US factories post rebound, consumer sentiment shaky
US factories post rebound, consumer sentiment shaky
Other data yesterday showed a drop in new claims for jobless benefits, although they remained elevated due to superstorm Sandy, and only a marginal improvement in consumer sentiment.
Financial information firm Markit said its US "flash," or preliminary, manufacturing Purchasing Managers Index rose to 52.4 from a three-year low of 51.0 in October. A reading above 50 indicates expansion.
Output in the factory sector and domestic new orders also grew at their fastest pace since June, while the pace of hiring in the factory sector was the swiftest in four months.
Some respondents said efforts to rebuild after Sandy may have accounted for some of the increased demand.
The data gives a positive signal for economic growth in the last three months of the year, although Sandy continues to make it more difficult to read the underlying health of the economy.
"Stripping out the short-term boost from Sandy, however, and output is probably flat," said Paul Dales, an economist with Capital Economics in London.
"That's unlikely to change much when the global economy is set to remain weak," he said.
Separately, the Labor Department said initial claims for state unemployment benefits dropped 41,000 to a seasonally adjusted 410,000. That was smack in line with the median forecast in a Reuters poll.
Despite the drop, the level of claims remained elevated due to Sandy, a sign of the substantial disruption to the labor market from the storm. That will likely prove temporary, although economists thought yesterday's data nevertheless pointed to a struggling jobs market.
"There appears to be a noticeable deceleration of growth in the fourth quarter," said Peter Hooper, an economist at Deutsche Bank in New York. "It would not be surprising if some of the new jobless claims are due to underlying weakness," he said.
US financial markets showed little reaction to the data as investors focused on developments in Europe and trading slowed ahead of the Thanksgiving holiday on Thursday. US stocks rose, while Treasury debt prices were down modestly.
An analyst from the Labor Department said several states were still reporting an increase in claims due to Sandy, a mammoth storm that slammed into the East Coast on Oct. 29.
The storm left millions of homes and businesses without electricity, shut down public transportation and led many factories in the Mid-Atlantic and Northeast to curtail production. Retail sales fell as Sandy slammed the brakes on automobile purchases last month.
The data covers the same week when the department collects data for its estimate on hiring during the month, and gives some reason to expect softness in that report due on Dec. 7, although not all analysts expect a significant impact. Nonfarm payrolls grew 171,000 in October.
"We are expecting things to be in the neighborhood of what we have seen, maybe with a pullback in light of the hurricane," said Bricklin Dwyer, an economist at BNP Paribas in New York.
Growth in the US economy has looked uneven in recent months, with business investment sagging due to fears that Congress will slash the budget deficit next year, while consumer spending and the housing market have shown some strength.
Several months of improvement in US consumer sentiment stalled at the end of November as uncertainty grew over federal tax and spending programs next year, a survey showed.
The Thomson Reuters/University of Michigan's final November reading on the overall index on consumer sentiment came in at 82.7, a touch up from 82.6 the month before, but down from a preliminary reading of 84.9 released earlier in the month.
A gauge of future US economic activity rose marginally in October, pointing to modest growth in the near term.
The Conference Board said its Leading Economic Index increased 0.2 percent to 96.0 after advancing 0.5 percent in September. It was the second consecutive month of gains and was in line with economists' expectations.
"Based on the trends, the economy will continue to expand modestly through the early months of 2013," said Ken Goldstein, an economist at the Conference Board.
Another report showed applications for US home mortgages eased last week as interest rates edged up, though demand for new loans improved.
Malaysia sets up task force to probe 1MDB scandal
- 1Malaysia Development Berhad was set up in 2009 ostensibly to promote the development of the Malaysian economy
- Huge sums of money from the fund are believed to have been funneled round the world in a complex web of transactions
KUALA LUMPUR: Malaysia on Monday set up a task force to probe allegations that billions of dollars were looted from sovereign wealth fund 1MDB in an audacious fraud overseen by ousted leader Najib Razak.
New Prime Minister Mahathir Mohamad led a reformist alliance to a shock victory at the May 9 polls over Najib’s coalition, which had governed Malaysia uninterrupted for over six decades.
A major reason for the success of 92-year-old Mahathir was public disgust at allegations of endemic corruption among the country’s ruling elite, and in particular an explosive scandal surrounding state fund 1MDB.
The fund, 1Malaysia Development Berhad, was set up in 2009 ostensibly to promote the development of the Malaysian economy.
But it is alleged that Najib, his family and cronies looted the investment vehicle in a massive fraud stretching from the Cayman Islands to New York, with stolen funds used to buy everything from real estate to artworks.
Since Najib’s ouster, Malaysians have been gripped by a series of police raids on properties linked to the ex-leader, which have yielded a stash of hundreds of luxury handbags believed to belong to his despised wife Rosmah Mansor, as well as suitcases stuffed with cash and jewels.
Mahathir — who first served as premier from 1981-2003 and came out of retirement to take on Najib — had pledged to reopen probes into 1MDB.
The new task force will be charged with seizing back assets and pursuing legal action against those suspected of breaking the law in relation to the fund, said the prime minister’s office.
“The government hopes the setting up of this task force, comprising a multi-agency enforcement unit, will help restore the dignity of Malaysia that has been tainted by the 1MDB kleptocracy scandal,” said Mahathir’s office.
The task force will include representatives of the anti-graft agency, the police and the attorney-general’s office. Some of those on the body were part of previous probes into the controversy but were pushed out by Najib’s regime as he moved to shut down domestic investigations.
Several current and former senior government officials will lead the task force, including Abdul Gani Patail, the former attorney-general who was removed from his post in 2015 as he was leading investigations into 1MDB.
Huge sums of money from the fund are believed to have been funneled round the world in a complex web of transactions, and the task force’s remit will include reaching out to law enforcement agencies in other countries, including the US, Switzerland, Singapore and Canada, according to Mahathir’s office.
The US Statement Department alleges in civil lawsuits that $4.5 billion was stolen from 1MDB and sent to the US, where it was spent on funding the Hollywood film “The Wolf of Wall Street” and lavish purchases including Monet and Van Gogh paintings.
Najib and 1MDB have consistently denied any wrongdoing.
The ex-leader, 64, sought to mount a fightback over the weekend, insisting he had not stolen any public money during a speech to hundreds of supporters in the constituency where he has been an MP for decades.
Mahathir, a former mentor of Najib who turned on him over 1MDB, is determined to breathe new life into democratic institutions that suffered under the ex-premier’s increasingly authoritarian rule and usher in a new dawn for the country.
In a speech to civil servants Monday, Mahathir said that Malaysia’s debt had ballooned to more than one trillion ringgits ($251 billion).
“We must realize that before our country was respected, but now it is no longer respected,” he said.