Monday PM July 6th, 2009
by: Ed Mayberry, July 6, 2009 4:07:12 pm
A trade group's measure of the health of the U.S. services sector contracted less than expected in June, reaching its highest level in nine months. The Institute for Supply Management said that its services index read 47 in June, up from 44 in May. Economists polled by Thomson Reuters had expected a reading of 45.5 last month. Any reading below 50 indicates the services sector is shrinking, and June marked the ninth straight month of deterioration. But it was the best showing since September when the index was at 50. Service industries such as retailers, financial services, transportation and health care make up about 70 per cent of the country's economic activity. Any turnaround in the sector requires improved consumer spending. The country's restaurants, shops, professional and other service providers have been hurt as consumers save more and spend less amid the longest recession since World War II. The government said Americans' savings rate was the highest in more than 15 years in May, while the Conference Board said consumer confidence fell in June as unemployment grew to a 26-year high of 9.5 per cent. The ISM is a Tempe, Arizona-based trade group of purchasing executives in 18 industries. Its index is based on a survey of members and covers new orders, employment, inventories and other indicators. Business activity, new orders and employment all slid at a sharply slower pace in June than in May, according to the ISM survey. All three hit their highest levels since September, and business activity, at 49.8, is nearly in growth territory. Real estate, finance and insurance, and food and hotel companies were among the six industries that actually reported growth last month. The 11 sectors that posted declines included agriculture, retail, health care, educational services, and corporate support and management. Utilities were flat. However, the prices businesses paid grew for the first time since October. Many commodities, including oil, have seen prices rise recently. The cost of future oil supplies last week hit their highest level in eight months.
A Chicago law firm says it will appeal a bankruptcy judge's ruling that General Motors can sell the bulk of its assets to a new company. That could clear the way for the automaker to emerge quickly from bankruptcy protection. The law firm says it will appeal to a federal court in New York. The firm represents people who have sued GM in several auto accident cases. Several consumer groups have objected to provisions in the sale that would free the new company from liability for consumer claims related to incidents that occurred before GM went into bankruptcy protection. That means that people injured by a defective GM product before June 1st would have to seek compensation from the “old GM,” the collection of assets left over from the sale, where they would be less likely to receive compensation.
Despite continued job losses, the number of teenagers hired for summer jobs is slightly ahead of last year, according to Challenger, Gray & Christmas, in an analysis of the Bureau of Labor Statistics data. But even so, 2009 will go down as the second-worst job market for teens since the late 1950s. Employment among 16- to 19-year-olds grew by 809,000 jobs so far this summer, about 10,000 more than a year ago at this time. Some retailers may add more workers for back-to-school sales.
Continental Airlines and its simulator engineer employees have agreed to a new four-year collective bargaining agreement. The engineers were represented by the Transport Workers Union. Continental will increase base pay rates by 2.5 per cent each year, match 401(k) contributions and add two floating holidays.
A key advertising forecaster cut its global ad spending estimates once again, but says there are signs a bottom could soon be reached. ZenithOptimedia now expects worldwide ad spending in 2009 to fall by 8.5 per cent. In April, it slashed its forecast to a decline of 6.9 per cent, steeper than the 0.2 per cent drop it had predicted in December. However, ZenithOptimedia says ad spending in the second quarter fell at a slower pace than the prior quarter. The U.S. is among the hardest hit markets. But a global recovery, including the U.S., is expected by 2011. ZenithOptimedia is a unit of French advertising conglomerate Publicis Groupe.
The International Council of Shopping Centers says more than 6,900 retail stores announced they were closing last year. That's a 50 per cent increase over the 4,600 that closed in 2007. And the closings have continued this year, including underperforming big-box stores, like the Home Depot in Bismarck, North Dakota. Is demise has left the community with a big, orange empty eyesore the size of a dozen football fields. And because it's nearly windowless, it's of limited use to other potential tenants. More communities across the nation are facing a similar problem. The empty stores are not only eyesores, but represent a loss of jobs and tax revenue. Many communities are trying to find creative uses for the big boxes. One store was turned into a go-cart track. Another became a museum. And an empty Wal-Mart became a church.
Main Street Theater is buying its current location and renovating, according to the Houston Business Journal, rather than lose its lease on Times Boulevard following the death of its landlord.The theater is beginning an effort to come up with the $3.5 million it will take to own the building. Dedication for the new building is set for 2011.
An Associated Press analysis indicates states that allow debt collectors to seize consumers' wages have sharply higher bankruptcy rates than neighboring states that prohibit or limit the practice. While bankruptcy rates vary for many reasons, five states prohibit or strongly limit wage seizures--North Carolina, Pennsylvania, South Carolina, Florida and Texas. All have drastically lower rates than their neighbors, with particularly striking differences along borders, where economic conditions are similar but bankruptcy rates are not. The Carolinas, Pennsylvania and Texas prohibit wage garnishment, except in special circumstances such as unpaid taxes or child support. Florida prohibits garnishing wages from the head of a household. South Carolina's bankruptcy rate is almost one-quarter that of Georgia's; Pennsylvania has half the rate of Ohio; North Carolina has about one-third the rate of Tennessee; Texas has a smaller rate than all its neighbors; and Florida has just about half the rates of Georgia and Alabama. The nationwide bankruptcy rate is 42 per cent higher than the rate in those five states. Consumer advocates say intercepting someone's wages to pay their debts only increases their financial vulnerability.
NASA satellite images could soon give information to nut growers about their orchards' health. That could allow them to stay ahead of plant stress issues, pests and diseases that could affect crop yield and quality. Researchers from New Mexico State University, Texas A&M and University of California-Davis recently received a three-year grant for nearly $870,000. The grant from the U.S. Department of Agriculture's Specialty Crops Research Initiative is to study nut trees and how data collected in orchards correlates to the satellite images. Rolston St. Hilaire is a plant and environmental sciences professor at New Mexico State. He says the satellites will give information invisible to the unaided eye, like leaf temperature. The images will capture different light wavelengths and resolutions created by the trees' energy use at a particular wavelength. The wavelengths can then tell researchers about a plant's health, which they hope will give pecan and other nut growers a way to spot plant stress early.