December 5, 2006 > Business Highlights
NEW YORK (AP), Dec 01 _ For the first time in almost four years, the nation's manufacturing sector has shrunk, and its fall is firing warning flares for the job market, economists said on Friday.
In a widely watched report, The Institute for Supply Management, a trade group based in Tempe, Ariz., said its manufacturing index came in at 49.5 in November, behind October's reading of 51.2. A reading below 50 indicates the sector is contracting.
Manufacturing had been growing since June 2003.
Industries such as wood, furniture, appliances, fabricated metal and transportation equipment all slipped last month, hit by a housing market slump and bloated automobile inventories.
The index was one of two worrisome economic reports Friday. The Commerce Department said construction activity in October plummeted by the largest amount since 2001, and home building fell for the seventh month in a row, the longest decline on record.
Both reports raised concerns that the economy may be in for a hard landing, and stocks and the dollar fell.
NEW YORK (AP), Dec 01 _ Wall Street stumbled Friday after a key survey showed manufacturing unexpectedly contracted in November for the first time in more than three years, stoking concerns that the economy won't be able to achieve a soft landing. The major indexes ended the week with losses.
Stocks and the dollar were socked after the Institute for Supply Management said its index on manufacturing fell to 49.5 from 51.2 in October. Economists had been expecting 51.5. Anything under 50 indicates the manufacturing sector is contracting.
The report, based on a survey of corporate purchasing managers, was seen by some on Wall Street as possibly indicating that the Federal Reserve might have overshot the mark in more than two years of interest rate hikes that ended in June. Wall Street had been expecting the Fed would hold interest rates steady at its Dec. 12 meeting, and now there is a growing belief the central bank may soon cut rates because of economic weakness.
DETROIT (AP), Dec 01 _ With a slump in U.S. vehicle sales by Ford Motor Co. last month, the No. 2 domestic automaker was beaten out not only by Japanese rival Toyota Motor Corp. for the second time ever but by DaimlerChrysler AG as well.
Ford, which also detailed planned production cuts, said Friday that sales dropped 9.7 percent in November compared with the same period a year ago. The drop came as industry sales rose a modest 2.9 percent to nearly 1.2 million vehicles.
Toyota sold 196,695 vehicles in November, a 15.9 percent increase over November 2005, and DaimlerChrysler's were up 4.7 percent to 186,635, compared with Ford's 181,111. Sales by GM, the world's largest automaker, rose 6.1 percent to 293,558 vehicles in the U.S. last month, the most of any manufacturer.
CHARLOTTE, N.C. (AP), Dec 01 _ Bank of America Corp. announced Friday that its chief financial officer, Al G. de Molina, will resign at the end of the year and be succeeded by fellow executive Joe Price.
The announcement came just 15 months after de Molina was named to the position. In a statement, de Molina said he wanted to pursue other business opportunities.
Chairman and Chief Executive Kenneth D. Lewis said in a statement that de Molina had made contributions during his tenure.
Price, 45, is the risk management executive for the bank's global corporate and investment banking division. He joined Bank of America in 1993 from the accounting firm PriceWaterhouse.
PARIS (AP), Dec 01 _ Alcatel-Lucent opened for business Friday as one of the world's biggest telecom gear makers, signaling a new push into enterprise markets eight months after Alcatel agreed to buy U.S. rival Lucent in a deal worth $11.6 billion.
Former Lucent CEO Patricia Russo, who heads the new group from Paris, played down cultural differences that could hinder implementation of the combination completed Thursday between Paris-based Alcatel SA and New Jersey-based Lucent Technologies Inc.
Alcatel-Lucent also displayed its new logo _ an infinity sign over a purple background that Russo said conveyed ``warmth'' as well as distinction _ as shares of Alcatel-Lucent began trading in Paris and New York. The stock fell 0.6 percent to close at 10.06 euros ($13.28) in Paris.
With combined sales of 18.6 billion euros ($24.5 billion) in 2005, excluding businesses sold off, Alcatel-Lucent overtakes LM Ericsson AB's 16.4 billion euros ($21.6 billion) in revenue to control about 18 percent of the fiercely competitive market for telecom gear.
PARIS (AP), Dec 01 _ The board of Airbus parent EADS approved the launch of the Airbus A350 XWB, the mid-sized jet designed to rival Boeing's 787, the company said Friday.
In a statement, European Aeronautic Defence and Space Co. said funding for the new plane would come ``predominantly from the company cash flows,'' but gave no details. Its success would depend on the successful implementation of cost-cutting plans at Airbus, EADS said. It gave no timetable for when it would go into service.
The decision by the EADS board, meeting in Amsterdam, comes a week after shareholders called off an earlier board meeting amid a dispute over how the plane would be funded.
Friday's statement did not say whether the program would draw on government funding. The European Union and United States are already embroiled in World Trade Organization litigation over subsidies to Airbus and Boeing Co. A decision to fund the A350 XWB with state-guaranteed loans or launch aid _ repayable only if the program turns a profit _ could exacerbate the dispute.
WASHINGTON (AP), Dec 01 _ U.S. companies will need to know more about where they store e-mails, instant messages and other electronic documents generated by their employees in the event they are sued, thanks to changes in federal rules that took effect Friday, legal experts say.
The changes, approved by the Supreme Court's administrative arm in April after a five-year review, require companies and other parties involved in federal litigation to produce ``electronically stored information'' as part of discovery, the process by which both sides share evidence before a trial.
Federal and state courts have increasingly been requiring the production of such evidence in individual cases. The new rules clarify that the data will be required in federal cases.
NEW YORK (AP), Dec 01 _ The dollar fell against other major currencies Friday after disappointing economic news, capping off a week of sharp declines against the euro and pound.
The euro bought $1.3335 in afternoon New York trading, up from $1.3250 late Thursday in New York. Earlier in trading, the 12-nation currency hit another 20-month high of $1.3348 this week and is moving closer to its all-time high of $1.3667, set in December 2004.
The British pound rose to its highest level against the dollar since September 1992, prompting analysts to predict that the sterling would hit $2 by the end of the year. It hit $1.9805 in New York trading, up from $1.9661.
The dollar also weakened against the Japanese currency, falling 115.35 yen from 115.75 the day before.