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Markets News Afternoon: US manufacturing expands in February for seventh consecutive month; Prudential to buy AIG's Asian life insurance unit for $35.5bn
By Finfacts Team
Mar 1, 2010 - 2:41:09 PM
President Obama in the White House Situation room on Saturday, Feb 27, 2010, discussing the aftermath of the devastating earthquake in Chile, as well as Hawaii and other Pacific islands affected by tsunamis.
Economic activity in the US manufacturing sector expanded in February for the seventh consecutive month, and the overall economy grew for the 10th consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business.
Norbert J. Ore, chair of the Institute for Supply Management Manufacturing Business Survey Committee said today: "The manufacturing sector grew for the seventh consecutive month during February. While new orders and production were not as strong as they were in January, they still show significant month-over-month growth. Additionally, the Employment Index is very encouraging, as it is up 2.8 percentage points for the month to 56.1%. This is the third consecutive month of growth in the Employment Index. With these levels of activity, manufacturers are seemingly willing to hire where they have orders to support higher employment."
The 11 manufacturing industries reporting growth in February - - listed in order - - are: Machinery; Paper Products; Apparel, Leather & Allied Products; Computer & Electronic Products; Miscellaneous Manufacturing; Transportation Equipment; Textile Mills; Plastics & Rubber Products; Electrical Equipment, Appliances & Components; Fabricated Metal Products; and Food, Beverage & Tobacco Products. The five industries reporting contraction in February are: Wood Products; Furniture & Related Products; Primary Metals; Printing & Related Support Activities; and Chemical Products.
Manufacturing continued to grow in February, but the rate of growth decelerated as the PMI (Purchasing Managers' Index) registered 56.5%, a decrease of 1.9 percentage points when compared to January's seasonally adjusted reading of 58.4%cent. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50% indicates that it is generally contracting.
The ISM says a PMI in excess of 42%, over a period of time, generally indicates an expansion of the overall economy. Therefore, the PMI indicates growth for the 10th consecutive month in the overall economy, as well as expansion in the manufacturing sector for the seventh consecutive month. Ore said: "The past relationship between the PMI and the overall economy indicates that the average PMI for January and February (57.5%) corresponds to a 5.2% increase in real gross domestic product (GDP). In addition, if the PMI for February is annualized, it corresponds to a 4.9% increase in real GDP annually."
Irish Public Sector Disruption: The IMPACT trade union has launched more industrial action as part of its ongoing campaign against pay cuts, threats to pensions and public sector reform plans.
IMPACTGeneral Secretary Peter McLoone was chairman of the free spending State training agency FÁS, until last year and is due to retire later this year. His pay is linked to that of the Cork City Manager and his total package is worth well €200,000. McLoone and other trade union leaders are focused on protecting the entitlements of people with secure jobs while they have nothing to say for the tens of thousands of unemployed. So from tomorrow morning, workers in alternating HSE (Health Service Executive) areas will stop answering phones for four hour periods.
The union likely expects its members to get paid for the non-work periods.
McLoone will retire on a guaranteed income for life like the politicians he is targeting but the victims of his union's actions will be the ones who get the crumbs of society. Beginning today, union members in the health and welfare division are also not taking on any work associated with vacant posts. They are also not doing any work associated with three major HSE projects involving the realignment of cancer care services and the configuration of hospitals in the northwest and the midwest regions.
IMPACT members are also refusing to process any requests for information for parliamentary questions or applications under the Freedom of Information Act.
From tomorrow, HSE staff will not answer telephones from 9am until 1pm in a different HSE region each day.
The action begins tomorrow morning in the Dublin and North East HSE region and includes voluntary hospitals. However, emergency department telephones and the main switchboards in acute hospitals will continue to be answered.
The action moves to the HSE West region on Wednesday, HSE South on Thursday, and HSE Dublin and Mid-Leinster on Friday.
Legendary investor Warren Buffett, chairman and CEO of Berkshire Hathaway, talks to CNBC about the economy and politics:
Car sales
Today's newly released statistics from the Motorcheck.ie Car Index show that new car registrations for the month of February exceeded those recorded last year by an encouraging 55%. This relates to 12,310 units for 2010 as compared with 7,896 in 2009.
Commenting on the major increase Motorcheck.ie Director Shane Teskey says "It's great to see sales rising at such a level. The government scrappage scheme has given the industry a much needed boost. One significant benefit is that buying a new car is no longer seen as 'politically incorrect' and consumers are starting to take advantage of the highly discounted pricing strategy adopted by manufacturers".
Total sales for 2010 are now 21% ahead of 2009 and with pre-orders building look set to continue ahead of last years low.
The number of used cars being imported into the state has also started to increase. Although still behind last year's figures by 25% this is a substantial improvement on the 46% drop experienced in January.
Top of the table for 'Manufacturer' in February is Toyota with 4,036 registrations. Ford comes second just 105 registrations behind with their Fiesta and Focus models have proven to be first and second most popular models with 1,471 and 1,348 respectively.
Diesel continues to outsell Petrol with 59% (17,047) of new vehicles registered.
Band B moves up a percentage point as the most common tax class with 44% (12,750) of all registrations.
The battle for most popular colour gets close as only 17 registrations now separates Silver (7,157) from Black (7,140) as the most popular colour on Irish roads.
There have been 86 convertibles registered in Ireland so far this year.
HSBC unveiled a 56% jump in 2009 underlying profit Monday. But James Chappell from Olivetree Securities said 2009's bad debts of $26.5 billion are bad news and the market was hoping that the number would have been smaller:
US markets
Bloomberg reports that Prudential Plc, Britain’s biggest insurer, agreed to buy the Asian life insurance unit from American International Group Inc. for $35.5 billion in cash and stock to gain more than 20 million customers in the region.
Prudential will pay $25 billion in cash and $10.5 billion in stock and other securities for AIA Group Ltd., the London- based insurer said in a statement today. The insurer said it plans to raise $20 billion in a rights offering and sell about $5 billion of bonds to finance the cash part of its offer.
US personal income: Americans boosted spending in January but growth of their income was weaker than the rate of inflation. The savings rate also fell.
On the New York Mercantile Exchange, oil for April 2010 delivery is trading at $80.01, up 44 cents from Friday's close, on the weak US jobs data. In London, Brent crude for April delivery is trading at $77.95 a barrel.
Currencies
The euro is trading at $1.3529 and at £0.9059.
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.
There will be "quite a potent rebound in M&A" because valuations are attractive and access to capital is easing, Kevin Gardiner from Barclays Wealth told CNBC Monday. Gardiner considers the outlook for a tie between Prudential and AIG's Asian life insurance arm. Gardiner coined the term 'Celtic Tiger' for the Irish economy when working for US investment bank Morgan Stanley in 1994:
