NEWS,30.01.2013

US economy shrinks in fourth quarter

The US economy contracted at a rate of 0.1% in the fourth quarter, according to the government's first estimate on Wednesday.But the economy expanded overall a modest 2.2% for the full year in 2012, a gain from 1.8% in 2013, the Commerce Department said.The fourth quarter estimate was lower than forecast, but came after a strong 3.1% pace in the third quarter."The downturn in real GDP in the fourth quarter primarily reflected downturns in private inventory investment, in federal government spending, in exports, and in state and local government spending," the department said.It stressed that the first estimate of GDP growth is based on incomplete data and is often revised.

US adds more jobs than expected

US private-sector employers added 192 000 jobs in January, more than economists were expecting, a sign of growth in the labor market, a report by a payrolls processor showed on Wednesday.Economists surveyed by Reuters had forecast the ADP National Employment Report would show a gain of 165 000 jobs. December's private payrolls were revised down to an increase of 185 000 from the previously reported 215 000.The report is jointly developed with Moody's Analytics.Small businesses with less than 50 employees did the most hiring this month, adding 115 000 jobs. But large businesses of more than 500 workers cut 2 000 jobs."The job market is slowly, but steadily, improving," Mark Zandi, chief economist of Moody's Analytics, said in a statement.By industry,professional and business services firms led gains with 40 000 jobs while the manufacturing sector fared the worst, cutting 3 000 positions.

    

Europe's economic gloom lifts

Business leaders and consumers in the eurozone sent signals in January that the clouds of economic gloom are lifting slightly, marking the third month running of firming optimism, data from the European Commission showed on Wednesday.Confidence indicators are important pointers to how the economy will perform, and the latest figures suggested that optimism is gaining ground in the eurozone, pulled by Germany in particular and overall also by the construction sector.The Commission's eurozone confidence index rose by 1.4 points from the December level to 89.2 points against a background of easing tensions over the debt crisis.And the index for all 27 members of the European Union also rose by 1.4 points to 90.6 points.In the eurozone, the sector of activity where confidence rose most was the construction industry for which the indicator gained 4.6 points. This reflected orders taken and expectations concerning the need for labour.The reading for confidence expressed by consumers also rose by 2.4 points in January.Confidence in the services sector rose by 1.0 point.However, for industry and the retail sector, the indicators were flat.Sentiment about the outlook for employment was less pessimistic in all sectors of activity than has been the case, both in the eurozone and in the European Union.In the eurozone, confidence rose the most in Germany by 2.5 points, in the Netherlands by 1.0 point, and in Spain by 0.5 points.In Italy it was steady and in France it slipped by 0.3 points.US stock index futures showed little reaction to the ADP report, though futures extended declines later in the morning following data that showed the economy unexpectedly contracted in the fourth quarter.The ADP figures come ahead of the government's much more comprehensive labor market report on Friday, which includes both public and private sector employment."The data suggests that jobs growth is accelerating and bodes well for Friday's payrolls report," said Omer Esiner, analyst at Commonwealth Foreign Exchange in Washington.The government release is expected to show hiring held steady in January with 160 000 jobs created.Economists often refer to the ADP report to fine-tune their expectations for the payrolls numbers, though it is not always accurate in predicting the outcome.

Obama's popularity highest in 4 years

US President Barack Obama's popularity has hit 60%, the highest level since he first took office four years ago, according to a poll released on Wednesday.The survey by ABC television and The Washington Post was made public just a little more than a week after the president's formal swearing-in was witnessed by an estimated one million people in Washington and millions more across the nation.The pollsters credited public approval of the president's inauguration address for his soaring poll numbers.In that address, Obama embraced a liberal agenda that vowed action during his second term on gun reform, gay rights and the environment, among other issues.But while the poll showed he has broad public support, it also found that his popularity is slightly less than that enjoyed by two other re-elected presidents - Bill Clinton and Ronald Reagan - at the start of their second terms.Obama's favourability rating at the start of this second term is higher, however, than that of his predecessor George W Bush at the same point during his tenure.The 60% popularity represents a 10-point increase since last summer, during the heat of the contentious presidential race against Republican challenger Mitt Romney.Obama has a way to go until he matches his all-time highest popularity numbers 79% achieved just days before he took office in January 2009, the pollsters said.The telephone survey of 1 022 adults was taken between 23 to 27 January and had a 3.5% margin of error.

Israel releases frozen Palestinian funds

Israel said on Wednesday it had released $100m of the tariffs and tax money it collects on behalf of the Palestinian Authority, which were frozen last year as punishment for the UN bid. But an Israeli official said it was a one-off measure to ease the financial crisis faced by the Palestinians and was not a sign that the transfers would be renewed."This decision was taken by Prime Minister Benjamin Netanyahu because of the Palestinian Authority's very difficult financial situation," an official at the premier's office told AFP."But this transfer is temporary and affects only funds owed for one month," he added, speaking on condition of anonymity."The prime minister did not commit to continue these transfers."The Palestinians said Israel's decision to transfer money on a one-time basis was effectively "extortion”."Israel's announcement that it will transfer 400m shekels [$107.31m] of our money on a one-time basis means they will continue to carry out extortion on this issue," Palestinian negotiator Saeb Erakat told AFP."Israel is using our money, which it collects, as a sword hanging over our heads," he said."Israel should pay us our money immediately and the international community should condemn this Israeli piracy and stop it immediately," he added."The transfer of the funds on a one-time basis means the financial and political siege is continuing and that nothing has changed in Israeli politics and Netanyahu's approach."Israel in early December announced it would not transfer tax and tariff funds it collects for the Palestinians in response to their successful bid for upgraded UN membership, a move the Jewish state had fiercely opposed.Every month, Israel transfers tens of millions of dollars in customs duties that are levied on goods destined for Palestinian markets that transit through Israeli ports, and which constitute a large percentage of the Palestinian budget.The transfers are governed by the 1994 Paris Protocols that governs economic agreements between Israel and the Palestinians.But Israel often freezes the transfer of funds as a punitive measure in response to diplomatic or political developments viewed as harmful.The measure has deepened an already dire financial crisis faced by the Palestinian Authority, which has frequently been unable to make payroll for its employees over the last year.In response to Israel's freezing of the funds, the Palestinians have urged Arab nations to activate a promised "safety net" of $100m a month to make up the shortfall.But despite pledging to deliver the money, funds have yet to materialise, leaving the Palestinian Authority unable to pay its thousands of government employees, who are still owed half their salaries from November and all their salaries from December.

NEWS,27.10.2012

Economic report not all bad for Obama

Republican challenger Mitt Romney used a government report showing tepid economic growth to hammer President Barack Obama less than two weeks before Election Day, but the report also had some good news for the president.With the Commerce Department reporting a modest 2% growth rate unlikely to make a big dent in unemployment, Romney said Obama inherited a bad situation when he took office and "made the problem worse." He criticised Obama for failing to reduce borrowing and spending, protect entitlement programs or reach deals with Republicans.The report also provided ammunition for Obama: It showed the economy grew for the 13th straight quarter at a rate that - though modest - beat expectations. Obama claims progress during his term on fixing the economy, though conceding it hasn't been fast enough, and says Romney's policies would only make matters worse.The economy remains the race's dominant issue. But voters who are still undecided aren't likely to be swayed by Friday's mixed report from the Commerce Department, experts said.Growth in the July-September quarter climbed slightly but was still too weak to stir significantly more hiring. The pace of expansion increased to a 2% annual rate from 1.3% in the April-June quarter, led by more consumer and government spending. This year's third-quarter growth is slightly below the 2.2% average pace since the recession ended in June 2009."For the average American, I don't think changes in quarterly GDP" make a big difference in their perception of the economy, said Andrew Kohut, president of the Pew Research Centre. "It's certainly good for the president that the number is not bad because that would resonate."With 11 days until the election, the economy is being kept afloat by revitalised consumer spending and the early stages of a housing recovery. But more than three years after the Great Recession ended, the US continues to struggle because businesses are reluctant to invest, and slower global growth has cut demand for American exports. The recovery is still the slowest since World War II.The latest report did exceed expectations in GDP growth and showed some progress in consumer spending, which drives 70% of economic activity.Obama took office during the worst downturn since the Great Depression and says his policies stabilised the economy later that year. He argues that his massive stimulus package and auto bailout helped it grow in 2010.

 

US economic growth accelerating

US economic growth accelerated in the third quarter as a last minute spurt in consumer spending and a surprise turnaround in government outlays offset the first cutback in business investment in more than a year.Even so, the stronger pace of expansion fell short of what is needed to make much of a dent in unemployment, and it offered little cheer for the White House ahead of the closely contested Nov. 6 presidential election.Gross domestic product grew at a 2% annual rate, the Commerce Department said on Friday in its first estimate of the third quarter, a pick-up from the second quarter's 1.3% pace. But to make substantial headway cutting the jobless rate, the economy needs to grow by more than a 2.5% pace over several quarters.The growth was a bit better than economists had expected, in part because of a surge in government defence spending, which was not expected to last. defence spending rose at its fastest pace in three years, and combined with the rise in household consumption and a jump in home building to strengthen domestic demand."The economy still has only weak forward momentum," said Nigel Gault, chief US economist at IHS Global Insight in Lexington Massachusetts. "Some underlying fundamentals are improving, but uncertainty at home and abroad is holding back the business sector."US stocks ended the day little changed, with corporate earnings holding greater sway over market sentiment, while Treasury debt prices rose. The dollar was flat against a basket of currencies.Since climbing out of recession, the US economy has faced a series of headwinds ranging from high gasoline prices to the debt turmoil in Europe and, lately, fears of US government austerity. The economy has struggled to exceed a 2% growth pace and remains about 4.5 million jobs short of where it stood when the downturn started.White House adviser Alan Krueger said the GDP report underscored the need to extend tax cuts for the middle class and small businesses, as President Barack Obama has proposed. Obama's Republican challenger, Mitt Romney, described it as evidence of the president's failed policies.In the third quarter, consumers shrugged off the impending sharp cuts in government spending and higher taxes that are due early next year and went on a bit of a shopping spree, buying automobiles and snapping up Apple Inc's iPhone 5.Consumer spending, which accounts for about 70% of US economic activity, grew at a 2% rate after increasing 1.5% in the second quarter.A separate private-sector report showed consumer sentiment rose this month to its highest point in five years, another sign households are little worried by the looming fiscal cliff at year end that will raise income taxes and is estimated to drain about $US600 billion from the economy next year unless Congress acts.High stock prices and firming home values have made households a bit more willing to take on new debt, supporting consumer spending even in the face of higher gasoline prices.An inflation gauge in the government's GDP report rose at a 1.8% rate, up from the second quarter's 0.7% pace. But a core measure that strips out food and energy costs slowed to a 1.3% rate, suggesting the rise in overall inflation will be temporary.Even so, with about 23 million Americans either out of work or underemployed, consumers might have to cut back, especially if they get slapped with a higher tax bill in 2013.Incomes were squeezed in the third quarter rising just 0.8% after accounting for inflation and taxes and households slowed their saving to ramp up their spending.Government spending, which snapped eight straight quarters of declines, accounted for 0.7%age point of GDP growth. defence outlays jumped at a 13% annual rate, the most since the second quarter of 2009, after dropping for three consecutive quarters. The surge was mainly in defence services installation, and support for both weapons and personnel.Fears of the fiscal cliff hammered business spending, which dropped at a 1.3% pace, the first decrease since the first quarter of 2011."We are being really cautious about (the) kinds of investments we make and the kinds of risks we are taking in this environment," the chief executive of consumer products maker Newell Rubbermaid Inc, Mike Polk, told on Friday.Worries over slower global growth have weighed on the corporate sector, which has issued a series of disappointing third-quarter earnings reports. According to Thomson Reuters data, 63% of companies have posted revenues below analysts' expectations; several have also announced job cuts.Slowing global demand, particularly weakness in Europe and China, caused US exports to contract for the first time since the first quarter of 2009. Exports declined by 1.6%, outstripping a 0.2% decline in imports, marking the first drop in imports for three years.Another spot of weakness in the GDP report were inventories, which were squeezed by a drought in the US Midwest. Farm inventories cut 0.42%age point from GDP growth and could remain a drag in the fourth quarter.Home building, which has been a weak spot in the economic recovery, surged at a 14.4% rate, thanks in large part to the Federal Reserve's ultra-accommodative monetary policy stance, which has driven mortgage rates to record lows.Economists say housing  the epicentre of the last recession  will contribute to growth this year for the first time since 2005.

Rightwing 'Big Bang' hits Israeli politics

The rightwing alliance between Israeli Prime Minister Benjamin Netanyahu and his foreign minister has polarised political forces in Israel ahead of next January's parliamentary election.Netanyahu and Avigdor Lieberman's surprise announcement late on Thursday that their respective Likud and Yisrael Beitenu parties would run on a joint ticket was dubbed "the rightwing Big Bang" by the Israeli press.Alongside the ultra-nationalist Yisrael Beitenu, the premier's right-wing Likud - already predicted to win the vote would be able to form a broad nationalist bloc leaning strongly to the right.Such a move would also allow Netanyahu to overcome, to some degree, the chronic instability of past coalition governments in the country."Israel needs a strong coalition government based on a political list based on genuine cooperation," Netanyahu said on Thursday evening."We ask the people to support strengthening the state, and I want a clear mandate so I can take care of the basic" issues.Israeli media quoted a survey by an adviser to Lieberman, according to which the joint list would receive 51 seats in the 120-seat Knesset, or parliament, when the votes are cast on January 22.Other polls, however, predict an outcome of less than 42 seats, the current combined number of Likud (27) and Yisrael Beitenu (15), the third largest political force in the Knesset."We are not worried about the polls, what interests us is the construction of a broad nationalist camp," Lieberman said at a news conference on Friday."Israel must move away from a reality of many parties to a system of larger parties. We will probably never reach two, like in the United States, but must achieve a system of four or five parties to ensure governmental stability," he added.Assuming his expected victory takes place, Netanyahu is certain to remain premier.But the Likud has vehemently denied a report of a premiership rotation deal with Lieberman, a populist authoritarian certain to receive a key position in the future cabinet.The leaders of the political centre and left denounced the "nationalist" and even "racist" Likud.Lieberman, a settler who was chief of Netanyahu's staff during his first term as prime minister in the late 1990s, is famous for his anti-Arab and nationalistic statements."The demon is out of its nationalistic closet. Netanyahu has removed his mask," the leader of the centre-right Kadima party Shaul Mofaz told public radio, calling on the centre to unify. "Bibi" Netanyahu and Lieberman's together might "encourage the centre-right parties to announce close cooperation in a national salvation front," wrote Yossi Sarid, former Knesset member for the left-wing Meretz party in a column in left-leaning daily Haaretz.Such a front would have "but a single mission: no to 'Biberman'."Speaking on public radio, Labour chief Shelly Yachimovich called for the creation of a "centre-left bloc, consisting of the centrist parties and moderate members of the Likud."In recent weeks media have noted the ambitions of potential candidates, such as former prime minister Ehud Olmert and former foreign minister Tzipi Livni, to head a centrist bloc to compete with Netanyahu.The Likud-Yisrael Beitenu alliance also threatens the orthodox parties, which could lose the pivotal role they have wielded in past coalitions, and they could even be excluded from the next one.According to commentators, Netanyahu's pact with Lieberman implies the adoption of at least some of Yisrael Beitenu's platform.Its policies include military conscription of rabbinic seminary (yeshivot) students and reducing the power of the Chief Rabbinate on matters such as conversions.The Israeli parliament decided earlier this month that the election would be held on January 22, 2013, nine months before its scheduled date.

EU lawmakers cancel Iran visit

A planned visit to Iran by five Euro MPs was called off on Saturday after Tehran refused to let them meet with a jailed activist lawyer and a filmmaker, just a day after the two were awarded a prestigious European human rights prize."The five MEPs were about to leave for Tehran when delegation chair (Tarja) Cronberg received a phone call from the Iranian ambassador to the EU, saying they would not be allowed to meet with the two Sakharov Prize winners," jailed lawyer Nasrin Sotoudeh and filmmaker Jafar Panahi, a European Parliament source said.Sotoudeh, 47, who is serving an 11-year jail sentence for conspiring against state security, and Panahi, 52, who is under house arrest and has been banned from making films for 20 years, were awarded the 2012 Sakharov Prize on Friday."The Islamic Republic of Iran categorically rejected any pre-conditions. Therefore this visit has been cancelled," the Young Journalists Club, an affiliate of the state broadcaster, reported on its website.The Isna news agency quoted Hossein Sheikholeslam, international affairs advisor to the speaker of parliament, as saying that Iran had "rejected a pre-condition set by the European parliamentary delegation to meet with two prisoners".EU sanctions"If the delegation agrees to visit Iran under the initially agreed conditions and agenda, then there is no objection to the visit... But we cannot accept the current pre-condition."Iran has cracked down on both since its disputed June 2009 presidential election.Sotoudeh is a leading human rights campaigner known for her work as a lawyer representing opposition activists, while Panahi has been acclaimed at international festivals for his gritty, socially critical movies.The human rights and democracy prize "is a message of solidarity and recognition to a woman and a man who have not been bowed by fear and intimidation and who have decided to put the fate of their country before their own", Parliament President Martin Schulz said on Friday.Schulz had also warned that the visit would be cancelled if the delegation was unable to meet Sotoudeh and Panahi.The rights award comes on the heels of tough new EU sanctions against Iran aimed at forcing a breakthrough in talks between global powers and Tehran on its disputed nuclear programme.After a biting oil embargo took effect in July, EU foreign ministers last week tightened the economic noose by targeting dealings with Iran's banks, shipping and gas imports.The last visit by a European parliamentary delegation to Iran was in 2007.