Business
Ray S. Eñano, Editor business@manilastandard.net extrastory2000@gmail.com
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MONDAY, JUNE 5, 2017
US jobs figures mixed in May
EU calms nervous industries vs China AS the European Union forges closer ties with China, the bloc is also moving to calm concern that Chinese exporters will destroy EU-based industries ranging from steel to solar. The EU will retain the scope to impose hefty levies against Chinese businesses that sell goods below cost in Europe under a planned tariff overhaul, according to Salvatore Cicu, an Italian member of the European Parliament. Europe is revamping the way it calculates duties on these “dumped” imports in response to longstanding Chinese demands for more favorable trade treatment. “We want to give a political message―especially to China―that we are open for trade, but EU industries mustn’t be penalized,” Cicu, who is steering a draft law on the controversial issue through the 28-nation Parliament, said in an interview at the assembly’s headquarters in Strasbourg, France. “We can find an effective compromise.” At a June 1-2 meeting in Brussels, Chinese and European leaders continued to chart a path to closer trade and investment ties. The EU is seeking to create stronger international bonds without reigniting a populist wave in Europe that rallied against globalism’s negative effects on domestic industries and workers. Meanwhile, the bloc is telling China that more open trade with Europe first requires fewer barriers to foreign investment in the Chinese market. After Chinese President Xi Jinping used the Davos forum of global business and political elites in January to portray his country as a champion of free markets, EU Trade Commissioner Cecilia Malmstrom said she’s still looking for results. “We are all waiting now for the remarks by the president to translate into action and make trade and investment more open,” Malmstrom told an EUChina business conference in Brussels on June 2. Disagreements over trade prevented both sides from drawing up as planned their first-ever statement on climate change and clean energy at the summit, according to an EU official, who said the discord over commercial matters had no impact on the unity over global warming. Bloomberg
RUSSIAN DIPLOMACY. Russian President Vladimir Putin (center) stands among Indian Prime Minister Narendra Modi (second from left), Moldovan President Igor Dodon (right) and Austria’s Chancellor Christian Kern after a session of the St. Petersburg International Economic Forum in Saint Petersburg on June 2, 2017. AFP
Skepticism mounts for US rate hikes on weak figures hile Janet Yellen and her Federal Reserve colleagues are poised to raise interest rates at their meeting this month, investors increasingly doubt the central bank’s projection for additional hikes following soft reports on US employment and inflation.
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Goldman Sachs Group Inc. on Friday pushed back its forecast for a third rate increase this year to December from September. Trading in futures contracts shows odds of a September increase have dropped to just one in four, and investors are now pricing in less than one rate hike in 2018 for the first time since the eve of the US elections in November. Fed officials speaking on Friday expressed no disappointment with the payrolls gain of 138,000 last month, which was below economists’ expectations. Philadelphia Fed President Patrick Harker called it a “good number,” while Dallas Fed Pres-
ident Robert Kaplan said “if we are not at full employment, we are moving closer.” “I’d be very surprised if they didn’t hike in June, given all the signals that they have sent,” said Jonathan Wright, an economics professor at Johns Hopkins University in Baltimore. While he still expects two more interest-rate increases this year, the probability has increased that the Federal Open Market Committee will move only in June, he said. The Labor Department report showed the jobless rate fell to a 16-year low of 4.3 percent, which is below the level the FOMC estimates to be full
employment. Monthly payroll gains are averaging 162,000 this year, a step down from the 2016 pace of 187,000. Average hourly earnings rose 2.5 percent from a year earlier, indicating a tightening labor market hasn’t brought an acceleration in wages. The FOMC, last raised rates in March and at the time projected two additional increases this year and three in 2018. Those quarterly forecasts will be updated this month. “The Fed has little credibility,” said Ward McCarthy, chief financial economist with Jefferies LLC in New York. Investors expect “the Fed to again back away from raising rates at minimal provocation. That is the legacy of the FOMC rate hikes underachieving relative to FOMC projections for so many years.” If Yellen decides to push forward in September, the FOMC may be forced to engage in a
“public campaign” of fairly explicit signals for a rate hike similar to what occurred in March, he said. The Fed’s Beige Book on Wednesday cited a variety of anecdotes of worker shortages and isolated pay raises across the central bank’s 12 districts. There was a manufacturer in the Chicago region raising pay 10 percent to attract workers. In the Atlanta district, construction work was delayed because of an inability to fill positions. In the Cleveland area, a transportation firm gave drivers a raise amounting to 7.5 percent to retain them. Yet overall, there’s no sign the tightening labor market is lifting inflation, which has been under the Fed’s 2 percent target for every month but one for the last five years. The Fed’s preferred measure of prices, excluding food and energy, rose just 1.5 percent in April from a year earlier. Bloomberg
WASHINGTON―US unemployment fell to a 16-year low in May but monthly job creation has slowed sharply in the past three months, creating a mixed picture of the labor market. The contrasting data could muddy the waters ahead of a Federal Reserve decision on interest rates later this month. The economy added just 138,000 net new jobs in May, well below analyst expectations, and average job creation for the last three months slowed to 121,000, after the payrolls data for April and March were cut by a combined 66,000, the Labor Department reported Friday. However, the jobless rate decreased by a tenth of a point to 4.3 percent. But while that drop looks like good news, it also reflects the fact that some workers left the labor force, with the closely-watched labor force participation rate falling 0.2 points to 62.7 percent. As it has done in recent months, the White House once again hailed the good news in the labor market. White House Press Secretary Sean Spicer said the employment report showed “Americans seeking jobs are having more success finding them than at any point in the last 16 years.” “There’s a lot of positive signs coming out of the job market,” he told reporters. President Donald Trump has vowed to add 25 million new jobs to the economy over a decade, but economists say this goal is unrealistic and the latest data may bolster that view, especially with increasing reports that firms are struggling to fill open positions. The employment report came a day after Trump announced he was withdrawing the United States from the 2015 Paris climate agreement in a bid to preserve US jobs. However analysts say the US stands to gain more by participating in the development of renewable energy. One in every 50 new jobs added in the United States in 2016 was in the solar industry. Jim O’Sullivan of High Frequency Economics was among those who said the weakness in job creation last month likely was due to volatility and distortions from seasonal adjustments applied to the data. “Through the volatility, we believe the trend in employment growth remains more than strong enough to keep unemployment trending down and the trend in wage gains upward,” he said in a research note. AFP
Will it ever open? Berliners laugh, cry over long delayed airport By Marie Julien BERLIN, Germany―Lufthansa had its planes ready and German Chancellor Angela Merkel was lined up for the ribbon-cutting ceremony―all was in place for the opening of Berlin’s stateof-the-art airport on June 3, 2012. Except the airport itself. Five years on, and the BER airport remains unfinished, shuttered and a byword for fiasco in a country usually better known for its engineering prowess and obsession with punctuality. Construction had begun back in 2006 for the mega-project set to replace the German capital’s two aging and saturated airports―Tegel and Schoenefeld. But the opening of BER, on the southern outskirts of Berlin, was scrapped a month before Merkel was due to inaugurate the site in front of 10,000 guests. The problem related to the fire alarm and smoke extraction system―but it soon emerged that this was far from the only issue. Besides a litany of technical faults that included a roof twice the authorized weight, there were planning errors, suppliers going bankrupt, and suspicions of corruption. Finally the scandal cost Berlin’s former mayor Klaus Wowereit his job. Meanwhile BER’s building costs more than tripled from the 1.7 billion euros ($1.9 billion) initially budgeted
This file photo taken on September 11, 2012 shows passengers bridges on the tarmac of the Berlin-Brandenburg International airport (BER) during a visit to the building site in Schoenefeld near Berlin. AFP
to more than 6 billion euros ($6.7 billion) to date. Authorities are running quirky weekly visits to the airport for a fee, but at 10 euros a head, they are doing little for the bottom line. No flights While the airport remains shut, its runways are occasionally being used by neighboring Schoenefeld airport, which was once the air hub of communist East Berlin and is undergoing its
own renovation. Other infrastructure linked to BER has to be constantly maintained so it will be ready when the airport finally opens its doors. To ensure that the rail tracks and stations built for the airport remain operational and free of mould, an empty regional train circulates on the route two nights a week. The ghost trains will continue their lonely trips until the day the terminal
opens, says Deutsche Bahn. At the nearby Hotel Steigenberger, eight housekeepers and technicians maintain empty rooms―even though the hotel “is not expected to open before the actual inauguration of the airport,” according to its operator Deutsche Hospitality. Travelers booking flights on websites are already offered the choice of landing at Tegel, Schoenefeld or BER― except that those who pick the third choice find no available flights. On Berlin roads, signs showing the way to the airport are, for now, simply crossed out. Running joke Lufthansa spokesman Wolfgang Weber recalled the day the airport was meant to open, with one of the carrier’s Airbus jets set to be the first on the tarmac. Germany’s largest airline had a “big plan” to bump up the number of direct flights from Berlin to other destinations from eight to 45. Tickets were sold, planes readied and personnel hired, he said, but “step by step, we cut down this flight plan”. Today, Lufthansa and its subsidiary Eurowings link Berlin to 30 destinations from Tegel airport, and the carrier has kept BER off its flights plans for coming years. “We need a date―and to have that date at least a year in advance,” said Weber.
But to avoid yet more embarrassment, authorities have not set a new date. Thomas Winkelmann, the boss of Air Berlin, has acknowledged “the limits of Berlin in terms of infrastructure.” In April―despite the carrier’s name―he decided to boost the western city of Duesseldorf as a base for its long-haul flights. For now, BER is a running joke among Berliners. Some have suggested the sweeping and deserted site as a possible nuclear waste storage site. Others, picking up on the Internet meme of “Chuck Norris facts,” say only the reputedly omnipotent US martial arts film hero can rescue the project now. One joke reprised former East German leader Walter Ulbricht’s notorious denial in 1961 that the communists were going to erect a wall around West Berlin―“Nobody intends to build an airport.” The football club Darmstadt, after its relegation following a loss to Hertha Berlin, sniped at its adversaries on Twitter that “we landed in League 2, but you are still landing at Tegel.” Even Germany’s usually dour finance ministry joined the fun in a video presenting Germany as this year’s G20 summit host, with an image of the airport and the admission “we are not perfect.” AFP