Russian manufacturing contracted in August for the first time in almost four years as businesses won fewer new orders and companies cut jobs.
VTB Bank Europe's Purchasing Managers' Index fell to 49.4 from 50.4 in July, the fifth consecutive monthly decline and the first contraction since November 2004, the bank said in an e- mailed statement today. A figure above 50 indicates growth. The bank surveyed 300 purchasing executives.
“The major factor underpinning the weakening in activity has been a decrease in new orders, which fell for the first time in almost 10 years,'' Dmitri Fedotkin, an economist at VTB Bank Europe Research, said in the statement.
Growth this year may miss the Economy Ministry's forecast of 7.8 percent as foreign investors pull money out and corporate borrowing costs rise as a result of international tension over Georgia, Alexander Morozov, chief economist at HSBC Bank in Moscow, said on Aug. 29. Industrial output rose an annual 3.2 percent in July, a slower pace than economists expected.
“With output requirements set to fall in light of the drop in new work received during the month, Russian manufacturers shed staff on average in August,'' the report said without giving details. The workforce shrank for the fourth consecutive month, it said.
Affecting Demand
New orders placed in August could have fallen because of a drop in the pace of wage growth and high inflation, at an annual rate of 14.7 in July.
“It may have got to the point where this is affecting demand,'' Fedotkin said by telephone from Moscow.
OAO GMK Norilsk Nickel, the world's largest producer of the metal, has said it may halve the 11,400 member workforce at one of its two largest Russian units to cut costs. Russia's biggest steelmaker, OAO Severstal, has also said it will eliminate as many as 3,000 jobs after costs climbed 23 percent last year.
“This could be a very negative indictor of the future trend,'' said Vladimir Tikhomirov, chief economist at UralSib Financial Corp. While there is a “broad consensus between government and the market'' that economic growth will slow this year, “new factors'' have emerged, he said.
“We've seen a correction on global energy and raw- materials markets, and we've also seen political problems, which have led to an outflow of short-term investment,'' Tikhomirov said cash advance loans. “This has put some investment projects on hold.''
GDP Contribution
Manufacturing accounted for 16.2 percent of gross domestic production in the first quarter, he said, compared with 18.3 percent for retail and wholesale trade, the largest contributor. The natural resources industry directly contributes 9.4 percent, though the industry indirectly drives 30 percent of the country's economic activity, Tikhomirov said.
Finance Minister Alexei Kudrin said on Aug. 17 that investors pulled $7 billion out the country between Aug. 8 and Aug. 11 after Russia's military incursion into Georgia.
The war was sparked by Georgian attempts to retake its breakaway province of South Ossetia, where most citizens have Russian passports. Russia sent troops, tanks and warplanes into the former Soviet republic before President Dmitry Medvedev ended military operations on Aug. 12. He subsequently recognized the independence of South Ossetia and Abkhazia, another separatist region, a step that angered the U.S. and Europe.
EU Summit
EU leaders are holding an emergency summit in Brussels today to consider a joint response to Russia's recognition of the two regions. Their options are limited, as Europe gets a quarter of its natural gas from Russia, and some leaders have played down the threat of sanctions.
Still, businesses in the PMI survey said costs eased in August even as transport, energy and metals prices rose.
“Input price inflation slowed more sharply than in any period in the 11-year survey history,'' the report said.
The cost of goods leaving factories and mines surged an annual 33.7 percent in July, the fastest pace in 3 1/2 years, led by fuel and coking coal prices, the Federal Statistics Service said on Aug. 21.
The PMI is derived from indexes which measure changes in output, orders, employment, suppliers' delivery times and stocks, according to VTB.
Democrats shaped a set of principles Saturday that commits the party to guaranteed health care for all, heading off a potentially divisive debate and edging the party closer to the position of Barack Obama’s defeated rival, Hillary Rodham Clinton.
The party’s platform committee moved smoothly through a range of issues for the fall campaign and approved a document that will go to the Democratic convention in Denver later this month for adoption.
There was little dissent — or room for it — in the day’s meeting and a compromise on health policy took one flash-point off the table.
Obama, soon to be the Democratic nominee, has stopped short of proposing to mandate health coverage for all. He aims to achieve something close to universal coverage by making insurance more affordable and helping struggling families pay for it.
Advisers to Obama and Clinton both told the party’s platform meeting they were happy with the compromise, adopted without opposition or without explanation as to how health care would be guaranteed.
In return for the guarantee, activists dropped a tougher platform amendment seeking a government-run, single-payer system and another amendment explicitly holding out Clinton’s plan as the one to follow.
The party now declares itself "united behind a commitment that every American man, woman and child be guaranteed to have affordable, comprehensive health care."
Under any system in play, most people would still put out money for health insurance as they do now, but they would get help when needed.
That was a common feature of the plans put forward by Obama and Clinton in the primaries. But she would have required everyone to get insurance while his plan makes it mandatory only for children.
Democratic Party Chairman Howard Dean praised "the spirit of this compromise." Judith McHale, a Clinton supporter who helped to lead the platform meeting, said Obama and Clinton advisers worked collegially throughout the process.
For the 186-member platform committee, one imperative Saturday was to satisfy Clinton loyalists still sore from the often acrimonious primary fight while keeping policy firmly in sync with Obama’s campaign.
Democrats made mostly cosmetic changes to a platform draft prepared for the meeting, a process designed to showcase unity more than to air differences in the party at large on hot-button issues such as the Iraq war, abortion and health care.
Party platforms are a statement of principles that are not binding on the candidates or the next president and they are typically given little attention after they are adopted.
Even so, the party’s decision to embrace guaranteed health care is bound to become a leading yardstick by which Obama’s presidency will be measured if he wins in November.
On Iraq, the platform states that Democrats "expect to complete redeployment within 16 months," reflecting Obama’s time frame but not the tone of certainty he brought to it when he was running in the primaries.
The 51-page platform draft showed the influence of Clinton’s supporters not only in the extensive section on health care but in its assertions about the treatment of women cash advance. Some of her backers believed sexism dogged her campaign for the nomination.
An extensive section on women’s rights is included and the votes she received in the primaries are described as "18 million cracks in the highest glass ceiling."
Even so, the platform is thoroughly tuned to Obama’s proposals.
It reasserts his promise of energy rebates to struggling families, pension subsidies, a crackdown on predatory lenders, higher taxes for families earning over $250,000, tax breaks for others, billions for economic stimulus and "direct high-level diplomacy, without preconditions," in the case of Iran.
On trade, it promises a multilateral approach to improving the North American Free Trade Agreement, without saying specifically what those changes should be. Obama criticized NAFTA when campaigning in states that felt disadvantaged by it, but the platform offers no suggestion he would take unilateral action against the deal.
Instead, it says: "We will work with Canada and Mexico to amend the North American Free Trade Agreement so that it works better for all three North American countries."
Democrats typically have a strong plank in favor of abortion rights; this year’s version is stronger than usual. "The Democratic Party strongly and unequivocally supports Roe v. Wade and a woman’s right to choose a safe and legal abortion, regardless of ability to pay, and we oppose any and all efforts to weaken or undermine that right," it says.
Gone is the phrase from the past that abortions should be safe, legal and "rare."
The party also pledges to ensure access to adoption programs, prenatal and postnatal care and income support programs for expectant mothers who need the help.
The party also:
–Promises "tough, practical, and humane immigration reform in the first year of the next administration."
–Favors restoration of the ban on assault-type weapons and other "reasonable regulation" that recognizes the constitutional right to own and use firearms.
–Favors helping religious groups provide social services as long as "public funds are not used to proselytize or discriminate."
–Promises to close the Guantanamo detention center.
–Promises to double the Peace Corps.
Pittsburgh Steelers chairman Dan Rooney and his son, team president Art Rooney II, want to buy Dan Rooney’s brother’s shares in the team.
The Steelers report that some of Dan Rooney’s four brothers want to focus their business efforts elsewhere.
The Rooney family owns racetracks in New York and Florida and they’ve added forms of gaming that are inconsistent with NFL gambling policy.
The team says the NFL is working with the Rooneys on an agreement concerning separation of gambling interests and on restructuring the ownership if part of the team is sold.
Dan Rooney says he’ll work to keep the team in the Rooney family and in Pittsburgh free credit report.com. Art Rooney II says the discussions should have no affect on the team or its fans.
A union leader called for more militancy yesterday as workers fortified a blockade of the General Motors of Canada headquarters in Oshawa after its parent rejected pleas to keep a nearby truck plant open.
Keith Osborne, plant chair of the Canadian Auto Workers at GM’s Oshawa complex, told cheering members in front of GMC headquarters that the union needs help to reverse the automaker’s decision to close the truck plant in 2009.
"I know it’s really hard to play baseball without a bat," Osborne said. "In the plants, we need support. We need to start getting a little bit more militant.
"Fighting back does make a difference. I’m not going to advocate a work stoppage. But I’ll tell you what. If it happens, I’m behind you 110 per cent."
There were rumblings that workers would halt GM truck and car production nearby to protest but support inside the plants for a walkout fizzled and production continued yesterday afternoon.
Chris Buckley, CAW Local 222 president, said the union would not lift the headquarters blockade, now in its fourth day.
"If they give us our truck (plant), I’ll give them their building," Buckley told the afternoon crowd that swelled to more than 200.
The blockade on the road in front of GM’s shiny Oshawa headquarters has forced about 1,000 staff to work from home.
Spokesperson Stew Low would not comment on the blockade’s impact on head office administration. But he said the company has not applied for a court injunction to gain access.
Buckley said the union, hammered by auto layoffs in the region, will reveal phase two of its fight to reverse the GM decision today.
He has stressed the union wants to be responsible and continue producing quality vehicles but, at some point, that may not be possible given workers’ anger and frustration.
"The fight has just begun," Buckley warned. "This fight is far from over."
One worker, who requested anonymity, described the mood at the blockade as "the calm before the storm."
At the truck plant, workers were sombre and worried, coming off the day shift http://us-no-fax-payday-loans.com.
"We’re very disappointed, but we’re hanging tough," said Kathy Ferris, a 27-year veteran. "I’ve never seen the industry this unstable. It’s very scary."
CAW national president Buzz Hargrove said the union contemplates more action in the next two weeks. He did not rule out plant disruptions.
Earlier, Rick Wagoner, chief executive officer of parent GM Corp., told Hargrove and the other union leaders in Detroit that the company would not change its decision because demand for pickup trucks and sport utility vehicles is plunging in the key U.S. market.
Wagoner shocked the industry Tuesday by announcing the Oshawa truck plant and three assembly operations in the U.S. and Mexico would close within two years.
He said soaring gasoline prices have abruptly driven motorists to smaller cars and there is no sign fuel costs will ever decline. The Oshawa plant produced more than 316,000 Chevrolet Silverado and GMC full size pickups in 2007.
The closing would end more than 2,000 plant jobs and several thousand others at parts suppliers.
Greg Moffatt, the truck plant union chair, told those at the blockade that he asked Wagoner why GM would close its best pickup operation for quality and productivity but got no answer.
CAW is considering a grievance against GM for allegedly breaching its recent three-year contract regarding production commitments. Labour law experts said they are unaware of any legal precedent where a court, labour board or arbitrator has forced a company to reverse a decision to close a plant. Ontario labour boards have fined companies and compensated workers after ruling firms violated operating commitments in contracts.
Federal prosecutors in New York have formed a task force together with other government agencies to examine the collapse of the market for risky home loans, a spokesman for the U.S. Attorney’s Office in Brooklyn said on Monday.
The group is being run out of the federal prosecutors’ office in Brooklyn, said Robert Nardoza, a spokesman for the office, formally known as the U.S. Attorney’s Office for the Eastern District of New York.
The task force is working with representatives from the Federal Bureau of Investigation, the U.S. Postal Inspection Service, the U.S. Secret Service, the Federal Deposit Insurance Corp and the U.S. Securities and Exchange Commission, Nardoza said.
He said the task force is focusing on mortgage activity in the New York area, where many financial services firms are located or do business.
It is working with representatives from the New York State Banking Department, New York City’s Department of Investigation and the Office of the New York State Attorney General.
“A lot of the districts in the country are taking similar action,” he said http://paydayloans-on.com. This task force was formed “to focus on the problem in our district,” which includes the New York City boroughs of Brooklyn, Queens and Staten Island, as well as Long Island.
The task force is being led by Assistant U.S. Attorney Jonathan Green in Brooklyn and had its first meeting last week, the spokesman said.
News of the task force was first reported in Monday’s editions of The Wall Street Journal.
Delta and Northwest, seeking to combine to create the world’s largest airline, posted losses Wednesday totaling $10.5 billion due to exorbitant fuel prices and writedowns of their companies’ value.
Atlanta-based Delta Air Lines Inc. said its loss widened in the first quarter to a whopping $6.39 billion. A few hours later, Eagan, Minn.-based Northwest Airlines Corp. reported a $4.1 billion loss for the period quick payday loans.
Both airlines have been hampered by the steep rise in fuel prices. Delta recorded a $585 million year-over-year increase in the cost of fuel in the first quarter, while Northwest’s fuel costs increased $445 million.
Japan’s parliament formally approved acting Bank of Japan Governor Masaaki Shirakawa as the central bank’s permanent head on Wednesday, bringing to a close a political impasse that had left the post vacant since last month.
The backing for Shirakawa, Japan’s youngest BOJ governor in 50 years, came as the central bank kept its main policy rate on hold at 0.5 percent, as expected.
Approval comes in time for the 58-year-old governor to fly to Washington for a meeting of G7 finance leaders on Friday that will seek ways to ease the global credit crisis.
Shirakawa won approval in both houses of parliament, including the upper chamber controlled by opposition lawmakers, but the government’s candidate for deputy governor, former finance ministry official Hiroshi Watanabe, was rejected.
That veto by the upper house leaves the central bank’s policy board with two vacancies and the potential for further wrangling over who should fill those posts.
Financial markets are more focused on U.S no fax payday loans. economic problems than the BOJ leadership, but analysts see Shirakawa, who won parliamentary approval last month to be deputy governor, as a realistic choice to end the three-week gap at the top of the BOJ.
There was frustration, though, that a broader policy stalemate between the government and the opposition Democratic party had delayed decisions on the central bank leadership.
“Everyone’s pretty much fed up. At least they now have a BOJ governor to go to the G7,” said Katsuhiko Kodama, a senior strategist at Toyo Securities Co Ltd. “It’s all rather embarrassing.”
Oil prices moved to a new record on Wednesday after the OPEC cartel decided to keep its production unchanged, ignoring calls from President Bush to pump more oil into an ailing economy.
OPEC rebuffed its top consumer, arguing that the world was well supplied with oil and blaming financial speculators and mismanagement of the United States economy for the current high prices.
But the Organization of the Petroleum Exporting Countries was not completely oblivious to the political and economic impact of $100 oil. The sharp surge in prices recently has deterred the group’s ministers from cutting their production, a move they seriously contemplated a few weeks ago to offset a seasonal slowdown in global oil demand in the second quarter.
With the U.S. economy slowing down, oil prices have risen sharply as investors seek refuge in commodities like oil and other hard assets to offset the drop in the value of the dollar and hedge against inflation.
Oil prices reached a record on Wednesday, rising to $103.98 a barrel in midday trading on the New York Mercantile Exchange, up $4.46 on the day. The spike came after U.S. fuel inventories unexpectedly declined while tensions escalated between Venezuela, an OPEC member, and Colombia.
As prices have risen in recent years, relations between energy producers and their consumers have been increasingly acrimonious. Oil producers are seeking better terms for their dealings with foreign oil companies, and often restricting access to investments. OPEC ministers are also increasingly confident in their ability to prevent prices from falling below $80 a barrel.
As a sign of growing impatience with oil producers, President Bush said on Tuesday that it would be a "mistake" for OPEC not to increase supplies. As the oil group was meeting in Vienna, Austria, the president repeated his assault on Wednesday, saying it was "obvious" that demand was stripping supplies, and pushing up prices.
"America’s got to change its habits; we’ve got to get off oil," Bush said at a conference on renewable fuels. "Until we change our habits, there’s going to be more dependency on oil."
Chakib Khelil, OPEC’s president this year, said the high price of oil was not due to a lack of supplies. Instead, he cited the "mismanagement of the U.S. economy" and blamed financial speculators for driving up prices.
"If the prices are high, definitely they are not due to a lack of crude," Khelil said in Vienna. "They are due to what’s happening in the U.S."
He added: "There is sufficient supply. There’s plenty of oil there."
Most energy analysts agree there is no physical shortage of oil today. Commercial oil inventories are at relatively high level and that refiners are not lacking oil.
Ali al-Naimi, Saudi Arabia’s oil minister, said in Vienna that there was no need to increase supplies by "even one barrel of oil." He said the reason behind today’s soaring oil prices was "tremendous speculation."
"There are even those who buy futures and speculate that oil prices will reach more than $200 in 2013 and 2015," Naimi said in Vienna faxless cash advance. "The most important thing that OPEC and Saudi Arabia look at is the stability of market factors."
Still, OPEC recognized the threat posed by a slowing economy on its business.
"In reviewing the prospects for the oil market, the conference highlighted the economic slowdown in the U.S.A., which, together with the deepening credit crisis in financial markets, is increasing the downside risks for world economic growth and, consequently, demand for crude oil," OPEC said in its final statement.
The oil cartel, which is next scheduled to meet in September, indicated it might call for an emergency meeting before then to review the market situation in the spring.
Meanwhile, ExxonMobil, America’s top oil company, plans a significant increase in its capital spending on new oil and gas projects in coming years as costs increase across the industry and rising political constraints mean oil companies are finding it increasingly challenging to pump oil out of the ground.
The high price environment is making it more difficult for companies like Exxon to expand its production and replace reserves, while posing a threat to global growth at a time the United States economy is slowing.
"Clearly the persistent higher cost that everyone is facing is now making its way into the next trench of projects," Rex Tillerson, the company’s chairman and chief executive, said at the company’s annual analyst meeting in New York. "The costs are a significant challenge for the industry as a whole and they are a challenge to us as well."
Exxon said Wednesday it would increase capital expenditures to $25 billion this year, up from $21 billion last year. Over the next five years, the company plans to spend as much as $30 billion a year, Tillerson said.
Last year, Exxon beat its own record for earnings, posting net income of $40.6 billion, up 3 percent from the previous year. But even as it takes in record profits, Exxon, like most major oil companies, is facing tightening business terms as oil-rich countries seek to grab a larger share of their oil revenue as prices rise.
ExxonMobil is engaged in a nasty dispute with Venezuela over the seizure of an oil field. The governments of Russia, Kazakhstan and Nigeria are all seeking to renegotiate oil contracts signed when oil prices were much lower than today.
In its final statement, OPEC expressed its support to Venezuela "in the exercise of its sovereign rights over its natural resources" in its dispute against Exxon.
But the oil producers also called for the parties to "resolve their dispute through good faith and amicable negotiations."
"Tall" and pricey is becoming "short" and cheap at the world’s largest gourmet coffee chain as it grapples with a cost-conscious consumer and competition from fast-food outlets.
Starbucks Corp. confirmed yesterday it is test marketing a smaller, cheaper $1 (U.S.) cup of coffee, as well as free refills, at some U.S. stores.
The chain that made millions selling high-priced designer brew said the new "short" coffee comes in an eight-ounce cup and is available at some Seattle outlets.
No decision has been made yet about bringing the product to Canada, a spokesperson for the company said yesterday.
Starbucks also said it frequently tests new products, but doesn’t comment on the results until it makes a final decision. The move is not indicative of any new business strategy, the company added.
However, it comes amid increased competition from low-priced fast-food outlets and signs that financially strapped U.S. consumers are "trading down" to cheaper retail outlets.
The gourmet chain grew to 15,000 stores worldwide mainly on the strength of large, customized brews that are priced accordingly.
But now cheaper chains, such as McDonald’s, have moved more aggressively into the category.
McDonald’s has plans to add coffee counters to as many as 14,000 U.S. locations.
The suggested retail price in the United States for a slightly larger 10-ounce cup of premium roast coffee at McDonald’s and Dunkin’ Donuts is $1.07 (U.S.) and $1.39, respectively, those companies said yesterday.
Shares in Starbucks lost nearly half their value last year as problems in the U.S payday loans. mortgage and credit markets dampened consumer spending.
The company also shuffled its senior management team, bringing back chair Howard Schultz as chief executive officer, and vowing to close underperforming stores and boost international expansion. Two-third of its outlets are in the United States.
In New York yesterday, the price of coffee fell on the futures market as many traders sold on fears the global economy is headed for a recession.
"Large hedge funds are saying, `Everything is going down – get me into cash,’" said Jaime Menahem, a broker with Alaron Trading Corp. in Miami. "There’s no confidence in the economy."
Coffee for March delivery fell 3.7 cents, or 2.7 per cent, to $1.313 a pound on ICE Futures U.S., formerly known as the New York Board of Trade. The price for coffee has dropped 3.6 per cent this month.
With files from the Star’s wire services
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