Thursday PM January 4th, 2007
by: Ed Mayberry, January 4, 2007 5:01:00 am
The holiday shopping season turned out to be worse than expected for many retail chains. They're reporting lukewarm sales gains for December. Disappointments included numbers from Limited Brands and jewelry chain Zale Corporation. On the positive side, Wal-Mart stores posted a better-than-expected 1.6 percent gain for December, following a dismal November. Costco Wholesale posted a nine percent gain in same-store sales. Pier One Imports reports a 10.7 percent drop in same-store sales. One analyst, Ken Perkins of RetailMetrics, says retailers were forced to mark down prices aggressively to lure consumers. That was good for shoppers, but not so good for the retailers themselves. Mild weather across much of the country meant shoppers were in no hurry to buy cold weather wear such as coats and gloves, hurting sales at many clothing outlets.
Houston-based Continental Airlines and Fort Worth-based American Airlines have matched Dallas-based Southwest Airlines in raising some domestic round-trip fares because of higher jet fuel costs. United, Delta, Northwest and US Airways also boosted one-way ticket prices by $2 for flights of less than 400 miles, $3 for flights of 400 to 750 miles and $3 on some longer flights.
The on-time performance of domestic airlines in November was the worst in six years, according to U.S. government data. The delays resulted in more service and baggage-related complaints. Aloha Airlines, run by former Continental head Gordon Bethune, had the industry's best performance at 93.2 percent. Continental was ranked 11th at 76.4 percent. Southwest was fourth at 83.4 percent.
Business activity in the non-manufacturing sector increased at a slower rate in December, according to the nation's purchasing and supply executives in the latest report from the Institute for Supply Management. The Business Activity Index is at 57.1 percent—a slower rate than in November. Industries reporting growth in December include real estate, rental and leasing, finance and insurance, utilities, wholesale trade, accommodation and food services, educational services, information, health care and social assistance, and professional, scientific and technical services. Decreased activity is noted in mining, management of companies and support services, construction, transportation and warehousing and public administration. Exports and imports all increased at a faster rate in December.
ConocoPhillips shares fell after announcing its fourth-quarter refining and marketing margins are expected to be significantly lower than the third quarter. In a U.S. Securities and Exchange Commission filing, the company also said its crude oil prices are weaker in the final three months of 2006 versus the third quarter. Investors reacted negatively. In its filing, the company said increased output from Alaska and Britain would be offset by lower production from the Timor Sea, Libya and the continental U.S. ConocoPhillips is scheduled to report fourth-quarter and full-year earnings later this month.
The Commerce Department says orders to U.S. factories rose nine-tenths of one percent in November. That marks a slight rebound after a sharp drop of four and a-half percent in the previous month. It was also weaker-than-expected.
The Labor Department reports more Americans were filing first-time claims for unemployment benefits last week. The rise of 10,000 to 329,000 marks the highest level since late November. Claims are seen still at a level indicating a generally healthy labor market. The four-week moving average, which is less volatile, rose slightly to more than 317,000. The government follows tomorrow morning with the December unemployment report.
Long-term mortgage rates were generally unchanged this week. Freddie Mac says the rate for 30-year fixed-rate mortgage averaged 6.18 percent--the same as the week before. A year ago, the 30-year loan averaged 6.21 percent. The average for the 15-year fixed-rate mortgage, popular for refinancing, was up a tick this week--to 5.94 percent. At this time last year, it averaged 5.76 percent. Freddie Mac vice president and chief economist Frank Nothaft attributes the lack of any significant movement to what he calls "the mixed messages'' from recent economic indicators. As an example, he notes a recently released manufacturing report showed an improvement, while a private sector employment report suggested that the labor market was weaker than anticipated.