Thursday, June 2, 2011

Today's links

1--ADP: Private Employment increased by 38,000 in May, Calculated Risk

Excerpt: ADP reports:

Employment in the nonfarm private business sector rose 38,000 from April to May on a seasonally adjusted basis, according to the latest ADP National Employment Report® released today. The estimated change of employment from March 2011 to April 2011 was revised down slightly to 177,000 from the previously reported increase of 179,000.
May’s ADP Report estimates employment in the service-providing sector rose by 48,000, marking 17 consecutive months of employment gains while employment in the goods-producing sector fell 10,000 following six months of increases. Manufacturing employment fell 9,000 in May following seven consecutive monthly gains.

Note: ADP is private nonfarm employment only (no government jobs).

This was well below the consensus forecast of an increase of 178,000 private sector jobs in May. The BLS reports on Friday, and the consensus is for an increase of 190,000 payroll jobs in May, on a seasonally adjusted (SA) basis. This is a very weak ADP report - and more evidence that the BLS report will be below consensus on Friday.

2--Cellphone Radiation May Cause Cancer, Advisory Panel Says, New york Times

Excerpt: A World Health Organization panel has concluded that cellphones are “possibly carcinogenic,’’ putting the popular devices in the same category as certain dry cleaning chemicals and pesticides, as a potential threat to human health.

The finding, from the agency’s International Agency for Research on Cancer, adds to concerns among a small but growing group of experts about the health effects of low levels of radiation emitted by cellphones. The panel, which consisted of 31 scientists from 14 countries, was led by Dr. Jonathan M. Samet, a physician and epidemiologist at the University of Southern California and a member of President Obama’s National Cancer Advisory Board....

Last year, a 13-country study called Interphone, the largest and longest study of the link between cellphone use and brain tumors, found no overall increased risk, but reported that participants with the highest level of cellphone use had a 40 percent higher risk of glioma. (Even if the elevated risk is confirmed, gliomas are relatively rare and thus individual risk remains minimal.)

3--ISM Manufacturing index declines to 53.5 in May, Calculated Risk

Excerpt: PMI was at 53.5% in May, sharply down from 60.4% in April. The employment index was at 58.2 and new orders at 51.0. All lower than in April.

From the Institute for Supply Management: May 2011 Manufacturing ISM Report On Business®

The report was issued today by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management™ Manufacturing Business Survey Committee. "The PMI registered 53.5 percent and indicates expansion in the manufacturing sector for the 22nd consecutive month. This month's index, however, registered 6.9 percentage points below the April reading of 60.4 percent, and is the first reading below 60 percent for 2011, as well as the lowest PMI reported for the past 12 months. Slower growth in new orders and production are the primary contributors to this month's lower PMI reading. Manufacturing employment continues to show good momentum for the year, as the Employment Index registered 58.2 percent, which is 4.5 percentage points lower than the 62.7 percent reported in April. Manufacturers continue to experience significant cost pressures from commodities and other inputs."

4--From the archive: Blacks Hit Hardest by Costlier Mortgages, New York Times

Excerpt: Regardless of income levels, blacks were about three times as likely as whites to borrow through more expensive "subprime" mortgages last year, according to a nationwide lending survey released Tuesday by the Federal Reserve.

The new report, based on data collected from 8,853 lenders, is the Fed's first attempt to look for evidence of racial and ethnic discrimination in the booming business in exotic mortgages and subprime lending.

Among low-income homebuyers, about 39.2 percent of blacks but only 12.9 percent of whites took out high-priced mortgages, which the Fed defined as loans with interest rates about 2 percentage points higher than those for "prime" customers with good credit.

For buyers of a $200,000 house last year, that would have meant about $3,000 extra in annual interest payments....

5--Cuts in US welfare programs hit hundreds of thousands of poor families, WSWS

Excerpt: US states are implementing drastic cuts to the Temporary Assistance for Needy Families (TANF) program, creating further hardships for 700,000 families that include 1.3 million children. The slashing of funding for TANF, the welfare program financed by block grants to states from the federal government, is part of an overall attack on all social programs in the US.

The impact and scale of the cuts are documented in a May 19 report issued by the Center on Budget and Policy Priorities (CBPP), a liberal policy group.

The CBPP report lists three areas of cuts being made by the states:

* Monthly cash assistance benefits have been cut in several states. This is pushing hundreds of thousands of families and children well below the poverty line.

* Time limits for receiving TANF benefits have been shortened. California and Arizona are two of the states carrying out such measures, which have the result of cutting off thousands of very poor families from any aid. Other state legislatures are discussing shortening time limits from 60 months to as short as 18 months.

* Working families with low incomes face cuts in TANF-funded supplements in several ways. Michigan’s Earned Income Tax Credit (partially funded by TANF) is being slashed by two-thirds, for example, raising state income taxes for several hundred thousand low-income working families. This is part of a state budget that sharply cut taxes for corporations and the wealthy. In other states, families are having their supplemental TANF benefits cut or eliminated.

6--After latest massacre, NATO to continue attacks on Afghan civilians, WSWS

Excerpt: The NATO command in Afghanistan Tuesday brushed aside President Hamid Karzai’s demand for a halt to air strikes and night raids on Afghan homes.

Karzai issued the demand in the face of mass popular outrage over a US air strike that killed 14 civilians—10 of them children and two of them women—in the southern Afghan province of Helmand on the night of May 28. It was only the latest in a series of atrocities carried out by American forces that have resulted in mass civilian casualties.

Speaking at a news conference in Kabul, the Afghan president declared, “From this moment, air strikes on the houses of people are not allowed.”

Karzai continued by warning: “If after the Afghan government said the aerial bombing of Afghan houses is banned and if it continues, then their presence will change from a war against terrorism to an occupying force. And in that case, Afghan history is witness to how the Afghans deal with occupying forces.”

The statement was a clear invocation of the CIA-backed war by the Afghan mujahideen which ended in the withdrawal of Soviet forces from the country in 1989. It also represented a tacit legitimization of the actions being carried out by armed Afghan opposition groups opposed to the current US-led occupation.

7---Chicago manufacturing gauge nosedives, Marketwatch

Excerpt: A Chicago-area manufacturing gauge dropped by the largest amount in nearly two-and-half years in May, in a further sign that the rise in oil prices and the Japanese earthquake have affected activity.

The Chicago PMI fell to a reading of 56.6% in May, the lowest reading since Nov. 2009, from 67.6% in April.

While that reading is still significantly above the 50-line indicating growth, the eleven-point drop is the biggest one-month deceleration since Oct. 2008 and was worst than the 60% reading that economists polled by MarketWatch anticipated.

Indexes for production, new orders and order backlogs each dropped by double digits. Inventories jumped, which in this case is more likely an indication of unplanned gains due to a lack of sales than stocking up in anticipation of better times ahead.

8-- US. consumer confidence declines in May, Marketwatch

Excerpt: Consumer confidence fell in May as Americans grew slightly more pessimistic about future job prospects and business conditions, according to a closely followed survey.

The nonprofit Conference Board said its consumer-confidence index fell to 60.8 in May — the lowest reading in six months — from a revised 66 in April. Economists polled by MarketWatch had forecast an increase to 67.5. Read our complete economic calendar and consensus forecast.

The decline in the Conference Board index conflicts with another consumer survey by Reuters and the University of Michigan that showed an increase in May owing to a drop in gas prices. Read MarketWatch report on sentiment survey.

Economists say the Conference Board index is more closely linked to the health of the U.S. labor market than the Reuters/Michigan survey, which might explain the difference.

Still, most economists were surprised by the decline. Some attributed the drop to the cost of gas, a downward spiral in housing prices, recent weakness in the economy, and even to a series of tornados and floods wracking parts of the U.S

9--Falling Home Prices Hit Big Banks, Fannie, Freddie, CNBC

Excerpt: Keeping your fingers crossed for the housing market is just the tip of the iceberg. Prices have now fallen, on this index, more than they did during the Great Depression. "On that occasion, the peak in prices was not regained until 19 years after they first fell," notes Paul Dales at Capital Economics.

So what about the banks? Sure, they took huge write-downs already, but there is clearly more pain to come, especially given that this report out today is actually a three month running average based on home sale closings in March, so really you could say the whole thing is based on sales contracts signed around six months ago. We've seen considerably more housing weakness since then.

"All will have to take new markdowns if these price pressures continue, which everything points to the fact that it will," says Peter Boockvar at Miller Tabak. "Bank balance sheets are still cluttered with mortgage loans, and they are still being asked to take back bad mortgages from those that bought them, like Fannie Mae and Freddie Mac, so the lower home prices go, the risk rises that another round of balance sheet write downs may be necessary."

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