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Markets News Afternoon: US new home sales unexpectedly jumped in October; Budget Travel in liquidation with loss of 172 jobs; ESRI report supports single pensions tax relief rate
By Finfacts Team
Nov 25, 2009 - 4:29:00 PM
US new home sales unexpectedly climbed 6.2% to a seasonally adjusted annual rate of 430,000 in October. The median price for a new home slipped 0.5% to $212,200.
The US Census Bureau and the Department of Housing and Urban Development said the October 2009 level was 5.1% above the October 2008 estimate of 409,000.
The median sales price of new houses sold in October 2009 was $212,200; the average sales price was $261,100. The seasonally adjusted estimate of new houses for sale at the end of October was 239,000. This represents a supply of 6.7 months at the current sales rate.
In other data, US consumer spending increased in October by 0.7% as incomes rose and inflation remained low. Personal income rose by 0.2% for the second straight month. In a separate report, initial claims for jobless benefits declined by 35,000 to 466,000 in the most recent week. However, durable goods, expected to last at least three years fell in October, and a barometer of capital spending by businesses, fell in another sign of the recovery's slow pace.
US economic roundtable: Jim O'Sullivan, Chief Economist MF Global:
Meanwhile, the US will pledge to cut its greenhouse gas emissions by 17 percent by 2020 at a UN climate change meeting in December, which President Obama will attend, the White House said.
Budget Travel in liquidation
Budget Travel -- Ireland’s largest tour operator - - has this afternoon applied to the High Court to have the company placed into provisional liquidation and for the appointment of Simon Coyle [Mazars] as provisional liquidator. The company will cease trading from this evening with the loss of 172 jobs and the closure of the company’s 17 retail shops.
Car dealer EP Mooney in liquidation
EP Mooney Garages has confirmed that the company has been put into provisional liquidation at the request of the board.
The Dublin Nissan dealer, with its main outlet on the Naas Road, was founded in 1971
Second home charge
The new €200 charge on second homes has raised €48.3m for local authorities this year so far and the charge may be increased in the Budget.
The Joint Committee on Environment and Local Government was told today that the Department of the Environment underestimated the number of properties liable for the tax.
Des Dowling, assistant secretary in the Department of the Environment, said that 75% of the money was paid through the website set up to deal with the charge.
Dowling said the department anticipated that 200,000 properties would be liable for the charge, but so far more than 240,000 properties had paid.
He said there may be even more, but it is impossible to say if all vacant properties identified by the Central Statistics Office are liable.
UK GDP: “We are seeing a recovery, but it’s based more around the turn of the inventory cycle and what we’re seeing is global trade also recovering,” David Owen from Jefferies told CNBC Wednesday. Geoff Tresman from Punter Southall Financial Management joined the discussion.
Germany- short time working
The German government today approved a 12-month extension of the public subsidised part-time working scheme.
Known as 'Kurzarbeit' (short-time working), the scheme enables firms hit by the recession to get up to 67% of a worker's salary paid for a period of up to two years.
September data showed about one million workers were covered by the scheme.
The programme had been due to expire on December 31, 2009 and is now set to be extended by a year, although for firms applying next year will only get paid for a period of 18 months instead of 24 months.
Germany's unemployment rate fell to 7.7% from 8% in September.
Irish Pensions
The Economic and Social Research Institute says in a report today that cutting tax relief to a single rate of 30% would save the Government €500m in lost taxes.
The ESRI says this would encourage more middle and lower income earners to save for their own pensions.
Researchers examined what would happen to pension savings if tax relief was cut to either the standard rate of 20% or a new 'hybrid rate' of 30%.
It says the second scenario encourages more savings by lower income earners, yields more tax to the State and will not discourage top earners from putting money aside for a pension.
The recently negotiated Programme for Government agreed a 33% hybrid rate to encourage a rebalancing in favour of middle and lower earners.
- - More on this from Finfacts on Thursday.
US markets
The housing and jobless data has boosted sentiment, in advance of Thanksgiving Day.
The Dow Jones is up 38 points to 10,472.
The Nasdaq has gained 0.36% and the S&P 500 is up 0.35%.
General Motors’ restructuring plan will include cutting 10,000 jobs in Europe, Tim Urquhart from IHS Global Insight told CNBC Wednesday. The company doesn’t plan to close any plants yet, he said, but “those two things (job cuts without plant closures) have never really been squared in my mind,” he added:
In Europe, the Dow Jones Stoxx 600 is up 0.36% Wednesday.
The ISEQ has dipped 0.54% in Dublin.
Aer Lingus is down 2%; AIB is up 3% and Elan is off 3.7%.
On the New York Mercantile Exchange, oil for January 2010 delivery is trading at $76.51 up 49 cents from Tuesday's close. In London, Brent crude for January delivery is trading at $76.52 a barrel.
Currencies
The euro is trading at $1.5072 and at £0.9039.
For live currency updates, check the right-hand column of the Finfacts home page.The dollar traded at a record low $1.6038 per euro on July 15, 2008.
“More and more people are shopping online; there is no doubt about that,” David Smith from IMRG told CNBC. While the postal strikes created a slight dip in online sales at the end of October, “by the end of the year, we are expecting round about £53 billion to be spent online for the year,” he added.
