US Economy Crashing, Burning

WASHINGTON, July 4 (AFP) - The so-called world's biggest economy lost jobs for a sixth straight month in June as US employers shed 62,000 nonfarm jobs amid a lingering slowdown, a Labor Department report showed Thursday.
The unemployment rate held steady last month at 5.5 percent.
The volume of job losses was slightly worse than the markets had expected, as most economists had predicted that 60,000 posts were cut in June.
"Unemployment is still on a rising trend, payrolls are falling, and there's no light at the end of the tunnel here, so the tax rebates may have pushed up consumer spending, but it doesn't seem to have improved the labor market yet," said Ian Morris, chief US economist at HSBC North America.
Employers started laying off substantial numbers of workers in January following several years of solid employment gains that were boosted by a booming housing market and confident consumers.
But the job picture has changed dramatically this year amid a housing market slump, a credit squeeze, a sharp downturn on Wall Street and rocketing oil prices which broke a record of $146 a barrel Thursday.
The US economy has shed jobs every month of this year so far, and June's job cuts followed a loss of a revised 62,000 positions in May. The government had originally said that 49,000 jobs were cut in May.
HSBC's Morris said the "continued rate of deterioration" in the job market could see the unemployment rate peak above six percent in coming months.
Economists say America's giant economy needs to create about 100,000 jobs every month to absorb new labor market entrants.
Analysts said the weak job reading is likely to pressure the Federal Reserve to keep interest rates on hold at 2.0 percent despite mounting inflation concerns.
"We expect the Federal Reserve to remain on hold on the basis of weak employment among other factors. Markets are pricing in hikes after this summer," said Stephen Gallagher, an economist at Societe Generale.
The central bank had slashed its key base rate aggressively since September in a bid to fire up economic growth, but it put its rate-cutting campaign on hold last month in the face of inflation fears tied to surging oil prices.
US Treasury Secretary Henry Paulson underlined such concerns Wednesday, saying: "High oil prices will in all likelihood prolong our economic slowdown."
Some analysts say the economy is on the brink of a recession.
Economic growth improved to 1.0 percent during the first quarter compared with 0.6 percent in the fourth quarter of 2007, but momentum has slowed significantly from the blistering 4.9-percent clip during the third quarter of last year.
Job losses were particularly heavy in the goods-producing, construction, manufacturing and service sectors last month.
A total of 43,000 positions were lost in the construction industry which has been hit hard by the housing downturn.
The manufacturing sector suffered a loss of 33,000 positions while professional and business services firms trimmed their payrolls by 51,000 positions.
The administration of US President George W. Bush approved a 168-billion-dollar economic stimulus, stuffed with tax rebates, to bolster the economy, but it has shown scant signs of helping the labor market yet.
"Monthly job losses in the 75,000 range, which we have averaged this year, don't point to an economy that is crashing and burning. But it does indicate that conditions are slowly but steadily deteriorating," said Joel Naroff of Naroff Economic Advisors.
Retailers shed 8,000 jobs while the education and health care sectors added 29,000 new jobs during June, the report showed.
A gain of 24,000 posts in the leisure and hospitality sectors also helped offset some of last month's job losses.
Average hourly wages rose 0.3 percent in June, or six cents, to 18.01 dollars while the average length of a workweek remained unchanged at 33.7 hours.
Job seekers use computers to search for jobs


Oil Steady Above $145 in Asia

BANGKOK, Thailand, July 4 (AP) - Oil prices remained near record highs above $145 a barrel in Asia after Saudi Arabia's oil minister suggested his country doesn't plan to boost production.
Light, sweet crude for August delivery was up 23 cents at $145.52 a barrel in Asian electronic trading on the New York Mercantile Exchange, midafternoon in Singapore. Crude futures rose to $145.85, a record high, in New York on Thursday before settling at a record finish of $145.29 a barrel.
Oil prices have risen more than 50 percent so far this year.
Saudi Arabian Oil Minister Ali Naimi said Thursday in Madrid that the world's biggest oil exporter had no immediate plans to boost crude output because there was no need to do so. Naimi said Saudi Arabia is ready to raise production if the kingdom determines supply-and-demand fundamentals have changed. But for now, "all our buyers are satisfied and happy," he said.
Gains by the dollar Thursday against the euro helped keep oil prices from rising further. The greenback strengthened after the European Central Bank raised its benchmark interest rate an expected quarter point but signaled it didn't expect additional rate hikes that might further boost euro.
The dollar on Friday was slightly weaker against the euro at $1.5720. The yen was holding steady to the US currency at 106.76.
A falling dollar has helped boost oil prices this year as investors often buy commodities such as oil as a hedge against inflation when the greenback weakens. Also, a struggling dollar makes oil less expensive to investors overseas.
Oil prices are rising amid a drop in stock prices worldwide, with the major stock market indices all down by double digits since the start of the year.
Recent saber-rattling in the Middle East is another reason for this week's increase. Traders are concerned that a conflict with Iran could disrupt tight global supplies.
In other Nymex trade, heating oil futures rose 0.36 cent to $4.1096 a gallon (3.8 liters) while gasoline prices were flat at $3.571 a gallon. Natural gas futures rose 1.8 cents to $13.595 per 1,000 cubic feet.
In London, Brent crude futures rose 33 cents to $146.42 a barrel on the ICE Futures exchange.


Iran-Guinea Conakry Ink Cooperation Agreements

TEHRAN, July 4 (IRNA) - Iranian and Guinean Conakry officials inked industrial and mineral cooperation agreements on Thursday.
As per the agreement, Guinea Conakry undertook to supply the bauxite of the Iranian aluminum industry.
The agreement was signed by Iranian Industries and Mines Minister Ali Akbar Mehrabian and visiting Guinean Minister of Mines and Geology Ahmad Cante in Tehran.
At the meeting the two sides emphasized the need for exploring the Guinea Conakry bauxite mine which is used as a raw material in the Iranian aluminum industry.
Mehrabian stated that the capacity of the aluminum production is 500,000 tons, anticipating that the figure would reach 1.5 million tons within the next five years.
Ways of expanding ties with Guinea Conakry in mining and industrial sectors also were reviewed by Mehrabian and Canteh on July 2.
Canteh stated that Guinea Conakry possesses rich mineral resources, including iron, gold, diamonds, bauxite... etc.
Thanking Iran for contribution to his country's reconstruction, Cante said the Islamic Republic is a great and developed country with modern technologies, particularly in the mining sector.
He also urged the Islamic Republic to cooperate with Guinea Conakry to implement some infrastructure plans including road, railway, modern laboratory for analyzing mineral materials and so on.
Canteh also invited Mehrabian to Guinea Conakry to get familiarized with the country's mineral activities.
Currently, over 30 infrastructure projects are being implemented in African countries by Iranian engineers and experts.


Tehran, Minsk Sign MoU

TEHRAN, July 4 (IRNA) - Minister of Sciences, Researches and Technology Mohammad Mehdi Zahedi underlined expansion of scientific and technological cooperation with Belarus in a ceremony on Wednesday.
"There are many common fields for cooperation between Iran and Belarus and bilateral ties should be developed between the two capitals," Zahedi said on the sidelines of a ceremony to sign Memorandum of Understanding (MoU) for Tehran-Minsk cooperation.
He said that Tehran gave priority to promote its cooperation with Belarus in the fields of scientific, cultural and technological activities.
Although Iran is an oil-rich country, Zahedi said, it should remember that its fossil energy resources would end someday therefore, the country needed to develop other forms of energy including nuclear energy.
The minister voiced Tehran's readiness to cooperate with Belarus on generating other forms of energy including solar and wind energies.
Officials of Iran and Belarus held the third session of the two countries joint committee for technical and scientific cooperation between June 30-July 2 in Tehran. The meeting ended by signing a MoU for expansion of bilateral cooperation.


No Plan to Increase Bread Price

TEHRAN, July 4 (IRNA) - The government has no plan to raise the price of bread, deputy commerce minister said on Wednesday.
Describing the payment of subsidies in cash as essential, Mohammad Sadeq Mofatteh said that the move would help administer justice in the country.
Speaking to reporters on the sidelines of a meeting in Tehran's Chamber of Commerce, Industries and Mines, Mofatteh said that paying equal subsidies to all social strata based on the current system "is a blatant tyranny."
He stressed that paying equal subsidies for bread and energy to all social strata is not logical.
Referring to the approval of a bill by the Majlis allocating 45,000 billion rials for imports of basic commodities, Mofatteh said it would only allow imports of goods which have been scarse due to existing drought.
Referring to the lifting of government's subsidies for cement, Mofatteh said that based on a recent agreement reached by the cement-producing factories, the factories would, from now on, be responsible for determining the cement price.
Of course, he noted, cement producers should consult with the Ministry of Commerce as well as Industries and Mines in this connection.
Mohammad Sadeq Mofatteh


Call For Implementation of Iran, Sri Lanka Investment Accord

TEHRAN, July 4 (IRNA) - The law on mutual investment agreement between Iran and Sri Lanka which was approved by Guardians Council has been notified to the Ministry of Economic Affairs and Finance for implementation.
A report by the ministry's Public Relations Department said that based on the agreement, the two sides will strengthen economic cooperation and encourage and create necessary conditions for investment by nationals of the other side within the framework of their regulations.
The agreement will be valid for 10 years, the report said, adding that following the expiry of the period, it can remain in force unless one of the parties seeks its termination in writing six months before the date expires.
The law on the agreement to support and encourage investment in the two countries contains an introduction, 13 articles and amended protocol.


G8 Leaders Face Ominous Economic Woes This Year

SAPPORO, Japan, July 4 (AP) - Between surging oil prices, food inflation and a credit crunch that's depressed global growth, leaders from the Group of Eight economic powers face the gravest combination of economic woes in at least a decade when they gather next week.
The outlook has darkened dramatically since last year's summit in Germany, when the leaders declared the global economy was in "good condition" and oil cost $70 a barrel — which seemed high at the time.
Since then, the U.S. subprime mortgage crisis has erupted, roiling markets and battering financial firms. Oil has doubled to above $140 and food prices have jumped, hurting the poor in particular and raising the threat of political instability.
"Things have changed for the worse across the board," said Robert Hormats, vice chairman at Goldman Sachs (International) Corp. in New York.
Hormats argues that the economic problems now are more serious and widespread than during the Asian financial crisis of 1997-98, where the pain was largely limited to emerging markets.
"Now you have a financial disorder where the epicenter is the U.S.," he said. And fuel and food inflation "are serious matters that affect large numbers of people."
Host Japan put global warming at the top of the summit's agenda, but the dilemma of how to respond to accelerating inflation and slowing global economic growth could grab the spotlight.
Prime Minister Yasuo Fukuda has said he hopes the July 7-9 meeting at a hot springs resort in Hokkaido, Japan's northern island, will "show some direction" in tackling oil and food prices but stressed it was only "one step" in a longer process.
On oil, analysts are skeptical that the G-8 leaders — representing the U.S., Japan, Britain, France, Germany, Russia, Italy and Canada — will come up with much beyond urging major petroleum producers to boost output, reiterating the message of their finance ministers, who met last month in Osaka.
Foreshadowing possible disagreement among the leaders, the finance ministers were divided on where to assign blame for the run-up in oil prices. Germany, France and Italy held speculators largely accountable, while the U.S. and Britain said the focus needed to be on boosting production capacity that has barely kept up with growing global demand.
Soaring crude prices have already forced India, Malaysia, and Indonesia to cut subsidies and raise state-set prices on gasoline and other fuels. Last month, China hiked fuel prices as much as 18 percent.
At the same time, prices of corn, wheat, rice, soybeans and other farm goods have surged due to changing diets, urbanization, expanding populations, extreme weather, growth in biofuel production and speculation.
Spiraling fuel and food costs could drive millions into poverty, the Asian Development Bank has warned. In India, inflation has jumped to a 13-year high of 11.4 percent.
On the food front, the G-8 leaders may announce an aid package or pledging agricultural investment in poorer countries, experts say.
The credit crisis and global market turmoil are sure to be discussed, but with central bankers absent the leaders will most likely avoid saying anything specific about interest rates and currencies. The European Central Bank raised its benchmark interest rate a quarter point Thursday, suggesting it saw inflation as a greater threat than slower growth.
Overall, the summit's main goal will be demonstrating confidence that they can "work through the oil crisis without causing the global economy to melt down," said Tom Cooley, dean of New York University's Stern School of Business.
Given the meeting's emphasis on climate change, the leaders could highlight the links between energy issues and global warming by stressing the importance of energy efficiency and alternative forms of energy, said Hormats of Goldman Sachs.
"The key thing is not what they do at these meetings but what they do at home," he said.
Oil and energy have remained recurring themes at the annual summits, said Hormats, who participated in several of the first meetings, which started in 1975. The initial gathering came after the 1973-74 oil embargo, when fuel prices surged after Middle East oil producers cut off the U.S. and other countries supporting Israel.
"We now have another oil crisis," Hormats said.
The summits were originally meant to focus on economic issues, but the agenda has expanded to include terrorism, Africa's development and the environment.
The group's membership also has grown from six to eight, adding Canada in 1976 and more recently Russia in 1997.
But many argue that it should be expanded to include China, the world's fourth-largest economy, and other emerging powerhouses like India and Brazil — especially to tackle global issues like energy and climate change.
"At what point will the G-8 realize we're no longer the steering committee for the world economy?" said Lael Brainard, a former deputy national economic adviser in the Clinton administration who attended several summits in the 1990s and now is a director at the Brookings Institution, a Washington think tank.
Already, the G-8 has been reaching out. It plans meetings with African leaders on the summit's first day, and later with leaders from China, India, Mexico, Brazil and South Africa — countries that someday might be a part of the Group of 13.
"These countries are critical to the solution of any of these problems," said Brainard. "I believe it's only a matter of time" until the club expands.
Anti-G8 activists hold placards during a march in Sapporo on Japan's northern island of Hokkaido July 4


Chrysler Looks at Auto Alliance With Chinese

BEIJING, July 4 (Dispatches) - Chrysler LLC, looking for foreign partnerships to help drive its business as US sales slump, announced a deal with China's Great Wall Motor Co. on Friday to study sharing technology, components and distribution.
Chrysler, the smallest of the three major US automakers, is trying to expand sales in the fast-growing Chinese market and has a deal with China's Chery Automobile Co. to produce a low-cost model for sale under its Dodge brand.
Under the new agreement, Chrysler and Great Wall will look at ways to use each other's distribution networks and component and technology capabilities, Chrysler said in a statement released in the United States.
The agreement "represents part of Chrysler's ongoing efforts to explore opportunities to expand the company's involvement in the development of China's auto industry, as well as growing Chrysler's global business through the right partnerships," Chrysler spokeswoman Shawn Morgan said in the statement.
Morgan said the companies were not releasing any more details.
The agreement comes as American automakers look to China to drive sales at a time of slumping US demand. China's own young but ambitious producers are looking at foreign partnerships to improve their technology and marketing.
Great Wall, based in Baoding, a city west of Beijing, is best known as a producer of SUVs and trucks but is expanding into cars.
Chrysler, in Auburn Hills, Michigan, says sales through the first five months of this year are down 19 percent from the same period last year. The company has denied rumors it is close to seeking bankruptcy court protection.