The number of contracts to buy previously owned homes rose more than forecast in November, a sign sales are recovering following a post-tax credit plunge.
The index of pending resales increased 3.5 percent after jumping a record 10 percent in October, the National Association of Realtors said today in Washington. The median forecast in a Bloomberg News survey called for a 0.8 percent rise in November, and the gain was the fourth in five months. The group’s data go back to 2001.
Home demand is stabilizing after sales collapsed to a record low in July, as the effects of a tax incentive worth as much as $8,000 waned. A jobless rate hovering near 10 percent means foreclosures will remain elevated and any recovery in housing, the industry that precipitated the worst recession since the 1930s, will take time to develop.
The figures are “in line with an ongoing gradual pickup in existing-home sales in December,” Yelena Shulyatyeva, an economist at BNP Paribas in New York, said in an e-mail to clients. “Housing demand should continue its uneven recovery entering 2011 as housing oversupply should keep pushing housing prices down.”
A report today from the Labor Department showed claims for jobless benefits fell last week to the lowest level since July 2008, showing the labor market is improving heading into 2011. Filings decreased by 34,000 to 388,000 in the week ended Dec. 25, fewer than the lowest estimate of economists surveyed.
Business Barometer
Other figures showed the economy accelerated at the end of the year. The Institute for Supply Management-Chicago Inc.’s business barometer jumped to 68.6 in December from 62.5 in the prior month. Readings greater than 50 signal expansion and the level was the highest since July 1988.
Stocks fluctuated between gains and losses after the reports. The Standard & Poor’s 500 Index fell 0.1 percent to 1,258.23 at 11:17 a.m. in New York. The benchmark 10-year Treasury note declined, pushing up the yield to 3.39 percent from 3.35 percent late yesterday.
The projected increase in pending home sales was based on the median of 24 forecasts in the Bloomberg survey. Estimates ranged from a drop of 5 percent to a gain of 5 percent.
Two of four regions saw an increase, today’s report showed, led by an 18 percent jump in the West. Pending sales rose 1.8 percent in the Northeast. They fell 4.2 percent in the Midwest and 1.8 percent in the South.
November 2009
Compared with November 2009, pending sales in the U.S. were down 2.4 percent.
Even as the labor market is improving and manufacturing is growing, housing remains a weak link. NAR chief economist Lawrence Yun last week estimated there were about 4.5 million distressed properties that could potentially reach the market in coming months.
Average home prices as measured by the S&P/Case-Shiller indexes have begun dropping again after rising when the tax incentive was in effect. The group’s 20-city index fell 0.8 percent in October from a year earlier, the biggest year-on-year decline since December. It fell 1 percent from the prior month, and is down 30 percent from its July 2006 peak.
Reports earlier this month showed the housing market is stuck near recession levels. Housing permits fell in November to the third-lowest level on record, while starts rose for the first time in three months, the Commerce Department reported Dec. 16.
Home Sales
Sales of new and existing homes last month rose less than projected by the median forecast of economists surveyed by Bloomberg, reports from the Commerce Department and the National Association of Realtors showed last week. Existing home sales represent closings on the contracts captured by the pending sales gauge.
Hovnanian Enterprises Inc., the largest homebuilder in New Jersey, on Dec. 22 reported a fourth-quarter loss bigger than analysts expected as revenue fell 19 percent.
“The year can generally be described as one where we and the industry were bouncing along the bottom,” Chief Executive Officer Ara Hovnanian said on a conference call.
Even so, economists in the past two weeks have boosted projections for fourth-quarter growth, reflecting a pickup in consumer spending and passage of an $858 billion bill extending all Bush-era tax cuts for two years.
Chrysler recalled about 150,000 trucks and SUVs on Thursday to address steering, air bag and potential stalling problems, while Ford recalled nearly 15,000 trucks and crossovers because of electrical issues.
Chrysler Group LLC said it was conducting three separate recalls to fix the problems, which were posted on the National Highway Traffic Safety Administration’s website.
The first recall covers about 22,000 Dodge Ram trucks from the 2008-2011 model years to address steering problems. Chrysler said it had received 86 complaints over three years but was not aware of any crashes or injuries connected to the issue.
The second involves about 65,000 2009 model year Dodge Journey SUVs to fix side air bags that might not deploy. Wires within the front door could break and interrupt the circuits for the side impact sensors, causing the air bag warning light to go off and potentially preventing the air bag from deploying in a crash, the car manufacturer told the government.
Chrysler said it has received 23 complaints from customers about the air bag lamp. There have been no reports of crashes, fires or injuries.
The last recall includes about 57,000 Ram 1500 trucks from the 2011 model year to fix components in rear axles that could cause the trucks to stall cash till payday advance. Chrysler said it has received 20 reports of axle bearing noise or failure, most coming within 500 miles of driving. It has not received any reports of crashes or injuries.
Meanwhile, Ford Motor Co. said it was recalling some 2011 model year Ford F150, F250, F350, F450 and F550 pickup trucks and 2011 Ford Edge and Lincoln MKX crossovers to address potential electrical shorts that could lead to fires in unattended vehicles. A Ford supplier produced the modules during a six-day period in November.
Ford said it was aware of two vehicle fires at an assembly plant in Dearborn, Mich., but had not received any reports of fires in vehicles on the road.
Chrysler’s recalls are expected to begin in February. Ford’s should begin by January 10.
Chrysler owners can call (800) 853-1403 and Ford owners can call (866) 436-7332 for more information.
Ameren Missouri, the region’s dominant utility, has taken its share of criticism over monopolistic actions savings account payday advance.
Now the St. Louis-based utility
Employers watch out: Your workers can’t wait to quit.
According to a recent survey by job-placement firm Manpower, 84% of employees plan to look for a new position in 2011. That’s up from just 60% last year.
Most employees have sat tight through the recession, not even considering other jobs because so few firms were hiring. For the past few years, the Labor Department’s quits rate, which serves as a barometer of workers’ ability to change jobs, has hovered near an all-time low.
But after years of increased work and frozen compensation, "a lot of people will be looking because they’re disappointed with their current jobs," said Paul Bernard, a veteran executive coach and career management advisor who runs his own firm.
Douglas Matthews, president and chief operating officer for Right Management, a division of Manpower, called the results "a wake-up call to management. … This finding is more about employee dissatisfaction and discontent than projected turnover," he said.
Despite a disappointing jobs report last month, experts agree that the employment picture will likely improve going forward, although hiring will be slow.
"A lot of people who have jobs are considering looking for new work this year," said Charles Purdy, a career expert at Monster+HotJobs. "I don’t know if we’re going to see a huge uptick in the number of jobs, but I do think we’ll see a huge surge in the number of people looking for work, even among people who are already employed."
Austin and Lauren will be two of them. (Both asked that their last names not be used.)
Austin has worked as the general manager for a small manufacturing company for six years, but he has his sights set on a job with the federal government faxless payday loans.
"I am definitely ready to make a move now," he said. "I want to change because I feel that I would be more successful and have more challenges working in a Federal agency representing the interests of multiple private small businesses."
Austin has applied to positions at the Department of Commerce, Homeland Security and the State Department. But until hiring picks up, he is maintaining his current employment while campaigning for his next career in the New Year, or what he calls "maintaining and campaigning."
Lauren wants to leave the marketing position she landed soon after graduating in May. She said she feels lucky to have any job at all, "but it’s definitely not what I expected."
"I’m currently in an environment where I’m not learning anything and am not challenged by any of my work," she said. "It just makes me feel like I’m wasting my time."
Even with less than a year of experience under her belt, Lauren plans to look for another opportunity in 2011. "What I’m hoping with the new year is that since most companies do their budgets around this time, they’ll have room for new employees," she said.
But Bernard warns that they shouldn’t leave their day jobs too soon. "People need to have realistic expectations," he cautioned. "It could still take 10 months to find a job."
South Africa has been formally asked to join the BRIC group of major emerging markets, comprising Brazil, Russia, India and China, bolstering its position as Africa’s champion.
Chinese President Hu Jintao wrote a letter to his South African counterpart, Jacob Zuma, to inform him of the decision and inviting him to the BRIC’s third heads of state meeting in Beijing next year, Chinese Foreign Minister Yang Jiechi said in a statement on his ministry’s website today.
South Africa, which has a population of 49 million compared with China’s 1.36 billion, is betting on raising its clout on the world stage by joining BRIC, while strengthening political and trade ties within the bloc. The country accounts for about a third of gross domestic product in sub-Saharan Africa and will offer BRIC members improved access to 1 billion consumers on the continent and mineral resources including oil and platinum.
Joining the group is “the best Christmas present ever,” South Africa’s Minister of International Relations and Cooperation Maite Nkoana-Mashabane told a reporters in Pretoria today. “We will be a good gateway for the BRIC countries. While we may have a small population, we don’t just speak for South Africa, we speak for Africa as a whole.”
Zuma has made state visits to all of the BRIC nations since coming to power in May last year and the government has “lobbied very hard” to be included in the group, which will now be known as BRICS, Nkoana-Mashabane said.
‘Powerful Country’
Africa’s biggest economy is a “powerful country,” even though it’s small compared with the other BRIC nations, Alexei Vasiliev, Russian President Dmitry Medvedev’s envoy to Africa, said on Dec. 22.
South Africa has an economy of $286 billion, which is less than a quarter of that of Russia, the smallest of the BRIC nations. Its population is also dwarfed by India’s 1.2 billion, Brazil’s 191 million and Russia’s 142 million.
Goldman Sachs Group Inc. economist Jim O’Neill coined the BRIC term in 2001 to describe the four nations that he estimates will collectively equal the U online payday loan lenders.S. in economic size by 2020.
“South Africa’s economy is very small,” O’Neill, who is now chairman of Goldman Sachs Asset Management International, said in an interview from London today. “For South Africa to be treated as part of BRIC doesn’t make any sense to me. But South Africa as a representative of the African continent is a different story.”
‘Big Boys’
At their first summit in Russia in June last year, the BRIC heads of state called for emerging economies to have a greater voice in international financial institutions and for a more diversified global monetary system.
“South Africa as a country is small, but if we go there as a regional market, that’s a different story,” said Martyn Davies, chief executive officer of Johannesburg-based Frontier Advisory, which provides research and corporate finance services on emerging markets. “For South Africa, it’s nice to be associated with the big boys.”
South Africa is the only African nation represented in the Group of 20, and will take up a two-year seat on the United Nations’ Security Council along with India and Brazil next year, resulting in all BRIC nations being represented on the council. The African nation is also part of a trilateral group with India and Brazil, known as IBSA, created in 2003 to coordinate action between the three emerging economies in global forums.
“We bring the most diversified and most advanced economy on the continent,” said Nkoana-Mashabane. “We may not be the same size, but we can open up opportunities for them and through that, we can complete our economic integration on the continent.
South Africa’s rand gained against the dollar to its strongest level since Jan. 15, 2008, trading at 6.7308 to the dollar as of 5:13 p.m. Johannesburg time.
Vietnam’s inflation rate accelerated to the highest level in 22 months after currency devaluations stoked import costs and credit expansion spurred domestic demand.
Prices increased 11.75 percent in December from a year earlier, compared with 11.09 percent in November, according to figures released today by the General Statistics Office in Hanoi. The reading is the highest since February 2009. Prices rose 1.98 percent from November.
The government is struggling to restrain inflationary pressures stoked by economic expansion, higher food costs and a weaker currency. Moody’s Investors Service said officials have been unwilling to tighten monetary policy effectively when it cut Vietnam’s debt rating on Dec. 15, and Standard & Poor’s cited “sensitive” domestic sentiment on inflation in cutting its rating on Dec. 23.
“To get more stable prices, they are going to have to slow growth down,” Ari Kokko, a professor at Copenhagen Business School’s Center for International Business and Emerging Markets, said by telephone on Dec. 21 after visiting Vietnam last month. “Inflation in Vietnam is closely related to domestic policies and in particular to credit expansion.”
Moody’s lowered Vietnam’s long-term foreign-currency rating to B1 from Ba3, with a negative outlook, citing balance-of- payments and reserves risks as inflation quickens and the nation’s currency weakens. Standard & Poor’s cut its long-term foreign-currency rating to BB- from BB, with a negative outlook, citing a greater susceptibility of the banking system to a financial or economic shock.
Currency Woes
The government has devalued the dong three times since November last year. The currency’s depreciation is playing a “significant role” in the acceleration of inflation, according to the International Monetary Fund.
The currency’s official exchange rate was 19,498 per dollar as of 8:51 a.m. in Hanoi, compared with 19,099 before the most recent devaluation in August. On the so-called black market, the dong traded yesterday as weak as 21,110 in Ho Chi Minh City, according to a telephone information service run by the state- owned Vietnam Posts & Telecommunications Group.
The central bank raised interest rates on Nov. 5 for the first time in almost a year, a day after the government said curbing inflation was a greater priority than boosting growth.
Vietnam should aim for inflation of 3 percent to 4 percent, in line with other countries in the Association of Southeast Asian Nations, the IMF said this month.
The government forecasts economic growth of approximately 6.7 percent this year. The pace of expansion may accelerate to 7 percent in 2011, Minister of Planning & Investment Vo Hong Phuc said on Dec. 8.
–Jason Folkmanis in Berkeley, California. Editors: Sunil Jagtiani, Alan Soughley
Spain’s prime minister says it will take his nation five years to repair the economic damage caused by Europe’s debt crisis and a big real estate boom that went bust.
Jose Luis Rodriguez Zapatero told Parliament that Europe’s fourth largest economy needs “five years to correct the structural imbalances in our economy.” Spain has unemployment of nearly 20 percent, with grim growth prospects.
Zapatero also said Wednesday that his government will unveil a long-awaited proposal to raise the retirement age from 65 to 67 on Jan 28 low fee pay day loans.
He spoke a day after Parliament approved a 2011 austerity budget by a razor-thin margin _ a move that likely saved Zapatero his job. Zapatero likely would have had to call early elections if it had not passed.
The Christmas travel season turned angry and chaotic Monday as British officials struggled to clear snow and ice that paralyzed rail and air links and spawned cancellations and delays stranding thousands around the world.
More than 48 hours after Britain’s last snowfall, some furious passengers with boarding passes for Monday flights were not even allowed into London’s Heathrow Airport. Inside, piles of garbage grew and some people slept on terminal floors.
Other travelers waited in the cold for up to six hours to get inside London’s St. Pancras train station, where they had to wait still longer for Eurostar trains to mainland Europe.
Chagrined British officials promised an inquiry into the failure to clear the remnants of a storm that dumped five inches over parts of England Saturday morning. Other European airports rebounded from weekend snowfall and resumed close to normal flight schedules by Monday.
“It can’t be beyond the wit of man surely to find the shovels, the diggers, the snowplows or whatever it takes to clear the snow out from under the planes, to get the planes moving and to have more than one runway going,” London Mayor Boris Johnson said as British Airways canceled its Monday short-haul schedule from Heathrow.
Forecasters have said Britain is experiencing some of the most severe winter weather in a century, with continued freezing temperatures and snowfall accumulations expected Monday afternoon and evening. Experts said the extreme winter weather may be related to climate change due to global warming. With a warmer climate, there’s more moisture in the air, which makes storms including blizzards more intense.
Heathrow operator BAA said swings in temperature after the five-inch snowfall in one hour Saturday led to extensive ice buildup around aircraft on the ground. BAA said “every available” staff member and several hundred additional contractors were trying to get the airport moving again.
But BAA offered little hope of relief from travel purgatory, saying a maximum one-third of scheduled flights would be allowed to take off and land at Heathrow until at least 6 a.m. (0600 GMT, 1 a.m. EST) Wednesday. The British government approved night-flight operations at Heathrow in an effort to remove the backlog, but officials warned it may take until after Christmas to do so _ and longer if more snow falls.
The capital’s smaller airport, Gatwick, announced late Monday that there will be no outbound flights until Tuesday morning because more snow is expected no fax cash advance.
At Heathrow’s sprawling Terminal 5, tired and disgruntled passengers faced lengthy waits without much information as piles of garbage grew throughout the complex.
“The whole situation is horrible,” said teenager Sophiya Bolkova, as she clutched her ticket home to Moscow after three days’ delay. “We are very angry. People were just mean, rude, sleeping on the floor, babies sleeping on the floor, no information, no help, no money for hotels.”
American Suzie Devoe, 20, spent two nights on the airport floor and was desperately trying to get back to Washington for Christmas.
“I just want to get home, I want to be with my family. But I’m being held in a horrible limbo,” the Bristol University student said.
At St. Pancras, hundreds of frustrated travelers hoping to travel to France and Belgium by train stood in a line that wound through the station, around the outside of the huge building and several hundred yards (meters) down the road.
Many had been there for five hours or more, bundled up in parkas, scarves, gloves and hats against the chill, or clutching cups of tea and coffee from a Salvation Army van that had handed out 2,000 hot drinks since before dawn.
Train operator Eurostar broadcast loudspeaker announcements warning people not to travel unless their journey was “absolutely essential.” Many said they were getting little other information. A spokeswoman said the delay was due to safety reasons, as trains traveling at high speeds in icy conditions can be damaged, but she promised good service on Tuesday.
Frankfurt airport, Germany’s biggest, was clear of snow and ice but officials canceled about 300 of 1,340 flights because of problems elsewhere in Europe.
French civil aviation authorities, meanwhile, asked airlines to reduce their flights at the two main Paris airports by 30 percent.
The snow-related problems come near the end of a year filled with travel disruptions, including the April shutdown of much of Europe’s airspace because of a plume of ash from a volcano eruption in Iceland.
China’s property boom hasn’t slowed even after the government announced policy tightening measures, Jim Chanos, founder of Kynikos Associates LP, said today.
The real estate market has picked up, said Chanos in an interview with Carol Massar and Matt Miller on Bloomberg Television’s Street Smart program. Millions of Chinese apartments have gone empty, he said.
China this year suspended mortgages for third-home purchases and pledged to speed up trials of property taxes, while the central bank raised bank reserve requirements on Dec. 10 for the third time in five weeks to tame inflation and restrain foreign capital. The central bank raised interest rates for the first time in three years in October.
“A lot of regulations in China, they are designed to be skirted,” Chanos said. “The boom has continued to be unabated. It’s actually even picked up a little bit recently towards the end of year.”
Home prices in 70 Chinese cities climbed 7.7 percent from a year earlier and increased 0.3 percent from October, the statistics bureau said Dec. 10. The year-on-year advance was slower than the 8.6 percent gain in October. Sales volume increased 14.5 percent from a year earlier and transaction values surged 18.6 percent, the report said.
China is “on a treadmill to hell,” Chanos said in the interview, repeating his view in January.
Chanos was one of the first investors to foresee the 2001 collapse of Houston-based energy company Enron Corp. The investor said he is short-selling Chinese developers as well as companies supplying building-related materials to the country, without identifying any stocks.
–Bonnie Cao. Editors: Andreea Papuc, Linus Chua
To contact Bloomberg News staff for this story: Bonnie Cao in Shanghai at +86-21-6104-3035 or bcao4@bloomberg.net
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