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Sunday, 18 August 2024
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European Business News (EBN), 97-08-01European Business News (EBN) Directory - Previous Article - Next ArticleFrom: The European Business News Server at <http://www.ebn.co.uk/>Page last updated Fri, August 01 5:59 PM CETCONTENTS
[01] U.S. unemployment hits 24-year lowThe U.S. unemployment rate returned to a near 24-year low of 4.8% in July after blipping higher in June, but wage growth stalled. The seasonally adjusted jobless rate, reported today by the Labor Department, marks a decline from 5% in June and matches the May rate. It hasn't been lower since November 1973. Businesses told the government they added 316,000 jobs, roughly 100,000 more than economists predicted, after a gain of 228,000 in June.However, the vibrant job market isn't translating into bigger paychecks. Seasonally adjusted average hourly earnings of nonfarm production and nonsupervisory workers was unchanged at $12.23 an hour. Even though the unemployment rate has fallen from 5.4% a year earlier, hourly wage growth has actually slowed. It's averaged 2.9 cents a month so far this year, compared with 3.8 cents in 1996. While bad news for people drawing paychecks, that's been good news for the Federal Reserve. It shows the economy's vigour isn't translating into higher inflation. After boosting interest rates slightly in March, the central bank has been able to refrain from further inflation-fighting increases since then. That in turn has fuelled a stunning rally on Wall Street. A separate report today from the Commerce Department showed that Americans' income grew 0.6% in June, the largest in three months, while their spending increased by 0.3% for the second straight month. In July, according to Bureau of Labor Statistics Commissioner Katharine G. Abraham, employment growth was concentrated in services, retail trade and local government. Health services rose by 31,000 jobs and growth was quite strong in engineering and management services and computer services, she said. Retailers added 65,000 jobs. Local education accounted for almost the entire increase of 56,000 government jobs, but Abraham said the gain may be explained by difficulties in adjusting the statistics for seasonal hiring swings. Manufacturing jobs fell by 5,000 and construction rose 3,000. Among demographic groups, unemployment slipped from 4.2% in June to 4% in July for adult men, from 4.4% to 4.2% for women, from 16.8% to 16.4% for teenagers, and from 10.4% to 9.4% for blacks. It rose for Hispanics, from 7.6% to 7.9% and held steady for whites at 4.2%. In a sign of softness in an otherwise strong report, average hours worked per week for nonfarm production and nonsupervisory workers fell from 34.7 to 34.4. The factory workweek declined for the third consecutive month, from 41.8 hours to 41.7 hours. Factory overtime also fell for the third month 4.7 hours to 4.6 hours. [02] Unilever plans four-way stock splitUnilever announced a planned stock-split as it reported second quarter profit, and said it expects profits growth in the remainder of the year to be less buoyant.The Anglo-Dutch consumer group said it planned four-for-one splits for the shares of both of its parent companies, Rotterdam-based Unilever and London- based Unilever. Unilever said the move was prompted by the 'continued strong performance' of the shares. Unilever announced a pre-tax profit of £4.39 billion ($7.46 billion) for the half year including a one-off gain of £3.02 billion from the sale of its speciality chemicals division. And in a statement attached to the group's half-year results, chairman Niall Fitzgerald said sales growth was likely to remain modest. 'Although profits growth in the remainder of the year will be less buoyant, profit improvement for the full year will be satisfactory,' said Fitzgerald. Fitzgerald said the group did not expect economic conditions to change much in the second half of the year. The strength of sterling and the weakness of the guilder as compared to last year were likely to have a significant impact on Unilever's full-year results when expressed at current exchange rates. [03] Lloyds TSB boosts first half profit by 33%Lloyds TSB Group said it had raised its half-year pre-tax profit by 33% to just over £1.5 billion ($2.5 billion) by cutting costs and raising income.The British bank raised it half-year dividend by a larger-than-expected 26% to 5.3p per share and chairman Sir Brian Pitman said the bank is 'well placed to continue to deliver superior returns to shareholders.' In addition, following the adoption of a new accounting standard in the second half of 1996, first half 1996 figures were restated, resulting in an £11 million reduction to £1.130 billion. For the first half of 1997, profits in retail banking rose 44% to £441 million from £307 million a year ago, as the charge for bad and doubtful debts fell 4% to £144 million and the bank reduced staff numbers. Lloyds TSB's mortgages division saw profits rise 18% to £293 million, although the bank warned business is concentrated in London and the Southeast, and not across the U.K. Net new lending increased 29% to £1.8 billion and represented an estimated market share of 16% of net new lending, according to the bank. Profits from Lloyds TSB's insurance groups fell 4.6% to £228 million in the first half, with the decline attributed to one-off tax items and pensions provisions affecting the life assurance businesses. The wholesale markets business saw profits increase 20% to £336 million, while the international banking division saw profits total £185 million, up 12% from the same period a year ago. [04] Airbus confirms deals with Virgin, Air CanadaAirbus confirmed that Virgin Atlantic Airways has ordered $2.5 billion worth of new Airbus jumbo jets Meanwhile, in a separate statement, Air Canada said it signed a letter of intent to acquire eight A330 and A340 aircraft from Airbus Industrie, with options for 20 additional aircraft.The deal is a big score for Airbus Industrie, the European plane-making group locked into a bitter rivalry with US-based Boeing that threatened last month to spark a transatlantic trade war. Virgin's order 'assures us that we are on the right track by expanding our innovative and modern aircraft family,' said Jean Pierson, the Airbus managing director. Virgin said it will be the first airline to fly the new Airbus A340-600, a four-engine competitor to the Boeing's big 747s - complete with private bedrooms for high-paying travellers, an onboard pub, showers and an exercise area. The new Airbus can seat up to 375 passengers and fly up to 7, 300 miles (13,500 kms) without refuelling. Virgin will lease rather than buy the 16 A340-600 airplanes but did not say who will own them. Virgin would not say how much it will pay. The value of the eight aircraft ordered by Air Canada, based on list prices, is about $1.4 billion, the airline said. Air Canada said it will become the first scheduled airline in North America to operate the A330-300 when it takes delivery of the first aircraft in October 1999. Air Canada said it is undertaking a three-year programme to replace its widebody fleet with fuel-efficient and environmentally-friendly aircraft designed to reduce operating costs and provide passengers with state-of-the- art comfort. Virgin, run by tycoon Richard Branson, said it will use the jets on long- haul flights from London to the Far East and the US West Coast. Noting that the wings for the Airbus jets are made in Britain by British Aerospace and the engines will come from London-based Rolls-Royce, Branson adopted a patriotic stance that let him open fire on archrival British Airways - a faithful Boeing customer. 'We are proud to become the launch customer for this predominantly British- made wide-bodied aircraft, which will carry the Union Jack around the globe, ' Branson said. He was referring to the recent controversial decision by British Airways to remove Union Jack-style logos from its airplane tails; Branson quickly painted the British flag on his own fleet. 'Boeing make excellent aircraft, but it is in the interests of both the aircraft industry and the consumer for them to have a strong competitor,' Branson said. 'It is therefore healthy to see a European manufacturer and a British engine-maker giving their American counterparts a serious run for their money.' [05] U.K.'s PMI falls to 53.4% in JulyBritain's purchasing managers' index fell to 53.4% in July, indicated the latest monthly survey from the Chartered Institute of Purchasing & Supply.Although the index slipped slightly to 53.4% in July from 53.5% in June, it shows that the manufacturing sector grew for the 14th month in succession despite a sharp fall in export demand. Any reading over 50 represents expansion in manufacturing. The index is based on a weighted average of a wide variety of individual survey indexes including new orders, output, stocks of finished goods and prices. Members of the institute are responsible for spending £750 billion of corporate money each year. The continued expansion of the manufacturing economy largely reflected a strong rise in output during July, said the CIPS. 'The rate of growth of output accelerated in July as companies reported rising backlogs or orders and further growth in new orders,' it added. Average input prices recorded the sharpest monthly fall since the survey began in July 1991, with almost one in three firms reporting a reduction in average prices compared to June. [06] EU Commission clears Daimler-Benz, Deutsche Telekom ventureThe European Union Commission gave the green light for Daimler-Benz and Deutsche Telekom to set up a joint venture, to be called Telematik, combining their activities in the area of traffic telematic services.The joint venture will develop, operate and market telematic services, the Commission said in a statement. Such services improve information and communication in traffic through data exchange between a service provider and automobiles. Potential applications lie in the area of security, traffic guidance and 'infotainment,' which includes travel planning, city, hotel and weather information and news. 'The market for this service is worldwide in an early technical and economical stage of development. Exclusionary effects as a result of the combination of an automobile producer and a mobile phone system provider don't exist,' the Commission said. Daimler-Benz is a worldwide company with activities in the area of automobiles, commercial vehicles, air and space technology, as well as services. Deutsche Telekom is active in telecommunications and operates a mobile phone system through its subsidiary, DeTeMobil. [07] Japan's jobless rate stays at record 3.5% in JuneJapan's jobless rate in June remained at an all-time postwar high of 3.5% for the second straight month, largely due to a continued trend among younger women to quit their jobs in search of better work situations, the Management and Coordination Agency said.The seasonally adjusted postwar high was previously recorded in May and June last year, and May this year. The June unemployment rate for women fell to 3.6% from a record-high 3.8% in May, while the rate for men rose 0.1 percentage point to 3.4%, the agency said. The number of jobless people in June totalled 2.29 million, up 1.3% from a year earlier. Of the total, the number of people who left their jobs voluntarily marked rise of 60,000 from a year earlier to 890,000 for the 20th consecutive month of increase. An agency official said the unemployment rate for women in the 25 to 34 age bracket showed a sharp 0.7 percentage point rise year-on-year to 5.6% in the reporting month, mainly because of many leaving their jobs voluntarily. 'We do not know how long this trend will continue, but we need to keep our eye on it,' the official said. The trend, which became noticeable the previous month, indicates that many women are quitting their jobs in hopes of finding better employment situations, but the labor market cannot provide the types of jobs they desire, the official said. The number of people who lost their jobs - mainly younger women and older people - marked a slight rise of 30,000 to 560,000, for the first increase in nine months. [08] Britain's Monopolies and Mergers Commission to probe PacifiCorp's bid for Energy GroupPacifiCorp's bid for Energy Group has been referred to the U.K.'s Monopolies and Merger Commission. Energy Group operates in north-east England and was previously known as Eastern Group.The MMC is required to report its findings by Nov. 21. The proposed linkup between PacifiCorp and Energy Group is the first proposed acquisition in the electricity sector since Labour was elected May 1. In a statement, Margaret Beckett, president of the Board of Trade, said. 'I have concerns over whether it will be possible to maintain adequate regulatory control over the merged company.' Previously, the director general of Fair Trading and the director of Electricity Supply advised in favour of allowing the merger to go ahead. Beckett reiterated that government policy continues to be to refer mergers for MMC scrutiny primarily on competition grounds. 'However, I shall continue to examine mergers on a case by case basis and where, as here, I believe that as a part of a wider public interest scrutiny, important regulatory issues are raised, I may decide that a reference is warranted,' Beckett said. Derek Bonham, chairman of Anglo-American electricity company Energy Group, said he is 'surprised and disappointed' by the U.K. government's decision to refer the group's bid offer for Pacificorp to the Monopolies and Mergers Commission. 'We are surprised and disappointed at (government minister Margaret) Beckett's decision, particularly as Pacificorp had indicated their willingness to comply with all assurances required by the U.K. regulatory authorities. Over 61% of our shareholders have already demonstrated their support for the transaction,' he said. [09] NatWest Markets appoints new chief executiveNatWest Group appointed a new chief executive at its investment banking unit, NatWest Markets, ending speculation that the subsidiary might be sold off following a damaging financial scandal.Konrad Kruger has been co-chief executive of global debt markets at NatWest Markets. Kruger joined the bank last year when it acquired Greenwich Capital Markets, where he was a top executive. Kruger takes over from the chief executive of the whole NatWest group, Derek Wanless, who stepped in to run the investment bank temporarily after former chief executive Martin Owen resigned in June. NatWest Group said it will also create a separate division, Global Financial Markets, by removing some activities from NatWest Markets to let it better concentrate on investment banking. 'With these changes we should leave no doubt about our commitment to developing a first class, focused investment banking operation,' Wanless said. 'NatWest Markets has many strengths and the decisions we have announced today will ensure that the business develops in a profitable and controlled manner.' NatWest Markets was shaken earlier in the year when it found that a former trader, Kyriacos Papouis, was able to cover up £77 million ($129 million) in losses on interest rate option trades over a two-year period. Fraud police said they will not investigate, although an official report blamed 'weaknesses in the operations and internal controls' at the bank. A half dozen NatWest executives departed as the scandal unfolded. [10] Corporate and Economic BriefsSpain's Finance Minister Rodrigo Rato said he sees Spain's year-end 1998 public spending deficit as a percentage of gross domestic product at 2.4%, down from the government's official target of 2.7%. Rato also said at a briefing following the council of minister's weekly cabinet meeting that he sees 1998 government spending up 3.4% and an increase of 5.7% in revenues for 1998. Spain's 1998 budget draft has to be presented to parliament by Sept. 30, and must be passed by year-end.The Swedish Consumer Confidence Indicator was unchanged at positive 3 points in July compared with June, national statistics agency SCB reported. A positive number indicates that households believe economic conditions are improving and a negative number that they expect deteriorating conditions. The portion of households that believe economic conditions in Sweden will improve over the coming 12 months rose by 0.4 percentage points in July from June to 28.8%, while those who believes the economy will deteriorate fell by 0.2 percentage points to 19.3% from 19.5% in June. Also, the households expect consumer prices to rise 1.8% in the coming 12 months compared with expectations of a 1.3% rise in June. Arjo Wiggins Appleton said sales for the first six months of the year were £1.64 billion, knocked down by sterling's strength from £1.86 billion in the first half 1996. However, when retranslated at constant 1997 exchange rates, first half 1996 sales were only £1.65 billion, the company said, illustrating the negative impact of the strong pound this year. In the second quarter, sales were £825.9 million, down from the published £894.9 million in second quarter 1996, but up from the second quarter 1996 figures restranslated at 1997 exchange rates at £791.7 million. [11] World News BriefsAbout 7,000 Cambodian refugees fleeing fighting between warring factions sought shelter in Thailand as strongman Hun Sen warned international mediators not to interfere with his rule. Hun Sen's forces rained rockets on at least two bases controlled by his opponents near the border town of Poipet, Nong Chan and Non Mak Moon, sending at least 7,262 people across the border. About half later returned to Cambodia as fighting eased.Security forces have disarmed a large car bomb outside a rural hotel in Northern Ireland. There were no injuries and no one immediately claimed responsibility. The bomb, which was neutralized on Thursday, was largest explosive device found since the Irish Republican Army began a cease-fire on July 20. The Royal Ulster Constabulary said today that the device contained between 500 pounds and a thousand pounds of homemade explosives. The device was discovered outside the Carrybridge Hotel in Lisbellaw after a telephone warning Thursday night, police said. The warning did not include a code word or other identification. Rebels blew up Colombia's largest oil pipeline, spilling 6,000 barrels and forcing the suspension of pumping, the state oil company said. Leftist guerrillas planted dynamite at the Cano Limon-Covenas pipeline near the village of Teorama, 250 miles (400 kilometers) northeast of the capital, Bogota, William Giraldo, a spokesman for Ecopetrol said. Rebels have sabotaged the pipeline hundreds of times since it opened in 1986, causing hundreds of millions of dollars in damage to the nation's No. 1 industry. In the latest attack, oil spilled into the River Catatumbo near the border with Venezuela. Ecopetrol crews placed containment barriers in the river to stop the oil flow. A remote-control car bomb exploded in Turkey, injuring two soldiers and a driver accompanying accused radical Islamic militants to court, officials said. One prisoner was also hurt. The bomb was detonated as the armored prison vehicle passed a car parked on a road near this central Anatolian city, Deputy Governor Osman Gurbuz said. The eight defendants, accused of causing a hotel fire in 1993 which killed 37 leftist intellectuals, were being taken to a hearing in the capital Ankara, some 180 kilometers (100 miles) northwest of Kirsehir. No one claimed responsibility for the attack. From the European Business News (EBN) Server at http://www.ebn.co.uk/European Business News (EBN) Directory - Previous Article - Next Article |
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