on this story: Carlos Torres in Washington ctorres2@bloomberg.net

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U.S. Recovery That’s Leaving Workers Jobless May Add to Company Profits

September 4, 2009

By Carlos Torres Sept. 4 (Bloomberg) — Employers kept Americans’ working hours near a record low in August, indicating that economic growth is poised to reward companies with added profits while postponing any recovery in the job market. The average workweek held at 33.1 hours, six minutes from the 33 hours in June that was the lowest since records began in 1964, the Labor Department said today. The report also showed that while payrolls dropped by the least since August 2008, the unemployment rate rose to a 26-year high of 9.7 percent. The preconditions for gains in payrolls, including giving the army of part-timers longer hours and taking on additional temporary employees, weren’t met last month. At the same time, with economic growth forecast to resume this quarter, the figures set the stage for a surge in worker productivity and drop in labor costs that will stoke corporate profits. “It’s disappointing and it tells us that we are not quite there yet,” said Michael Feroli , an economist at JPMorgan Chase & Co. in New York who used to work at the Federal Reserve. “It’s great for business and terrible for households” for coming months, Feroli said. There were almost 9.1 million Americans working part-time last month who would rather have a full-time job, up 278,000 from July, today’s report showed. It almost matched May’s reading, when it reached the highest level since records began in 1955. Total Hours The index of total hours worked, which takes into account changes in payrolls and the workweek, fell 0.3 percent last month to the lowest level since 2003. “It tells us payrolls aren’t turning positive any time soon,” Joseph LaVorgna , chief U.S. economist at Deutsche Bank Securities Inc. in New York, said on a conference call today, referring to the workweek figures. “This wasn’t a friendly report.” A measure of unemployment, which includes the part-time workers who would prefer a full-time position and people who want work but have given up looking, reached 16.8 percent last month, the highest level in data going back to 1994. The workweek for factory employees, which held at 39.8 hours last month, leads total payrolls by about three months, LaVorgna said. Once it reaches at least 41 hours and once payrolls for temporary workers stabilize, then an increase in total employment can be expected months later, he said. Payrolls for temporary workers started turning down in January 2007, 11 months before the recession began. They dropped by another 6,500 workers in August, the government’s report showed today. On the Mend At the same time, today’s report did underscore that the economy is on the mend and pulling out of the deepest recession since the 1930s. The drop in payrolls slowed for the sixth time in seven months, to 216,000 in August. Declines in temporary jobs have also slowed in recent months. Companies cut 90,400 temporary staff in November of last year. It’s a step in the right direction, Tig Gilliam , chief executive officer of Adecco Group North America, said in an interview. “That has to happen first,” he said. “That is a pre-indicator for improvement in the overall market.” Adecco SA, based in Glattbrugg, Switzerland, is the world’s largest supplier of temporary workers. Gilliam projects the U.S. economy will not start adding jobs until early 2010 and that unemployment will reach at least 10 percent next year. The jobless rate climbed to 9.7 percent last month, the highest level since 1983, from 9.4 percent in July, today’s report from the Labor Department showed. Total Hours Total hours worked are down at a 2.8 percent annual pace so far this quarter, according to calculations by Ian Morris , chief U.S. economist at HSBC Securities USA Inc. in New York. Morris, who projects the economy will expand at a 4 percent to 6 percent pace this quarter, says that means worker productivity may exceed the second quarter’s 6.6 percent jump, which was the biggest gain in almost six years. “This is set to flow straight into the corporate bottom line,” he said in an e-mail to clients. That indicates the “strong” earnings for companies in the Standard & Poor’s 500 Index in the three months to June will continue this quarter, he said. To contact the reporter on this story: Carlos Torres in Washington ctorres2@bloomberg.net

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Japanese, Australian Stock Futures Gain on Metals Prices; Honda Declines

August 13, 2009

By Masaki Kondo and Satoshi Kawano Aug. 14 (Bloomberg) — Japanese and Australian stock futures rose after metals prices climbed to a 10-month high, outweighing a weakening dollar that dimmed the U.S. earnings prospects for Japanese manufacturers. U.S.-traded securities of Mitsubishi Corp. , a Japanese trading company that gets more than a third of its sales from commodities, added 0.9 percent from the Tokyo close. Those of BHP Billiton Ltd., the world’s biggest mining company, advanced 1 percent. Honda Motor Co. , which gets more than half its sales in North America, sank 0.5 percent. “Resilience in the commodity market will likely prompt investors to snap up Japanese trading houses, while the weaker dollar will drive down exporters,” said Juichi Wako , a senior strategist at Tokyo-based Nomura Holdings Inc. Futures on Japan’s Nikkei 225 Stock Average expiring in September closed at 10,545 in Chicago, 0.2 percent higher than 10,520 in Osaka. Australia’s S&P/ASX 200 Index futures contract due in September rose 0.9 percent. New Zealand’s NZX 50 Index was little changed at 3,125.79 in Wellington. The MSCI Asia Pacific Index has gained 61 percent from a more than five-year low on March 9, as improved economic statistics and corporate earnings fanned optimism the global economy is recovering. Stocks on the gauge traded at 1.56 times their corporate net worth yesterday, nearing an 11-month high of 1.57 times on Aug. 11, according to data compiled by Bloomberg. In New York, the Standard & Poor’s 500 Index climbed 0.7 percent, with the KBW Bank Index advancing 3.1 percent, the most this week. The S&P 500 earlier dropped as much as 0.5 percent following government reports on retail sales and initial jobless claims that were worse than economists had estimated. Europe’s Economy The European Union said yesterday the euro-region’s economy contracted 0.1 percent in the three months to June from the first quarter. Economists had estimated a 0.5 percent decline. A gauge of six metals in London climbed 3.6 percent yesterday to the highest level since Sept. 30. Copper rose 3.2 percent in New York. The Baltic Dry Index , a measure of shipping rates for commodities, advanced for the first time in 11 sessions with a 2.8 percent gain. The dollar weakened versus the yen to as much as 95.26 from 96.11 at the 3 p.m. close of Toyo stock trading yesterday, reducing the value of overseas sales at Japanese companies when converted into their home currency. To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net ; Satoshi Kawano in Tokyo at skawano1@bloomberg.net .

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Japanese, Australian Stock Futures Gain on Metals Prices; Honda Declines

August 13, 2009

By Masaki Kondo and Satoshi Kawano Aug. 14 (Bloomberg) — Japanese and Australian stock futures rose after metals prices climbed to a 10-month high, outweighing a weakening dollar that dimmed the U.S. earnings prospects for Japanese manufacturers. U.S.-traded securities of Mitsubishi Corp. , a Japanese trading company that gets more than a third of its sales from commodities, added 0.9 percent from the Tokyo close. Those of BHP Billiton Ltd., the world’s biggest mining company, advanced 1 percent. Honda Motor Co. , which gets more than half its sales in North America, sank 0.5 percent. “Resilience in the commodity market will likely prompt investors to snap up Japanese trading houses, while the weaker dollar will drive down exporters,” said Juichi Wako , a senior strategist at Tokyo-based Nomura Holdings Inc. Futures on Japan’s Nikkei 225 Stock Average expiring in September closed at 10,545 in Chicago, 0.2 percent higher than 10,520 in Osaka. Australia’s S&P/ASX 200 Index futures contract due in September rose 0.9 percent. New Zealand’s NZX 50 Index was little changed at 3,125.79 in Wellington. The MSCI Asia Pacific Index has gained 61 percent from a more than five-year low on March 9, as improved economic statistics and corporate earnings fanned optimism the global economy is recovering. Stocks on the gauge traded at 1.56 times their corporate net worth yesterday, nearing an 11-month high of 1.57 times on Aug. 11, according to data compiled by Bloomberg. In New York, the Standard & Poor’s 500 Index climbed 0.7 percent, with the KBW Bank Index advancing 3.1 percent, the most this week. The S&P 500 earlier dropped as much as 0.5 percent following government reports on retail sales and initial jobless claims that were worse than economists had estimated. Europe’s Economy The European Union said yesterday the euro-region’s economy contracted 0.1 percent in the three months to June from the first quarter. Economists had estimated a 0.5 percent decline. A gauge of six metals in London climbed 3.6 percent yesterday to the highest level since Sept. 30. Copper rose 3.2 percent in New York. The Baltic Dry Index , a measure of shipping rates for commodities, advanced for the first time in 11 sessions with a 2.8 percent gain. The dollar weakened versus the yen to as much as 95.26 from 96.11 at the 3 p.m. close of Toyo stock trading yesterday, reducing the value of overseas sales at Japanese companies when converted into their home currency. To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net ; Satoshi Kawano in Tokyo at skawano1@bloomberg.net .

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