Wednesday AM February 6th, 2008
by: Ed Mayberry, February 6, 2008 5:02:00 am
A snapshot of the nation's service sector shows contraction in January for the first time in almost five years. The Institute for Supply Management Index of Service Sector Business Activity fell sharply to 44.6 in January from a revised reading of 54.4 in December. It was much weaker than expected. It is the first time the index has contracted since March 2003. A reading above 50 indicates expansion, while a number below 50 indicates contraction. The group's manufacturing index helped intensify fears of recession last month when it fell below 50 for December. It rebounded to 50.7 for January. The group says the report was released because of "a possible breach of information.'' A spokeswoman for the trade group said it decided to release the index early, before U.S. markets opened, because someone who was familiar with the contents had inadvertently made a comment about it last night. Spokeswoman Andrea Wass says "it was a slip of the tongue,'' adding ``the person doesn't think the other individual had a clue.''
The U.S. Department of commerce recently completed its annual adjustment to the seasonal factors used in the monthly ISM reports. Seasonal adjustments are used to allow for effects of repetitive intra-year variations resulting from weather conditions, various institutional arrangements and differences attributable to non-movable holidays.
Two top Treasury Department officials say U.S. and global financial markets are continuing to adjust to a period of prolonged turmoil and the Bush administration is closely monitoring developments. Treasury Secretary Henry Paulson, testifying before the Senate Finance Committee, said the administration has been closely watching capital markets since a severe credit crisis hit in August, roiling markets around the globe. Paulson told the panel that he has "great confidence in our markets.'' He will be in Tokyo this weekend for a meeting of finance ministers and central bank presidents from the group of seven major industrial nations. David McCormick, the department's Undersecretary for International Affairs, said that the market turmoil would be a top item on the discussion agenda at the meetings on Friday and Saturday. McCormick said that "serious turmoil'' is persisting, although he said financial institutions have taken a number of steps to address the problems.
The credit crunch is claiming a bigger slice of the U.S. public. The Federal Reserve says many U.S. banks have made it harder for creditworthy borrowers to get a mortgage. The central bank says about 55 percent of those surveyed said that they had tightened their lending standards on prime mortgages. That is up from about 40 percent in a previous survey released in November. Problems first cropped up in the market for risky "subprime'' mortgages made to people with tarnished credit or low incomes and have been spreading to more creditworthy borrowers. Foreclosures have hit record highs. About 60 percent of domestic banks responding to the survey indicated that they had tightened their lending standards for approving applications for revolving home equity lines of credit over the past three months. The Fed's survey found that banks have tightened lending standards on a range of mortgages. They also have tightened lending standards for businesses. For the latest survey, banks had to respond by January 17th. That was before the Fed--in part citing a worsening credit crunch—became more aggressive in cutting its key interest rate.
Farmer's, State Farm and Allstate are raising auto insurance rates in Texas an average of 1.8 percent to 12.4 percent. The companies say the hikes are necessary due to higher anticipated losses. Insurers can implement rates immediately after filing them with the Texas Department of Insurance, which can then challenge them and demand refunds.
Houston-based drilling and production technology company Flotek Industries has agreed to acquire Oklahoma-based Teledrift in a $95.2 million deal, according to the Houston Business Journal. Teledrift designs and manufactures wireless survey and measurement-while-drilling tools.
The Houston Asset Building Coalition is providing free tax preparation, financial education and assistance to file and receive Earned Income Tax Credit and Child Care Credit for Houston families earning less than $40,000 a year. The EITC provides up to $4,700 in tax credits for some 67,000 qualifying families and individuals in the Houston area. The coalition is providing help at more than 25 Volunteer Income Tax Assistance locations. The non-profit group is a partnership of the City of Houston Mayor's Citizens' Assistance Office, the IRS, financial institutions, government agencies, community-based organizations and faith-based groups.
The Greater Houston Convention and Visitors Bureau is welcoming 24 conventions, trade shows and other events to the city in March. More than 56,663 attendees will spend an estimated $55.1 million while visiting. Pri-Med holds is Primary Medicine Today conference and exhibition March 5th through the 8th at the George R. Brown Convention Center. The United States Institute for Theatre Technology stages its Annual Conference and Stage Expo March 19th through the 22nd at the same venue. The National Collegiate Athletic Association holds its South Regional Division 1 Men's Basketball Championship March 28th through the 30th at Reliant Stadium. This is the second weekend of NCAA March Madness, and the Regional determines one of the four teams to advance to the Men's Final Four in San Antonio.
The U.S. Transportation Department says domestic airline delays last year were the second-worst on record. Flights in the U.S. were late more than 26 percent of the time last year. That's slightly better than in 2000, when airlines were late 27.4 percent of the time. The federal government began collecting airlines' on-time data in 1995. The industry's poor performance reflects rising passenger demand coupled with congestion in the skies and on tarmacs. Also, the Federal Aviation Administration is facing a growing number of air traffic controllers nearing retirement age. President Bush has demanded action to avoid another summer of record delays, but there is little consensus among airlines, airport operators, Congress and the administration on what should be done. The nation's 20 largest carriers reported an on-time arrival rate of 64.3 percent in December. Customer complaints rose nearly 40 percent to 849 in December compared with a year earlier.
United Airlines says it will charge passengers $25 to check a second piece of luggage for domestic travel if they are not part of its most-frequent-flier programs. The airline says the change will yield it more than $100 million in revenue and cost savings each year. The change takes effect May 5th and applies to tickets purchased on or after Monday. Travelers would have to log at least 25,000 miles in a year on United to ensure they can check their second bag for free. Airlines want to charge more for not only checked baggage but assigned seats and other services. Investors have urged airlines to pass on the higher costs of fuel to passengers through ticket-price increases or similar surcharges. United's customer research showed a quarter of its customers check a second bag.
Governor Rick Perry has announced more than $4.8 million in Texas Emerging Technology awards to two projects in west Texas.
AT&T next month will raise the price of its most common broadband Internet services in many of the states where it operates. The $5-per-month increase will apply in all but the states acquired with the buyout of BellSouth. San Antonio-based AT&T says the hike will affect customers who have the company's three slowest broadband tiers. The increase does not affect new customers who sign up for the slowest broadband service. Customers who signed up under special package promotional deals also avoid the price increase--at least for the term of their promotional deal. A spokesman says AT&T decided to raise prices for some of its customers to better reflect the value of its broadband service.
AT&T has won approval to buy highly coveted airwaves licenses that cover 196 million people in 281 markets. The Federal Communications Commission released an order approving the company's $2.5 billion cash buyout of Aloha Partners and its Spectrum Holdings. The licenses are in the much-sought-after 700-megahertz band that is being vacated by television broadcasters. Sixty-two megahertz are up for auction. The Aloha transaction is for 12 megahertz. AT&T provides wireless service to 63.7 million customers, more than any other wireless provider in the nation. Aloha is a Rhode Island-based company that acquired the licenses in previous FCC auctions and in the secondary market between 2003 and 2005.
A Dallas energy company says it's plugging a southwestern Mississippi oil well that blew out in December and drilling another to replace it. The blowout caused carbon dioxide to escape the well, shut down a highway and led to an evacuation but caused no injuries. The oil well is located in Amite County, Mississippi. Officials with Dallas-based Denbury Resources say a hole found at a depth between 1,500 and 2,000 feet in the oil well casing apparently caused the blowout. Officials said Denbury workers found another hole around 65 or 70 feet deep, but they believe it was caused by the blowout. The cleanup at the site is complete. The company removed about 7,000 tons of dirt contaminated by crude oil and saltwater.
Apple has updated its iPhone and iPod Touch lineup, offering double the memory. It is also setting a new top price for high-end models. The latest iPhone features 16 gigabytes of memory and sells for $499. The previously released 8 gigabyte version of the hybrid cell phone, multimedia player and wireless Internet device costs $399. The new iPod touch comes with 32 gigs of memory and retails for $499. The older 16 gig and 8 gig versions of the combination multimedia player wireless Internet gadget cost $399 and $299, respectively. The new devices are available through Apple's online and retail stores. The iPhone is also available through AT&T's online and retail stores. Apple says that all iPhone and iPod touch models come with updated software announced by the company last month. It includes a new maps application and the ability to watch movies from the iTunes movie rental service.