clarinews@clarinet.com (ELLEN WULFHORST, UPI Business Writer) (02/03/90)
NEW YORK (UPI) -- The Commerce Department reported this week that the index of leading indicators, a set of 11 economic measures used to forecast economic activity, rose a strong 0.8 percent in December. This sharp rise, after a mere 0.1 percent gain in November and a drop of 0.3 percent in October, led analysts to say the economy may emerge from its sluggishness without falling into a recession. The report, released Wednesday, was the strongest since April, when the index also climbed 0.8 percent. However, the National Association of Purchasing Management said Thursday that U.S. economic growth continued to decline in January for the ninth straight month and at the greatest rate of decline since December 1982. The Purchasing Managers' Index fell in January to 45.2 percent, down from 46.7 percent in December. A reading below 50 generally indicates the manufacturing segment of the economy is experiencing a decline in growth. A reading above 50 usually indicates that the manufacturing portion of the economy is expanding. The association also revised the index for December down to 46.7 percent, from the 48 percent reported in January to take into account seasonal adjustment factors used by the Department of Commerce. On Friday, the government said demand for airplanes, ships and military tanks sent factory orders up 1.9 percent in December for a second monthly rebound after a disappointing October. The $4.5 billion surge to $244.2 billion followed a 2.4 percent increase in November and a 0.1 percent drop in October, the Commerce Department said. Factory orders finished 1989 at $2.8 trillion, 6.4 percent ahead of 1988. Analysts said the data was another indication that economy is not sliding into a recession, and that the increase suggests the possibility of a steadier pattern of activity in the industrial sector, which has been weakening for the past several months. Also Friday, the government reported January's mild weather boosted construction employment to offset jobs lost at temporarily idled auto plants, keeping the month's civilian unemployment rate unchanged since June at 5.3 percent. The Labor Department's Bureau of Labor Statistics reported that 6.5 million Americans were unemployed last month. The bureau commissioner said the January's unemployment report reflects slow but consistent job growth and stable unemployment in the labor market. The nation's retailers Thursday reported brisk January sales gains spurred by markdowns that captivated bargain-conscious shoppers. Throughout the industry, sales gains at stores that were open one year earlier, known as same- or comparable-store sales and considered by analysts to be the best indication of performance, were better than expected, analysts said. The nation's largest retailer, Chicago-based Sears, Roebuck & Co., said same-store sales were up 3.3 percent, while No. 2 K mart Corp. of Troy, Mich., said same-store sales rose 3.1 percent. Fast-growing Wal-Mart Stores Inc. of Bentonville, Ark., posted a comparable-store gain in January of 10 percent. On Wall Street, John J. Phelan Jr. announced Thursday he is resigning as chairman and chief executive officer of the New York Stock Exchange at the end of the year. Phelan, who has headed the exchange for six years, ruled out taking a government post at this time, quashing to rumors that had swept the financial markets for two days that he would replace U.S. Treasury Secretary Nicholas Brady. No successor was named, and the board appointed a transition committee to make recommendations to the board this fall. As chairman, Phelan saw the market through the insider trading scandals that shook Wall Street in the late 1980s and through its biggest loss ever when the Dow Jones industrial average plummeted 508 points Oct. 19, 1987. Phelan said he did not have any specific plans, but said he hopes there will be ``another career out there for me.'' The stock market was up sharply at midday Friday in active trading, as bargain hunting after January's sharp declines and computerized program buying boosted prices. Stocks closed mixed in quiet trading Thursday, with the blue chips pressured by profit taking after a 47-point rally Wednesday. It was the market's biggest rally since its surge to record highs Jan. 2. Stocks closed lower Tuesday and closed broadly lower Monday in moderate trading. Before computerized buying kicked in, the Dow industrials were down about 25 points, led by a slump in takeover-related issues. Analysts blamed the selloff in so-called ``deal'' stocks on severe weakness in the junk-bond market. The bonds of RJR Holdings Capital, issued to finance last year's $25 billion leveraged buyout of RJR Nabisco, the largest ever, were down sharply after Moody's Investors Service Friday downgraded the bonds. On the oil market, the government reported Thursday that the difference between the price refineries paid for crude oil and the amount they charged for heating oil made from crude, soared fourfold during the recent December freeze. But the Energy Information Administration in its report to Congress noted it was ``too early to translate these (margins) into profits.'' The EIA report was made in response to congressional concerns and Northeast governors' questions of how much profits rose and who profitted from the near-record December cold snap and rise in consumer heating oil prices. It noted that margins do not account for refining, distribution, transportation, storage and other costs, nor reflect the actual volume of product sold.
clarinews@clarinet.com (NENA BAKER, UPI Business Writer) (02/10/90)
NEW YORK (UPI) -- The United States wrapped up its quarterly
refunding marathon this week with surprisingly strong global
participation that produced higher yields on 30-year bonds, 10-year and
3-year notes.
During the three-day quarterly refunding, the United States sold:
--$10 billion in 3-year notes Tuesday yielding 8.43 percent, the
highest since 9.12 percent May 9 and better than November's 7.77
percent. The 3-year notes, which mature Feb. 3, 1993, and have an
interest rate of 8.375 percent, sold at an average price of $99.857.
--$10 billion of 10-year notes Wednesday with the yield jumping to
8.59 percent, the highest since 9.18 percent May 10. The 10-year notes,
with an interest rate of 8.5 percent, sold at an average price of $99.40
and mature Feb. 15, 2000. The November 10-year notes yielded 7.94
percent.
--$10 billion of 30-year bonds Thursday with the yield increasing to
8.5 percent -- the highest since 9.11 percent on May 11. The 30-year
bonds, which mature Feb. 15, 2020, and have an interest rate of 8.5
percent, sold at an average price of $100. At the November auction,
30-year bonds yielded 7.87 percent.
Wholesale prices surged by 1.8 percent in January in the biggest
rise since the 1974 energy crisis, fueled by a huge increase in oil and
gas prices, the government said Friday.
Vegetable prices also took a beating, but analysts, who placed the
blame on the brutal winter weather, predicted only moderate inflation
for the year.
The unusually large 13.6 percent increase in energy prices was the
steepest since the government started tracking wholesale gas and oil
prices in 1974, and the overall increase in the producer price index was
the largest since 2 percent in November of that year, the Labor
Department said.
The January surge appeared to a be one-time shot.
``We had the cold weather hit and nobody in the northeast was
prepared for it,'' said professor Donald Ratajczak, director of the
economic forecasting center at Georgia State University.
Meanwhile, worker productivity slowed in the last three months of
1989, winding up a year with the smallest gain in the hourly output of
goods and services since 1982, the government said Monday.
Some analysts said the report may set the stage for steeper
inflation ahead.
In its report on productivity and costs, the Labor Department said
worker output decreased by 0.2 percent in the quarter and the number of
hours worked fell by 0.4 percent -- the first decline since the second
quarter of 1986 -- while hourly pay jumped by nearly 7 percent. It also
warned conumer prices are on the rise.
``There was a big jump in labor costs,'' warned Irwin Kellner,
chief economist for Manufacturers Hanover Trust in New York. ``Unless
business wishes to take a hit to the bottom line they'll be trying to
recoup this by raising prices.''
However, prices for new one-family houses fell slightly in the last
quarter of 1989 and rose 2.7 percent during the year compared with
prices for similar houses sold in 1988, the Commerce Department reported
Monday.
Last year, only the West registered a significant increase in
prices for new one-family houses comparable to those sold in 1988, the
department's Census Bureau said.
Analysts noted that during 1989 nationwide house sales as well as
new construction remained at a low ebb due to higher mortgage interest
rates.
According to the Census Bureau, the average price of houses sold in
1989 rose 8 percent to $149,300 from 1988, indicating that houses were
larger and had more amenities than those sold in the previous year.
_T_h_i_s_ _W_e_e_k_ _ _ _ _ _L_a_s_t_ _W_e_e_k_ _ _ _ _ _ _Y_e_a_r_ _A_g_o
_(_I_n_ _M_i_l_l_i_o_n_s_,_ _S_i_x_ _Z_e_r_o_s_ _O_m_i_t_t_e_d_)
Gov't Sec Bought
Outright $214,337 $217,228 $223,424
Held Under RP 0 0 0
Loans Dep Ins $880 x-$850 $970
M-1 $796,900 x-$794,200
Bank Clrngs $4,295,993 $4,529,177 $3,699,378
_(_F_o_l_l_o_w_i_n_g_ _f_i_g_u_r_e_s_ _i_n_ _F_u_l_l_)
Auto, Truck
Production 179,950 x-177,534 246,438
Rail Ldngs 337,389 345,864 322,583
Coal Output _2_0_,_7_1_2_,_0_0_0_ _ _ _ _ 20,712,000 19,701,000
Elect Pdn 54,451,000,000 54,672,000,000 53,749,000,000
Dun & Brad
Bus Failures unavailable
Std & Poor's
Bus Index a-174.4 174.2 176.4
Steel Pdn 1,798,000 1,800,000 2,001,000
Loans to depository institutions include seasonal borrowings of
$37,000,000 in the latest week. Extended credit 28.
a-Latest figure available
x-Revised