A key central bank survey showed Thursday that confidence at major Japanese manufacturers fell over the last quarter, as the export-reliant country battled a strong yen and an increasingly precarious global economy.
In the Bank of Japan’s “tankan” survey of business sentiment, the main index for big manufacturers fell to minus 4, in the first deterioration in two quarters. Three months ago, it stood at 2.
The figure represents the percentage of companies saying business conditions are good minus those saying conditions are unfavorable, with 100 representing the best mood and minus 100 the worst.
The result is in line with Kyodo News agency’s average market forecast.
Japan has been battling a strong yen, which has hit multiple historic highs this year against the dollar. Amid economic uncertainty in Europe and the U.S., global investors have looked to the Japanese currency as a relatively safe haven.
But Japan relies on exports to drive growth, and the yen’s appreciation has hit companies such as Toyota Motor Corp. and Sony Corp. hard. When the yen climbs, it reduces the value of exporters’ overseas profits when repatriated to Japan payday advance.
That has forced companies to shift more production overseas, prompting worries about a hollowing out of Japanese industry.
Big non-manufacturers were feeling slightly more optimistic. Their confidence index rose to 4 from 1 three months earlier.
Medium-sized manufacturers’ reading was flat, at minus 3, while the small manufacturers’ index improved to minus 8, up from minus 11.
The tankan, which helps guide monetary policy, showed that large companies overall plan to boost capital spending by 1.4 percent this fiscal year through March 2012. The figure is down from 3 percent in the September survey.
Large manufacturing companies assume an average exchange rate of 79.02 yen per dollar for this fiscal year, compared with 81.15 yen three months ago.
The Bank of Japan surveyed 10,846 companies nationwide. About 99 percent responded.
The bank’s next policy board meeting is scheduled for Tuesday and Wednesday.
China’s chronically high inflation rate fell to a lower than expected 4.2 percent in November, paving the way for authorities to further ease credit to support growth.
The National Bureau of Statistics said Friday that falling food prices and a high base from a year earlier helped to bring inflation down from 5.5 percent in October.
The decline gives China’s leaders the leeway to ease policies that were imposed to cool an overheated economy but recently have fanned fears growth might be stifled at a time when hopes are pinned on a robust China to help offset the malaise in Europe and the U.S.
“Inflation is marching south at an aggressive pace,” Alistair Thornton, an economist with IHS Global Insight, said in a research note.
Data for November “highlighted strong downward pressure amid an increasingly gloomy global outlook,” it said.
China has already begun relaxing reserve requirements on banks to help ease a cash crunch and reopen a flow of liquidity needed to keep growth on track.
Beijing is treading a thin line as it strives to support job-creating growth while avoiding re-igniting inflation that can undermine public support for the ruling communist party because it erodes the economic gains that underpin their claim to power saving account payday loan.
“The challenge for policymakers is to enact measures that boost domestic demand and to loosen credit controls somewhat without stoking inflation and property price bubbles,” said Jing Ulrich, JP Morgan’s chairwoman for global markets.
Incomes are rising but gains are increasingly unevenly distributed.
Food costs, a major component of the consumer price index and especially sensitive in a society where poor families spend up to half their incomes on food, rose 8.8 percent, the National Bureau of Statistics said.
China’s latest bout of perilously high inflation, fueled by a binge in bank lending unleashed by stimulus meant to fend off the global crisis, peaked at 6.5 percent in July.
O’FALLON, MO.
Premier Mario Monti urged lawmakers Tuesday to accept his financial rescue package, including new and higher taxes, saying Italy had risked running out of money to pay state salaries and pensions.
Lawmakers on the right and left have been grumbling over his 2-day-old rescue plan, including pension reforms to make Italians work far longer and a revived home property tax.
Monti’s rescue plan, approved by his Cabinet on Sunday aims to pull Italy back from the brink of default on its staggering sovereign debt, a scenario that could doom the eurozone and worsen economic crises across the globe.
“Parliament is sovereign, time is short, the room to maneuver is very little,” Monti said on a state TV talk show when asked about political leaders’ insistence in Italy that the austerity plan be softened.
He said it is “premature” to decide if his 3-week-old government would resort to a confidence vote in a bid to get his rescue recipe approved by Parliament quickly and intact.
With no political base in Parliament _ Monti and his ministers are all technocrats asked to save Italy’s finances _ the government would topple if it loses a confidence vote, a prospect that could trigger catastrophe in global markets.
Monti, an economist and former EU commissioner, announced emergency measures on Sunday that seek to save euro30 billion through austerity measures and reinvest euro10 billion of savings from those measures to enhance growth, which has been stuck at zero for a decade.
Much of the austerity strategy hinges on new or higher taxes, such as the higher excise tax on gasoline and diesel fuel, which already took effect Tuesday. News reports said it would mean it would cost consumers an extra euro5 or euro6 (nearly $7-8) every time they fill up their car.
Monti called the hike in fuel taxes “indispensable” and needed to help keep local public transport functioning.
“We didn’t have to look far. Greece represented what could have happened to Italy,” Monti said, evoking the drastic situation of its fellow eurozone member across the Adriatic.
“We lived well, consuming the wealth produced by past generations instead of producing more,” he said. Under existing pension system reforms over the last decade or so, many Italians could retire at as much as 80 percent of pay in their mid-50s. With Italians enjoying exceptional longevity, the pension payments are becoming nearly unsustainable.
Italy’s public debt is amounting to a staggering euro1.9 trillion, or 120 percent of its GDP.
Asked if Italy had risked being unable to pay its public servants, Monti replied, grimly: “It was certainly possible” that salaries as well as pensions ran that risk.
On Tuesday, the government approved the release of euro4.8 billion ($6.4 billion) from state coffers to fund strategic infrastructure projects aimed at stimulating economic growth. The funds will pay for highway projects, high-speed railways and retractable underwater barriers to help protect Venice from flooding.
Economists have mixed views on how effective infrastructure programs are for spurring economic growth, with most favoring privately funded projects for better stimulus. Still, longer-term projects such as railways usually require state funding because the investment period is too long for many investors.
Sunday’s Cabinet emergency decree allows the funds to be released immediately, but Parliament must still convert the measures into law.
The new funding includes euro2 billion to upgrade the Treviglio-Brescia and Milan-Genoa railway lines, both in the north, to high-speed, euro598 million for highways, and euro600 million for the Venetian lagoon mobile barriers, a project already more than two years behind schedule due to financial problems and designed to protect Venice from periodic high tides. The projects are expected to stimulate growth by putting unemployed people to work and to keep construction contracts flowing.
Unicredit economic analyst Chiara Corsa said the measures appear “sufficiently bold” to allow Italy to balance its budget by 2013,” even with recession looming.
President Ollanta Humala declared a 60-day state of emergency Sunday in a northern region wracked by protests against a highlands gold mine, the country’s biggest investment, by peasants who fear for their water supply.
The emergency restricts civil liberties such as the right to assembly and allows arrests without warrants in four provinces of Cajamarca state that have been paralyzed for 11 days by increasingly violent protests against the $4.8-billion Conga gold-and-copper mining project. U.S.-based Newmont Mining Corp. is the project’s majority owner.
Dozens have been injured in clashes between police and protesters, some of whom have vandalized Conga property. The general strike also shuttered schools and snarled transportation as protesters mounted roadblocks.
Humala said in a brief televised address Sunday night that protest leaders had shown no interest “in reaching minimal agreements to permit a return of social peace” after a day of talks in Cajamarca with Cabinet chief Salmon Lerner and three other ministers.
Humala said the government “has exhausted all paths to establish dialogue as a point of departure to resolve the conflict democratically” and blamed “the intransigence of a sector of local and regional leaders.”
He said the emergency would take effect at midnight Sunday.
Lerner’s group was accompanied by Peru’s military and police chiefs and guarded by hundreds of heavily armed police.
Cajamarca state’s governor, Gregorio Santos, who has been leading the protests, called Humala’s announcement an unnecessary provocation. He said protest leaders had been planning to end the strike and had asked government officials for 12 hours to consult with protesters.
“I think what’s being sought is for this to end in a bloodbath,” Santos told The Associated Press by telephone. Police have already used tear gas and bullets against protesters.
“We will continue with our fight,” Santos added, without specifying how.
Local elected officials have led protests against Conga, an extension of the nearby Yanacocha mine, for more than a month.
They say they fear it will taint and diminish water supplies affecting thousands and have demanded a new study of the environmental impact of the mine, which was to begin production in 2015.
Peruvian government officials have expressed no intention of redoing Conga’s environmental impact study, which was approved by the Ministry of Mining in October 2010.
Those plans call for displacing four lakes more than two miles high and replacing them with reservoirs. Local residents say they fear that could affect an important acquifer on which thousands depend.
Several weeks ago, the Interior Ministry asked prosecutors to file criminal charges against Santos and four other local leaders who have led protests against Conga, a top ministry lawyer, Julio Talledo, told The Associated Press.
The charges include “hindering the functioning of public services” and carry prison terms of at least two years. It was not immediately clear whether prosecutors have acted on them.
The streets of the regional capital, Cajamarca, and the city of Celendin, a flashpoint of protests, were empty Sunday night after Humala’s announcement but people remained tense, local police told the AP by phone. Local reporters reported seeing busloads of soldiers and police with assault rifles arriving in recent days.
Cajamarca police duty officer Miguel Vigil said police commanders were meeting to plan their next steps.
“We can’t yet say what measures will follow,” he said.
Newmont announced last week that it was suspending work at Conga until order could be restored.
Its chief executive, Richard O’Brien, said in a statement then that if Newmont was unable to continue with Conga, “the scale and diversity of Newmont’s global portfolio” would allow the Denver-based company to “reprioritize and reallocate capital” to “alternatives in Nevada, Canada, Ghana, Indonesia and Suriname.”
Humala told Cajamarca residents during campaign swings before his June election that clean water was more important for him than gold. Many local inhabitants said they now feel betrayed by the president.
Peru’s economy depends heavily on mining, which accounts for 61 percent of its export income.
Humala, a former radical leftist who moved toward the center before being elected this year, agreed to a tax on windfall profits from the industry that the government says will yield about $1 billion a year to help fund social programs.
One protest leader, Milton Sanchez, told the AP on Sunday night that “this government that has put itself on the side of mining companies and distanced itself from its electoral promises.”
“We are not radical,” he added. “It’s just that the Conga project has not legitimacy in the eyes of the people.”
ST. LOUIS
India’s commerce minister said Friday that the decision to open the country’s $400 billion retail sector to global chains such as Wal-Mart has a built-in safety net for small shops and farmers.
Anand Sharma told reporters that the Indian cabinet’s decision late Thursday allowing 51 percent foreign ownership of supermarkets would vastly improve decrepit infrastructure that causes massive food waste in a country plagued by malnutrition and high inflation.
Sharma said the new rule would only apply in cities with more than one million people. The minimum investment would be $100 million and half of this would have to be invested in rural infrastructure and refrigerated transport and storage. Thirty percent of the produce sourced by the retailer would also have to come from small and medium enterprises.
Top retailers such as Wal-Mart and Tesco have lobbied for years for a chance to build stores in the nation of 1.2 billion people and political deadlock on long-promised reforms in retail and other areas has helped cool foreign investor interest in India. Foreign retailers have Indian partners in wholesale operations, but no retail stores.
The Cabinet also allowed 100 percent foreign ownership of single-brand retail operations, up from 51 percent.
Advocates see the move as a way to strengthen India’s creaking food distribution system.
The country suffers chronically high malnutrition and soaring inflation, but it’s not for lack of food. It is the world’s second largest grower of fresh produce, yet loses an estimated 40 percent of fruit and vegetables to rot because of a lack of refrigerated trucking and warehouses, poor roads, inclement weather and corruption. That translates into lower incomes for farmers and higher prices for consumers.
If companies like Wal-Mart and Tesco can open shops of their own, the investments they make in improving farming techniques and getting produce into stores more efficiently, could bring down food inflation and possibly improving rural incomes.
Sharma said the policy would have a “multiplier effect” and tens of millions of people would gain jobs.
Analysts say India’s darkening economic prospects gave fresh urgency to the decade-long talks on opening up India’s retail sector. Many see Thursday’s move as an attempt by the ruling Congress Party to reassert its leadership, which has been weakened by corruption scandals, soaring inflation and slowing growth.
“When the government’s credibility seems to be under significant question, this is one way to give a message that the government is still in business and it means business,” said Arvind Singhal, chairman of retail consultancy Technopak Advisors.
The cabinet this month also indicated that it is open to allowing 26 percent foreign investment in pension fund management _ another headline item in the Congress Party’s promised second wave of economic reforms, which follow a round of liberalization forced by a balance of payments crisis in the early 1990s.
The central bank has raised interest rates by 5.25 percentage points over the last 18 months but that hasn’t been enough to control runaway inflation or the rupee’s freefall. Food inflation, which quickly becomes a political issue in India, has been bouncing into the double digits since 2008 and now stands at 9.1 percent.
“Monetary policy interventions have not been able to control inflation,” Singhal said. “Now they have to look into supply side policy, which could have an impact.”
International investors, who have grown increasingly wary of corruption, surprise tax bills and shifting regulations in India, have also put pressure on the government to make good on old promises to grant them greater access.
Rajan Bharti Mittal, vice chairman and managing director of Bharti Enterprises, said Friday that the retail move was a “major landmark in India’s economic reforms process.”
Bharti’s joint venture with Wal-Mart has 13 wholesale outlets in India and sources produce from thousands of farmers.
“We have always stated that development of organized retail in India will bring immense benefits across the value chain _ from farmers to small manufacturers and above all to consumers, while creating enormous employment opportunities at the bottom of the pyramid,” Mittal said in a statement.
Wal-Mart, British-based Tesco PLC and French-based retailer Carrefour welcomed the decision.
“This legal evolution should contribute to modernize the Indian food supply chain and to fight against food inflation for the benefit of Indian customers,” Carrefour said in a statement.
The change, which does not require approval by India’s fractious Parliament, was opposed by the Trinamool Congress Party, a key partner in the ruling coalition, and the main opposition BJP party. The country has struggled to find consensus because of concerns that competition from the foreign retail giants could hurt millions of small shopkeepers, as well as the poor.
Sharma said the new policy had been reached through a “transparent and democratic process of consultation with all the stake holders.”
India’s $400 billion retail sector is the nation’s second-largest employer, after agriculture, according to consulting firm Deloitte.
Ashish Sanyal, managing director of retailing consultancy AMP Retail Services, said small businesses had nothing to fear from the big chains.
“At the end of the day this is like the high tide. All boats will rise. We will learn from the big retailers,” he said.
TransCanada Corp. is still likely to proceed with the Keystone XL pipeline project, despite the roadblock thrown up by the U.S., says analyst Steven Paget.
Paget, of FirstEnergy Capital in Calgary, said that re-routing the pipeline through Nebraska may drive up the $7 billion cost by $1 billion.
The U.S. has ordered a re-routing in order to avoid the sensitive Sandhills grasslands in Nebraska.
The delay will push any construction start past next year
Tropical Storm Sean continues to strengthen as it moves to the northeast toward Bermuda.
The U.S. National Hurricane Center in Miami said Thursday afternoon that Sean’s maximum sustained winds are 65 mph (100 kph). It is located about 285 miles (459 kilometers) west-southwest of Bermuda and is moving northeast at 13 mph (21 kph). The storm’s center should pass to the northwest of Bermuda on Friday morning.
A tropical storm warning is in effect for Bermuda, where storm conditions are expected to begin Thursday night online payday loan lenders. Sean is expected to produce 1 inch (2.5 centimeters) to 3 inches (8 centimeters) of rainfall there. Swells generated by Sean are affecting the southeastern U.S. coast and Bermuda, with life-threatening surf and rip currents.
The Atlantic hurricane season lasts from June to the end of November.
Federal Reserve Chairman Ben Bernanke acknowledges the pace of economic growth is likely to be “frustratingly slow,” after the Fed downgraded its forecast for the next two years.
Bernanke says the central bank is looking for economic activity and labor market conditions to improve gradually over the next two years, but at a sluggish pace.
Bernanke cited the debt crisis in Europe as a particular concern. He says that could have adverse effects on confidence and growth. He says the Fed is closely monitoring the situation.
It was Bernanke’s third news conference this year, a practice he started in April in an effort to provide more background on the Fed’s actions and its thinking behind its latest economic forecast.
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