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U.S. consumer confidence, home prices show weakness

NEW YORK (Reuters) – U.S. consumer confidence fell in September for the first time in five months and home prices in July rose less than expected from a year earlier, underscoring the unsteady nature of U.S. growth.

Another report on Tuesday showed business activity growth in the U.S. Midwest decelerated slightly in September.

“We’re continuing to effectively struggle,” said Mike Englund, chief economist at Action Economics in Boulder, Colorado. “Some of the optimism that we got in the updraft in consumer confidence in the third quarter was probably a bit overstated.”

The Conference Board, an industry group, said its index of consumer attitudes fell to 86.0 in September from a upwardly revised 93.4 the month before. Economists had expected a reading of 92.5, according to a Reuters poll.

Consumer confidence was hurt by concerns over the job market and expectations that economic growth will slow in coming months.

The SP/Case Shiller composite index of home prices in 20 metropolitan areas gained 6.7 percent in July year over year, shy of expectations for a 7.5 percent rise. On a seasonally adjusted monthly basis, prices in the 20 cities fell 0.5 percent in July. A Reuters poll of economists had forecast a flat reading.

“The home price data suggests that we haven’t entirely repaired the home sales process,” said Englund. “We have a housing market where people who are dependent on credit to buy homes are finding that homes aren’t as easy to buy as they used to be.”

In a third report, the Institute for Supply Management-Chicago business barometer fell to 60.5 this month from 64.3 in August, falling short of economists’ expectations for 61.9. A reading above 50 indicates expansion in the regional economy.

U.S. stocks traded slightly lower as the dollar rose and weighed on multinational companies. U.S. Treasury prices fell.

(Reporting by Sam Forgione; Editing by Meredith Mazzilli)

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News Corp to buy real estate website operator Move for $950 mln

(Reuters) – Rupert Murdoch’s News Corp (NWSA.O) will buy Move Inc (MOVE.O), the owner of property websites such as, for about $950 million to expand its digital marketing business as advertising revenue from its print business dwindles.

The deal is the second large acquisition in the online real estate market this year as property website operators struggle to turn rising revenue into consistent profitability.

Top U.S. real estate website operator Zillow Inc (Z.O) bought smaller rival Trulia Inc (TRLA.N) for $3.5 billion in July.

CRT Capital analyst Neil Doshi said the online real estate market remained largely fragmented and there was room for more consolidation., like Trulia’s and Zillow’s, lists properties for sale or rent on behalf of homeowners and agents and gets revenue through subscriptions and advertising.

Trulia and Zillow lost a combined $30 million in 2013 while Move had a profit of $574,000.

News Corp, which owns the Wall Street Journal, the New York Post and newspapers in the UK and Australia, said it would pay $21 per share for Move, a premium of 37 percent to the stock’s Monday close.

Move shares rose to $20.93 in early trading on the Nasdaq, while News Corp shares were down about 1 percent at $16.67.

Australian real estate website REA Group Ltd (REA.AX), which is 61.6 percent owned by News Corp, will take a 20 percent stake in Move for about $200 million, News Corp said.

“In addition to boosting Move’s subscription, advertising and software services, this acquisition will give News Corp a significant marketing platform for our media assets,” News Corp CEO Robert Thomson said in a statement.

Real estate agents and brokers are expected to spend $14 billion on online advertising in 2014, of which Move is expected to corner about 2 percent, he said on a conference call.

Move’s market share is likely to grow as more advertising spending moves online in the United States, Thomson said.

Move also operates and The company, whose sites are accessible through, reaches about 35 million people monthly, making it the third largest U.S. property website operator.

Benchmark Co analyst Daniel Kurnos wrote in a note on Sept. 11 that he expected Move’s revenue to grow faster in 2015 as the U.S. housing market picks up.

News Corp said it would commence a tender offer for Move shares within 10 business days and that it expected the deal to close by the end of the year.

Goldman Sachs was News Corp’s financial adviser and Skadden, Arps, Slate, Meagher and Flom LLP its legal adviser. Morgan Stanley was Move’s financial adviser and Cooley LLP its legal adviser.

Up to Monday’s close, Move shares had risen 4.5 percent since July 24, when reports emerged that Zillow was in talks to buy Trulia.

(Editing by Ted Kerr and Kirti Pandey)

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Fed’s Powell rejects Treasury-Fed cooperation as threat to central bank independence

WASHINGTON (Reuters) – Federal Reserve board member Jerome Powell said on Tuesday he feared any move for the Fed and the U.S. Treasury to cooperate on debt management and other issues would undermine the central bank’s independence and should be avoided.

Powell was responding to research by a team of Harvard economists concluding that the Treasury’s effort to ramp up its sales of longer-term bonds in recent years undercut the Fed’s effort to bring down long-term rates through quantitative easing.

The economists, including former Treasury Secretary Lawrence Summers, suggested the two agencies coordinate – particularly in a crisis – to be sure the government’s debt management plans and the Fed’s monetary policy are in synch.

That proposal “seems to me to be fraught with risk for the Federal Reserve,” said Powell, noting that when the Fed and Treasury did cooperate in the years after World War Two it cut into the Fed’s independence.

“There is considerable evidence that monetary policy independence leads to better macroeconomic outcomes. Any active collaboration between debt management and monetary policy, even in a crisis, would risk calling into question that independence,” Powell said.

He downplayed the group’s conclusion that Treasury’s debt management undercut the impact of the Fed’s quantitative easing. He said, for example, that quantitative easing sent a strong signal to markets that the Fed would stand behind the economy, providing a psychological boost to markets.

(Reporting By Howard Schneider; Editing by Andrea Ricci)

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U.S. consumer confidence falls in September

NEW YORK (Reuters) – U.S. consumer confidence fell in September to its lowest level since May on concerns over the job market and economic growth, according to a private sector report released on Tuesday.

The Conference Board, an industry group, said its index of consumer attitudes fell to 86.0 from a upwardly revised 93.4 the month before. Economists had expected a reading of 92.5, according to a Reuters poll.

August’s reading was originally reported as 92.4. The dip in September came after four straight months of improvement.

“A less positive assessment of the current job market, most likely due to the recent softening in growth, was the sole reason for the decline in consumers’ assessment of present-day conditions,” Lynn Franco, director of economic indicators at The Conference Board, said in a statement.

“All told, consumers expect economic growth to ease in the months ahead.”

The expectations index fell to 83.7 from a revised 93.1 figure, while the present situation index fell to 89.4 from a revised 93.9.

Consumers’ labor market assessment worsened. The “jobs hard to get” index rose to 30.1 percent from a revised 30.0 percent the month before, while the “jobs plentiful” index fell to 15.1 percent from 17.6 percent.

Consumers also expect a decrease in inflation, with expectations for inflation in the coming 12 months down to 5.4 percent from 5.5 percent.

(Reporting by Sam Forgione; Editing by Meredith Mazzilli)

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U.S. home prices rise less than expected in July: S&P/Case-Shiller

NEW YORK (Reuters) – U.S. single-family home prices rose in July on a year-over-year basis but fell short of expectations, a closely watched survey said on Tuesday.

The SP/Case Shiller composite index of 20 metropolitan areas gained 6.7 percent in July year over year, shy of expectations for a 7.5 percent rise.

On a seasonally adjusted monthly basis, prices in the 20 cities fell 0.5 percent in July. A Reuters poll of economists had forecast a flat reading.

Non-seasonally adjusted prices rose 0.6 percent in the 20 cities on a monthly basis, disappointing expectations for a 1.1 percent rise.

“The broad-based deceleration in home prices continued in the most recent data,” David Blitzer, chairman of the index committee at SP Dow Jones Indices, said in a statement.

“While the year-over-year figures are trending downward, home prices are still rising month-to-month although at a slower rate than what we are used to seeing over the past couple of years.”

A broader measure of national housing market activity that SP/Case-Shiller is now releasing on a monthly basis rose at a slower pace year over year, coming in at 5.6 percent.

The seasonally adjusted 10-city gauge fell 0.5 percent in July versus a 0.2 percent decline in June, while the non-adjusted 10-city index rose 0.6 percent in July compared to a 1.0 percent rise in June.

Year over year, the 10-city gauge also rose 6.7 percent.

(Reporting by Sam Forgione; Editing by Chizu Nomiyama)

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Auto recovery wobbles in Paris show spotlight

PARIS (Reuters) – Europe’s anemic car market rebound could be over before it has really begun. That is the fear of executives as they gather for the Paris auto show opening on Thursday, the biggest industry event in the regional calendar.

While U.S. and Japanese car sales are back at pre-crisis levels, Europe is still 20 percent below its 2007 peak.

Carmakers are rolling out new models in anticipation of closing the gap — the Paris show floor will be bristling with fuel-efficient small cars and compact SUVs.

But a tentative recovery following a six-year slump is looking increasingly fragile. And this time there is little relief to be had elsewhere, with Chinese demand cooling, Russian sales in freefall and other emerging markets in sharp decline.

“Few plants have been closed, headcount levels remain high, and RD budgets have largely been left intact to ensure a future product pipeline,” Bernstein analyst Max Warburton said. “The industry is just sitting tight hoping for a brighter future.”

It may have to wait a while.

At the end of this decade, European demand will still be 1 million vehicles short of its pre-2008 average, according to forecaster IHS Automotive.

“This recovery has always had shaky foundations,” said IHS analyst Ian Fletcher, who sees European market growth slowing to 3 percent next year after a 4.6 percent spurt in 2014.

“It’s about whether customers on the front line feel secure in their jobs and how heavily indebted they are from previous years,” he said.

Carmakers that were too optimistic about the pace of this year’s upturn have already been forced to cut back.

Ford, which is showing a new S-Max minivan in Paris, will stop building its top-selling Fiesta subcompact in Germany for 11 days in October and November.

Production of PSA Peugeot Citroen models has also outpaced sales, prompting a two-week halt to assembly of the 208 and C3 small cars in Slovakia as well as 300 job cuts at its main domestic plant in eastern France.

Low-cost cars offer a notable bright spot but are largely imported, leaving the region’s factories with excess capacity estimated at 2-3 million vehicles a year, according to consulting firm Oliver Wyman.

Renault’s budget Dacia range, the fastest-growing brand in Europe with a 2.9 percent market share, will be unveiling crossover versions of its Moroccan-built Lodgy and Dokker vans.

Besides the no-frills range, Renault has been cushioned from the crisis by its 43.4 percent stake in Japan’s Nissan, and Fiat is similarly shielded by Chrysler after taking full control of the U.S. carmaker early this year.

It is Peugeot, showing small concept cars using a compressed-air hybrid drivetrain developed with Bosch [ROBG.UL], that is most exposed to Europe. Some 60 percent of its sales are still generated in the region and almost a third of its global production in high-cost France.


Regional demand is “a contributor to the recovery of Peugeot, which is heavily implanted in Europe,” Chief Executive Carlos Tavares said on Tuesday.

“We are placing our hopes in the continuation of this growth, although its weakness makes us rather cautious about whether it will last.”

European auto stocks have tumbled 14 percent since June 6, based on the 14-member Stoxx Europe 600 Autos Parts index, after doubling in value over the course of a two-year rally driven by recovery hopes.

“The momentum has turned from positive in early summer to very negative right now,” said Arndt Ellinghorst, a London-based analyst with ISI Group.

The outlook has worsened as consumer and business confidence are “dragged down because of the whole Russian situation”, Ellinghorst added.

Russian car sales were down 26 percent in August, with the rouble tumbling as the United States and Europe stepped up sanctions over Moscow’s military intervention in Ukraine.

China’s auto-market growth is also slowing to a forecast 7.9 percent next year from 11.2 percent expected in 2014, according to IHS. That threatens to curb the bumper profits that have allowed premium carmakers BMW, Daimler and Volkswagen’s Audi to ride out the crisis at home.

The German big three are challenged by the pricing fallout from their intense sales rivalry, as well as new competition from the likes of Tata’s Jaguar Land Rover, whose Jaguar XE sedan makes its public debut in Paris.

European market leader Volkswagen also looks vulnerable to demand weakness at home, as it struggles to rein in cost overruns at the heartland Wolfsburg plant.

But a real rebound must happen sometime, and Bernstein’s Warburton sees Europe’s average vehicle age — 9 years, compared with a pre-crisis 7.9 — among reasons to be cheerful.

“There must be some form of pent-up demand building in Europe,” he said in a recent note. “There is clear upside for vehicle demand, if only a proper recovery gets underway.”

(Editing by Mark Potter)

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Walgreen posts highest quarterly sales growth in 3 years

(Reuters) – U.S. drugstore chain operator Walgreen Co reported its biggest jump in quarterly sales in three years, helped by higher prescription sales, sending its shares up more than 3 percent in premarket trading.

The company posted a better-than-expected 6.2 percent rise in quarterly sales as prescription sales rose 9.3 percent in the fourth quarter ended Aug. 31.

The largest U.S. drug retailer said it filled 211 million prescriptions in the quarter, an increase of 4.2 percent from a year ago, helped by strong growth in prescriptions filled for Medicare Part D patients.

Walgreen ended the year with a record 856 million filled prescriptions.

Total revenue rose to $19.06 billion in the quarter, from $17.94 billion a year earlier, the company said.

Walgreen said the net loss attributable to the company was $239 million, or 25 cents per share, in the quarter. The loss figure includes an $866 million non-cash loss due to the amendment and exercise of Walgreen’s Alliance Boots [ABN.UL] call option.

Deerfield, Illinois-based Walgreen last month bought the 55 percent of Alliance Boots it did not already own. Walgreen said it would pay 3.13 billion pounds in cash and 144.3 million shares for Alliance Boots, Europe’s biggest pharmacy chain..

The company said it expected Alliance Boots to add 10 to 11 cents per share to its current-quarter adjusted earnings.

While lower third-party reimbursement and generic drug price inflation hurt results in the quarter, Walgreen said pharmacy and front-end margins benefited from purchasing synergies arising from its joint venture with Alliance Boots.

Walgreen posted a profit of $657 million, or 69 cents per share, in the same quarter a year ago.

Excluding items, the company earned 74 cents per share in the fourth quarter, with Alliance Boots contributing 6 cents per share.

Analysts on average had expected a profit of 74 cents per share on sales of $19.02 billion, according to Thomson Reuters I/B/E/S.

Walgreen’s shares have lost 14 percent of their value since the company announced its acquisition of the remainder of Alliance Boots in August.

The company’s shares rose about 3.2 percent to $61.50 in trading before the bell on Tuesday.

(Reporting by Nandita Bose in Chicago and Sruthi Ramakrishnan in Bangalore; Editing by Savio D’Souza and Simon Jennings)

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China final September HSBC PMI steady on firmer global demand but risks remain

BEIJING (Reuters) – China’s vast factory sector showed signs of steadying in September as export orders climbed, a private survey showed on Tuesday, easing fears of a hard landing but pointing to a still-sluggish economy facing considerable risks.

The final HSBC/Markit Manufacturing Purchasing Managers’ Index(PMI) hovered at 50.2 in September, unchanged from the August reading which was a three-month low, but lower than a preliminary reading of 50.5.

A sub-index measuring new export orders, a gauge of external demand, expanded to a 4-1/2-year-high of 54.5, though domestic demand appeared soft. The 50 mark separates expansion from contraction in activity on a monthly basis.

More worrisome, the survey showed further weakness in the job market, with the sub-index for manufacturing employment shrinking for the 11th consecutive month, which is bound to concern China’s Communist leaders.

The world’s second-largest economy has stumbled this year as a slowdown in the housing market further weighs on softening domestic demand.

With the property market expected to cool further, economists believe policymakers will have to roll out more stimulus measures in coming months to meet the government’s 2014 growth target of around 7.5 percent.

“Overall, the data in September suggests that manufacturing activity continues to expand at a slow pace,” said Qu Hongbin, chief economist for China at HSBC.

“We think the risks to growth are still on the downside and warrant more accommodative monetary as well as fiscal policies.”

Despite the strong surge in export orders, the overall output level fell to its lowest in four months, but managed to hold above the 50-point level.

Shares in Shanghai .SSEC gave up modest early gains and dipped into the red after the report.


Despite a run of weak economic readings, Chinese leaders have said repeatedly that no dramatic change in policy is imminent.

Premier Li Keqiang said earlier this month that China cannot rely on loose credit to lift its economy and would continue to make only “targeted adjustments” to boost activity.[ID:nL3N0RA2IY]

The latest worrying data came at the weekend, with news that profits at China’s industrial companies fell in August from a year earlier. Many of the country’s biggest firms are already receiving heavy subsidies from the state. [ID:nL3N0RS03I]

A flash PMI by HSBC/Markit that was released last week had showed factory employment skidding to a six-year-low in September. Tuesday’s survey showed the sub-index was revised up markedly in the final version, though it showed the labour market was shrinking nonetheless.

A soft labour market is a worry for Chinese policymakers, who fear that rising unemployment could fuel social unrest and threaten the government’s grip on power.

“The domestic economy is very weak and is being brought down by the property market,” said Tao Wang, an economist at UBS in Hong Kong.

“But until there is clear evidence of weakness in the labour market, the authorities won’t be responding,” she said in reference to the soft employment data in the PMI.

China will release its official factory PMI on Wednesday. It is also expected to show growth steadied. [ID:nL3N0RR32J]

The official PMI is focused on larger factories that belong to the government, as opposed to the HSBC/Markit PMI survey which is biased towards smaller manufacturers in the private sector.

Smaller firms are facing greater financial stresses as some cash-strapped customers are taking longer to pay their bills. Smaller companies are also having more trouble getting credit as banks grow more cautious in the face of mounting bad loans and fears of defaults.

The Industrial and Commercial Bank of China (1398.HK) (601398.SS), the country’s biggest bank, said 80 percent of new non-performing loans in the second quarter came from the manufacturing and wholesale sectors.

China’s banking regulator said on Sunday it had issued revised internal control guidelines for banks to ensure that appropriate risk management controls are adopted, while increasing penalties for any violations.

Issuance of the guidelines came days after China’s central bank began a targeted program to make available 500 billion yuan ($81.6 billion) in short-term funds to China’s five biggest banks to help the economy by keeping borrowing costs affordable.

(Reporting By Xiaoyi Shao and Koh Gui Qing; Editing by Kim Coghill)

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Euro zone inflation slows in September, weakens euro versus dollar

BRUSSELS (Reuters) – Euro zone inflation slowed again in September as some food and energy prices fell, a first estimate showed, reinforcing expectations the ECB will ease policy further and sending the euro to a two-year low.

Eurostat said on Tuesday that consumer prices in the 18 countries sharing the euro rose 0.3 percent year-on-year, less than the 0.4 percent increases seen in August and July. The September reading was in line with market forecasts.

The European Central Bank wants to keep headline inflation at just under 2 percent over the medium term. Persistently low price growth underscores the difficulty of hitting that target while the euro zone economy continues to stagnate.

The euro sank below $1.26 for the first time since September 2012 after the data, hitting a low of $1.25715 on trading platform EBS and down almost 1 percent on the day.

Euro zone shares rose on expectations the ECB will introduce new stimulus measures to boost the region’s flagging economy.

“With actual output below potential and weak wage growth in many euro zone countries, inflation will remain subdued,” said Tomas Holinka, economist at Moody’s Analytics.

“The euro area economy stalled in the second quarter and the recovery prospects are fading. With tougher sanctions against Russia, risks are weighted to the downside.

“The euro zone’s weaker than expected performance fuels uncertainty about economic recovery and fears about the threat of deflation,” he added.

Unprocessed food prices fell 0.9 percent year-on-year in September and energy was 2.4 percent cheaper.

What the European Central Bank calls core inflation – a measure stripping out these two volatile components – was 0.8 percent year-on-year, slowing from 0.9 percent in August.

Eurostat initially reported core inflation of 0.7 percent but later revised its figure, citing a rounding error.

To accelerate price growth, the ECB has cut the cost of borrowing to almost zero, offered further cheap loans to banks and pledged to buy repackaged debt. ECB President Mario Draghi has emphasised that it could do even more.

But going for full-blown quantitative easing, by adding government bonds to the ECB’s shopping list, would be politically difficult because of stiff opposition in Germany, the euro zone’s biggest and most powerful economy.

Draghi is expected to give further details of ECB plans to buy asset-backed securities and covered bonds when the bank’s governing council meets in Naples on Thursday. Investors do not expect new policy decisions yet, after the bank cut all three of its main interest rates in early September.

Draghi has, in the meantime, sought to put the ball back in the court of governments, saying that the central bank cannot single-handedly turn around the bloc’s economy, and that countries need to make reforms.

The ECB’s job may be made easier by a weakening euro, which has broken below its 2013 lows and is down almost 9 percent from the peak it hit against the dollar in May.

(Additional reporting by John O’Donnell in Frankfurt; Editing by Catherine Evans)

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