Monday PM April 5th, 2010
by: Ed Mayberry, April 5, 2010 4:04:00 pm
A private trade group says the U.S. service sector grew in March at its fastest pace since 2007 as the economy adds jobs and consumer spending slowly increases. The Institute for Supply Management's service index rose to 55.4 in March from 53 in February. Economists had expected a reading of 54. Any reading above 50 signals expansion. It’s the strongest pace of growth since ISM revised how it measured the service sector in January 2008. Meanwhile, the group says business activity soared to its strongest level since April 2006 and new orders are near a five-year high. The service sector's recovery has been bumpy, lagging a resurgence in manufacturing amid high unemployment, slow wage growth and a rocky real estate market.
United Airlines is offering to bring its flight attendants up to the pay scale of Continental Airlines workers in exchange for changes in work rules. A letter, from a United executive to the head of the flight attendant union, suggests that some senior flight attendants would get raises of more than ten percent if they were brought up to the pay of those at Continental. United says it proposed the idea last year. The letter was sent Saturday. It says negotiations are “seemingly headed down the wrong path.” Negotiations for a new contract began a year ago Tuesday. United flight attendants plan to picket at 15 airports to protest the lack of a new agreement.
The number of buyers who agreed to purchase previously occupied homes rose sharply in February, far exceeding expectations, in a sign that the housing market may be coming back from the winter doldrums. The National Association of Realtors says its seasonally adjusted index of sales agreements rose 8.2 percent from January to a February reading of 97.6. January's reading was revised slightly downward to 90.2. Economists surveyed by Thomson Reuters had expected the index would fall slightly to 90.3. The index is considered a barometer for future sales activity because there is typically a one- to two- month lag between a signed sales contract and a completed deal.
The government has launched a new effort to speed up the time-consuming, often-frustrating process of selling your home if you owe more than it's worth. The Obama administration will give $3,000 for moving expenses to homeowners who complete such a sale--known as a short sale—or agree to turn over the deed of the property to the lender. It's designed for homeowners who are in financial trouble but don't qualify for the administration's $75 billion mortgage modification program. Owners will still lose their homes, but a short sale or deed instead of foreclosure doesn't hurt a borrower's credit score for as much time as a foreclosure. For lenders, a home usually fetches more money in a short sale than a foreclosure. And the bank avoids expensive legal bills, cleanup fees and maintenance costs that follow a foreclosure.
Apple says it sold more than 300,000 iPads on Saturday, the day it debuted across the country. Sales included pre-orders of the iPad, a new type of touch-screen device that blends features of the iPhone, electronic book readers and tablet computers. Prices start at $499 for iPads that connect to the Internet through wi-fi. Apple will sell costlier iPads with cellular data connections later this month. Apple says that iPad owners downloaded over a million applications from its app store and more than 250,000 electronic books on Saturday. Apple's CEO Steve Jobs says the iPad is going to be a game changer.
The Transportation Department says it's seeking the maximum penalty, more than $16 million, against Toyota for failing to promptly notify the government about defective gas pedals among its vehicles. The fine would be the largest civil penalty ever issued to an automaker by the government. Transportation Secretary Ray LaHood says evidence shows that Toyota knew of the problem with sticking gas pedals in late September but did not issue a recall until late January. Toyota has two weeks to accept or contest the $16.375 million penalty. Toyota has recalled more than six million vehicles in the U.S., and more than eight million worldwide, because of acceleration problems in multiple models and braking issues in the Prius hybrid.
Average retail gasoline prices at the pump in Houston rose 3.9 cents per gallon in the past week, according to HoustonGasPrices.com, averaging $2.68 per gallon. That compares with the national average of $2.83—up 3.2 cents in the past week.
The grim economy is hitting some consumers in the wallet in yet another way: their water bills. Many water utilities are raising rates because water use is down. That's partly because manufacturers have closed or are cutting back, tourism has fallen and the real estate market is in the doldrums. The water utility serving Kennebunk, Maine, says water usage fell 11 percent last year to 1995 levels. Superintendent Norm Labbe of the Kennebunk, Kennebunkport & Wells Water District says the number one reason is the sour economy. A recent study by the Denver-based Water Research Foundation shows home foreclosures, high unemployment and slower business have brought reduced water demand to many areas.
Galveston streetlamps battered by Hurricane Ike are being fixed with the help of federal funds. The Federal Emergency Management Agency will reimburse Galveston for 90 percent of the nearly $39,000 cost to repair and replace the lamps. The city will pay the rest. Galveston suffered major damage when Ike stormed ashore on September 13th, 2008. The devastation included iconic gas lamps that are part of the city's famed Strand historic district. The storm surge damaged the lamp bases and the gas-flow regulators. Crews from Farmer's Marine Copper Works have begun removing the lamps from the sidewalks and covering the exposed components. City spokeswoman Alicia says crews also will repaint all the lamp poles and shine the glass in a project expected to take about three months.
The top White House economics adviser says putting people back to work is an administration “preoccupation.” Lawrence Summers also the jobless trend has turned, but there's still a long way to go to recover all the jobs lost during the economic downturn. He's also criticizing Republicans who are holding up an extension of unemployment benefits, saying the economy still needs emergency action. Summers appeared on CNN's State of the Union”
Interest rates are rising in the bond market on fresh signs the economy is continuing its slow, steady recovery. The yield on the ten-year Treasury note rose to its highest level since before the credit crisis erupted in late 2008. The yield is often used as a benchmark for consumer loans. The ten-year note yield is up to 3.98 percent, compared with 3.94 percent during Friday's holiday-abbreviated trading session. Monday's yield was the highest since October 2008 when it eclipsed four percent. That came just before the credit crisis peaked and investors bought up Treasurys, sending yields plummeting. A new report showing the service sector is continuing to expand and a surprising jump in February pending home sales were the latest reports to bolster hopes for the recovery.
A charitable foundation has begun a ten-year, $100 million initiative to help artists and arts organizations create new spaces and projects around the country. The Ford Foundation said that the support of the arts was even more vital in the current economic downturn. Its Supporting Art Spaces Initiative says a strong cultural environmental has a role in revitalizing local economies. Under the initiative, the foundation has already awarded a $1 million grant. It will turn an abandoned East Harlem High School into artist housing and a hub for community arts. In Seattle, the foundation's support created a permanent home in a renovated historic hotel for the Wing Luke Museum.
A new Buckner senior living community in West Houston opens a new $2.5 million wellness center at 11 tomorrow morning. The center at Parkway Place on Park Bayou Drive features a swimming pool, fitness area, bistro area and a patio.
Associated Press says ConocoPhillips Chairman and CEO Jim Mulva's compensation slipped nearly two percent last year as the oil company struggled with weaker demand for its refined products. Mulva's pay totaled $14.4 million in 2009, down slightly from $14.6 million in 2008. The Houston company partially benefited from the rebound in oil prices last year, but those prices coupled with drivers' reduced demand for gasoline also hurt margins in its refining business. The AP's executive pay calculation, based on a regulatory filing, aims to isolate the value the company's board placed on the CEO's total compensation package. The figure includes salary, bonus, incentives, perks and the estimated value of stock options and awards.
The Associated Press has found that Halliburton's chairman and CEO received 2009 compensation valued at $12.4 million--down 20 percent from a 2008 pay package that included a bigger performance-based bonus. The oilfield services company paid David J. Lesar a $1.3 million salary and stock and option awards valued at $4.7 million on the day they were granted. He also received miscellaneous compensation valued at nearly $1.3 million and a performance-related bonus of $5 million. In 2008, Lesar's incentive bonus totaled $8.1 million. The AP calculation is based on a regulatory filing. It aims to isolate the value that company boards place on CEOs' total compensation packages. It includes salary, bonus, incentives, perks and the estimated value of stock options and awards.