Finance Blog number 1

U.K. factory output prices unexpectedly fell in December for the first time in 18 months as the cost of petroleum products such as gasoline plunged.

The cost of goods at factory gates declined 0.2 percent from November, the Office for National Statistics said today in London. Annual price growth slowed to 4.8 percent, the least in a year. On the month, economists had forecast a 0.1 percent gain in December, according to the median of 17 estimates in a Bloomberg News survey.

Declines in prices for commodities such as oil may ease inflation pressure in the economy as producers and manufacturers pass lower costs onto consumers. The Bank of England, which maintained its bond-purchase target at 275 billion pounds ($422 billion) yesterday, has forecast that consumer-price growth will ease

America’s retailers enjoyed a record 2011 and their first $400 billion sales months ever. But the final month of the year was a dud.

Sales eked out a 0.1 percent increase in December, lifting sales to a seasonally adjusted $400.6 billion.

It was the second straight month that sales have topped $400 billion. The government revised November sales to show a 0.4 percent gain, twice the original estimate.

For all of 2011, sales totaled a record $4.7 trillion. That was a gain of nearly 8 percent over 2010 _ the largest percentage increase since 1999.

Steady sales gains have fueled a 20 percent surge from the low during the Great Recession. Monthly sales are even 6 percent above their pre-recession high. The figures confirm evidence that the economy was strengthening as 2011 ended.

Still, December’s increase was the weakest in seven months. Excluding volatile auto purchases, overall sales actually fell 0.2 percent. It was the first such drop since May 2010.

Part of the reason was lower gasoline prices. Those prices reduced sales at gasoline stations by 1.6 percent. Excluding gas stations, overall retail sales would have risen 0.3 percent in December.

Another factor was heavy discounting during the holiday shopping season. Many retailers said they had to offer cut prices in December to attract shoppers.

Separately, more people applied for unemployment benefits last week, the government said. Applications rose 24,000 to a seasonally adjusted 399,000. But the gain was largely due to companies letting go of workers after the holiday season.

Economists downplayed the increase. It followed three months of declines that had reduced the number of unemployment applications to their lowest level in more than three years.

And businesses increased their stockpiles in November to meet rising consumer demand. That gain likely boosted economic growth in the final months of 2011. Companies are rebuilding stockpiles after cutting them last summer amid fears of another recession. It means many anticipate higher consumer spending.

The government’s report on retail sales showed that holiday discounts weakened department store sales. They fell 0.2 percent in December. A broader category that includes department stores like Macy’s and big chains such as Wal-Mart showed an even larger drop last month: 0.8 percent.

Compared with the same time last year, retail sales have risen 6.4 percent.

An earlier survey of 25 major retail chains by the International Council of Shopping Centers found that revenue in December at stores open at least a year rose 3.5 percent over the same month a year ago.

That survey’s figures aren’t adjusted for seasonal changes; the government’s sales figures are. The government report is also a broader gauge. It covers purchases at all retailers, not just at major national chains. It also includes auto dealerships, restaurants and bars, grocery stores and gasoline stations.

Though December’s retail sales were disappointing, analysts said they still expect consumers to help the economy strengthen further, especially because businesses have stepped up hiring payday loan no faxing. More jobs mean more people with money to spend.

“Although consumer spending is not particularly robust, households do continue to spend and provide moderate support for the overall economy,” said Steven Wood, chief economist at Insight Economics.

The strength last month was led by a 1.5 percent jump in auto sales. Furniture store sales rose 1 percent. Hardware stores reported a 1.6 percent increase. But sales at electronics and appliance stores sank nearly 4 percent.

Restaurants and bars fared slightly better over the holidays. Their sales rose 0.7 percent.

The government’s retail sales report is its first look each month at consumer spending, which accounts for roughly 70 percent of economic activity. A healthy report typically signals a stronger economy.

Compared with the same time last year, retail sales have risen 6.4 percent.

This week, the Federal Reserve issued a report saying the final six weeks of 2011 were among the economy’s best last year. The report pointed to higher holiday and auto sales, along with increased travel.

The job market has brightened, too. Employers added 200,000 jobs in December. And the unemployment rate fell to 8.5 percent, the lowest in nearly three years.

Many analysts predict that economic growth rose to an annual rate of roughly 3 percent in the final three months of 2011. That would be an improvement from the summer, when the annual rate was just 1.8 percent. And it’s much better than the 0.9 percent growth rate in the first six months of 2011.

For the holiday season, many retailers drew customers by staying open on Thanksgiving Day or offering sharp discounts. Discounting helped generate record sales at the start of the shopping season and in the days before Christmas.

U.S. automakers have said that November and December were their two best sales months in 2011. Their U.S. sales rose 10 percent to 12.8 million in 2011, a 23 percent jump from the recession year of 2009.

Chrysler Group reported sales surged 26 percent for all of 2011. General Motors Co. saw sales rise 13 percent for the year. Ford Motor Co. reported an 11 percent gain for 2011.

Because the government’s retail sales report is seasonally adjusted, the current month can be compared with the previous month. But the figures aren’t adjusted for inflation.

A separate government report each month measures consumer spending. It’s an even more inclusive gauge. It covers all spending at retailers _ for both durable goods like cars that are expected to last for years and nondurable goods such as food.

This report also covers spending on services. Services include items such as doctor’s visits, airline tickets, apartment rentals and utility bills. The service category makes up two-thirds of consumer spending and isn’t covered in the retail surveys.

Source

Republican Senators Orrin Hatch of Utah and Bob Corker of Tennessee criticized the Federal Reserve for overstepping its role by making policy recommendations on how the U.S. government should try new ways to spur the housing market.

Hatch, the top-ranking Republican on the Senate Finance Committee, said the housing study sent by Chairman Ben S. Bernanke to Congress last week, along with recent Fed speeches,

Banks will be allowed go below minimum liquidity levels set by global regulators during financial crises to avoid cash-flow difficulties.

(Corrects number of electoral votes in next to last paragraph. For more campaign news, see ELECT)

President Barack Obama called yesterday

U.S. stock futures are falling Thursday as the European debt crisis again becomes the key driver of market sentiment.

Stock markets in London, Germany and France have all declined. The euro has dropped to a 15-month low against the dollar.

The concern in the markets has centered on the state of Europe’s banks following UniCredit’s announcement Wednesday that it was selling new shares at a large 69 percent discount to Tuesday’s closing price.

Banks are an integral part of the debt crisis because they hold government bonds. A default or steep fall in the value of government bonds could inflict heavy losses on banks and choke off credit to the European economy. That’s why regulatory authorities want Europe’s banks to raise their buffers by euro115 billion (149 billion) over the next few months. The worry in the markets is that banks will have to offer sharp discounts to raise the funds.

U.S. economic reports have the potential to shift sentiment. Key releases later Thursday include the Institute for Supply Management’s monthly survey of the services sector as well as indicators on the pace of hiring in the private sector.

The latter may affect market expectations for Friday’s closely-watched nonfarm payrolls data for December. The figures often set the market’s tone for a week or two after their release. The expectation is that the U No teletrak payday loan.S. economy generated around 150,000 jobs during December.

Positive economic news propelled U.S. stocks to a big rally on Tuesday. Those gains held Wednesday as automakers reported strong sales in December.

Less than two hours before trading opens in New York, futures on the Dow Jones industrial average are down 55 points to 12,301. Futures for the broader S&P 500 index have fallen 7 points to 1,266.

European stocks fell, though most indexes remained higher for the year so far. Germany’s DAX was down 0.7 percent at 6,066 while the CAC-40 fell 1 percent to 3,163. The FTSE 100 index of leading British shares was 0.7 percent lower at 5,629.

Earlier in Asia, Japan’s Nikkei 225 index fell 0.8 percent to close at 8,488.71. South Korea’s Kospi index lost 0.1 percent at 1,863.74, while Hong Kong’s Hang Seng Index rose 0.5 percent to 18,813.41. Benchmarks in Singapore and Taiwan were also higher.

Mainland China’s benchmark Shanghai Composite Index lost 1 percent to 2,148.45, its lowest level in almost three years. The Shenzhen Composite Index lost 3.5 percent to 813.99. More than 100 companies plunged to the daily limit of 10 percent.

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LONDON

FRANKFURT

North Korea said solving food and power shortages are urgent goals in 2012, and called on its people to defend Kim Jong Un, who inherited control of a country struggling to feed itself after 60 years of totalitarian rule.