INTERNATIONAL

 

July 22 - 28, 2002

 

1.INTERNATIONAL

2. INDUSTRY

3. FINANCE

4. POLICY

5. TRADE

6. GULF

 

US RECOVERY SLUGGISH

Economic recovery in the United States remains sluggish and fragile, a closely-watched survey suggests.

"We continue to be in a jobless, profitless recovery," said Ken Goldstein, chief

 

economist of the Conference Board, a New York-based private research firm.

Its survey of 10 economic health checks, such as joblessness and hours worked in factories, did not register any improvement in June from May.

This amounts to a slowdown from May, when the board's index of leading economic indicators rose 0.6% on the previous month.

"Only consumption growth has been a consistent growth force during the first half of the year," said Mr Goldstein.

"As if there were not enough to slow down economic growth, the financial markets continue to be pounded by a relentless barrage of news about questionable corporate practices."

Five of the survey's 10 components saw improvement in June. These were money supply, weekly jobless claims and weekly manufacturing hours.

But stock prices and consumer expectations fell in June, while manufacturers' orders of consumer goods remained unchanged.

Consumers account for two-thirds of the US economy, and their confidence is vital for the prospects of future economic recovery.

Not only did consumer confidence fall in June, but other researchers have found signs of a slowdown in spending.

But the latest official figures gave a more hopeful picture on joblessness, showing new claims for unemployment benefit had fallen sharply during the week.

The US Labor Department said new claims hit their lowest level in 17 months in the week to 13 July, falling by a seasonally adjusted 28,000 to 379,000.

EXPORTERS LEAD UK FACTORY REVIVAL

The manufacturing sector is continuing to show signs of recovery, a detailed survey of UK firms has said.

Manufacturers have seen "considerable gains" in export sales and orders over the past three months, the latest quarterly survey from the British Chambers of Commerce (BCC) said.

The findings echoed an official report last week showing that manufacturing output had risen for the second month in a row.

But the BCC said that although the outlook was getting better, companies were continuing to cut jobs.

The manufacturing sector is emerging from a year-long recession, having been battered by the global economic downturn and the strength of the pound against the euro.

But the BCC's survey which covers more than 7,000 firms showed that exports were beginning to pick up.

The survey found the balance of manufacturers reporting higher export sales over those reporting lower sales climbed to plus 7%, compared with plus 1% during the first three months of the year.

Exports orders also picked up, with the balance figure rising to plus 5%, from plus 1% in the first quarter.

But the domestic situation worsened slightly, with sales and order data slipping back.

The BCC also found that manufacturers were continuing to cut jobs, although at a slower pace than in the first quarter.

"The manufacturing recovery is not yet assured, although it appears to have strengthened somewhat since last quarter," said David Frost, the BCC's acting director general.

"However, employers are continuing to lay off staff and we must remain cautious until the pick up in recovery filters through into employment prospects.

"With the global picture still unclear, inflation at a 27-year low and with the stock market threatening to hamper economic prospects, there is no need for the Bank of England to be even contemplating raising interest rates in the short-term."

MARKETS HOPE THE WORST IS OVER

Share prices around the world have steadied, amid mounting hopes that two months of sharp declines may be over.

Japan's Nikkei share index was up almost 2% in trading, leading Asia higher, after Wall Street stocks closed up on Wednesday.

US shares had surged at one point, but the froth came off by the end of the day a sign that the mood is still uncertain.

Now, all eyes are on the long list of US corporate results due later in the day.

YEN'S RISE SPELLS TROUBLE FOR JAPAN

Japan's currency is strengthening inexorably against the dollar, sparking worries that the rise could stamp out any sparks of recovery from the country's decade-long downturn.

Since the beginning of 2002, the yen has gone up almost 15%, rising from about 135 yen to the US dollar to less than 116 on Wednesday.

The relentless appreciation to a 17-month high comes despite concerted action from the Bank of Japan, which has got its colleagues in Europe and the US to join it in selling yen and buying dollars to stem the tide.

FORMER COLONIES SEEK AID FROM EUROPE

Leaders of former European colonies are asking the European Union for aid to protect them from free trade.

Members of the 78-nation strong African, Caribbean and Pacific group (ACP) are meeting in Fiji to discuss what should replace the preferential trade agreements signed with their former colonial masters.

These agreements, worth more than $13bn, have provided protection for products such as sugar, bananas and coffee, and allowed duty free access to EU markets for other exports from the ACP.

WTO RULING AGAINST US DUMPING LAW

The World Trade Organization has issued an interim ruling against the United States over an anti-dumping law giving US firms cash from punitive duties applied on foreign companies, Canada said on Wednesday.

Canadian International Trade Minister Pierre Pettigrew said he was "very pleased" by the ruling against the so-called Byrd Amendment which he said encouraged US firms to seek damages from foreign companies.

Canada was one of several countries to challenge the amendment, which allowed the US Customs Service to distribute revenues from anti-dumping and countervailing duties to those US firms that originally filed for import protection.

MOROCCO TAKES ISLAND DISPUTE TO EUROPE

Morocco's foreign minister is to travel to Europe later on Friday to discuss his country's dispute with Spain over the tiny island of Perejil.

Mohamed Benessai will hold talks in Paris and with the European Union in Brussels on the row, which was sparked last week when Moroccan soldiers occupied the island.

MICROSOFT PROFITS SOAR

Microsoft reported net profits of $1.5bn (900m), up from $65m a year earlier. Sales jumped 10% to $7.25bn in the same three months of last year.

OPTIMISTIC EBAY'S PROFITS DOUBLE

EBay reported net income profits of $54.3m (34.5m) for the three months to end-June, more than double what it earned a year before, and was one of the few firms reporting on Thursday to be unreservedly bullish.

DAIMLERCHRYSLER PROFITS PICK UP SPEED

DaimlerChrysler turned the corner in the first three months of the year, and has now helped push DaimlerChrysler into a 1.1bn euro (705m; $1.1bn) profit for the second quarter, up by more than one-third year on year.

HSBC MULLS BID FOR MEXICAN BANK

Banking giant HSBC has said it is considering a bid for Mexico's largest retail banking group, Grupo Financiero Bital.

Analysts see GF Bital as one of two Mexican banking firms which could be bought by a foreign investors.

With almost 6 million customers, GF Bital has the largest customer base of any Mexican bank group and boasts 1,380 branches.

PRESCOTT UNVEILS 1BN HOUSING PLAN

Deputy Prime Minister John Prescott has set out details of a huge expansion in house building in the south-east of England.

The plans could lead to 200,000 new homes being built in the region over the next five to 10 years, with thousands of subsidised properties for key workers such as nurses and teachers.

But Mr Prescott has abandoned plans to reduce local people's input into big infrastructure projects such as Heathrow terminal 5.

WANADOO BUYS SPANISH ISP

Wanadoo has bought a Spanish internet service provider (ISP) in a deal it says will make the merged group into the biggest ISP in Europe.

French firm Wanadoo said it is to buy Spanish firm eresMas for 255m euros ($257m; 163m) in shares.

ACCOUNTING GIANT FINED $5M

Accounting giant PricewaterhouseCoopers has been fined $5m by the US Securities and Exchange Commission (SEC) for improper auditing and violating standards of independence.

COKE PROFITS KEEP THEIR FIZZ

Soft drinks giant Coca Cola said on Wednesday that profits for the April to June period came in at $1.29bn (774m), up 15% on the same period last year. Sales were also up 15% on the year at $5.37bn.

UK JOBLESS RATE SHOWS SURPRISE RISE

UK unemployment has shown a surprise rise, as factory lay-offs saw the manufacturing workforce decline to a record low.

The number of Britons claiming unemployment benefit rose 1,300 in June to 952,400.

FORD EDGES BACK INTO PROFIT

Auto giant Ford reported a net profit of $570m (364m) in the three months to June, after losing $752m in the same period last year, the respite looks set to be shortlived.

PROFITS RISE AT CADBURY

Profits at Cadbury Schweppes rose 10% to 386m in the first half of this year.

UK RATE DECISION OPPOSED BY ONE

The men and women who set interest rates in the UK earlier this month voted overwhelmingly in favour of leaving interest rates unchanged at 4%, minutes of the rate decision meeting show.

The Bank of England's Monetary Policy Committee voted eight to one in favour of the no-change decision, its eight in as many months.

TURKEY HEADS FOR EARLY ELECTION

Leaders of the three parties in Turkey's coalition government have opted for early elections on 3 November in an attempt to end the country's political crisis.

The decision came after the government lost its majority in parliament, following mass defections from the party of ailing Prime Minister Bulent Ecevit.

In the last two weeks, 59 deputies have left his Democratic Left Party (DSP), leaving the coalition government with 275 seats in the 550-seat parliament.

US MULLS LESS DEPENDENCE ON GULF OIL

The United States is actively pursuing a new energy security policy, so as to considerably lower its dependence on the oil rich states of the Gulf and diversify significantly its energy sources.

In order to overcome the psychological issue of energy security the US is hoping to double its oil imports from Nigeria from the current 900,000 barrels a day to around 1.8 million barrels per day in the next five years, says Dr. Paul Michael Wihbey, a fellow of the American Institute of Advanced Strategic and Political Studies. Dr. Wihbey, a member of the African Oil Policy Initiative Group (AOPIG), said this while presenting his paper last week in Lagos, Nigeria, emphasizing the US needs to diversify its oil and energy sources.