Italian Prime Minister Matteo Renzi
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Italian Prime Minister Matteo Renzi
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FRANKFURT, Germany (AP) — As if the global economy didn’t have enough troubles, it looks like Germany, Europe’s traditional growth engine, risks falling into recession — or growth so weak it holds back the entire euro currency union’s weak recovery.
Europe’s largest economy has seen a run of lousy numbers for factory orders, industrial production, exports and business confidence. All that’s bad news because exporting industrial goods such as machines and cars is the heart of Germany’s globally linked economy.
And if Germany isn’t selling goods, it suggests other parts of the world’s economy are not strong enough to keep buying them.
Global stock markets tumbled this week, in part due to the German figures, with the U.S. logging its worst day of the year on Thursday. Germany’s DAX blue chip index was down a painful 2 percent on Friday.
But are things in Germany all that bad? Economists are debating whether it’s really time to use the R-word and predict a shallow recession. That would be another quarter of negative output in the third quarter, which ended Sept. 30, following shrinkage of 0.2 percent in the second quarter.
Here are the key issues.
AS GERMANY GOES: So does Europe, in many ways. Strong business activity in Germany has made the overall growth figure for the 18 countries that use the euro look a lot better in the past few years. And Europe showed zero growth in the second quarter. Germany is 28 percent of European GDP. And the value chain for companies in other countries often runs through Germany. Suppliers in Italy or France, for example, sell chemicals, coatings or parts to a Germany company that assembles the final factory machine or car.
GLOBALLY SPEAKING: A renewed slump, or long-term stagnation in Europe is a risk for the global economy as a whole. That’s one reason why International Monetary Fund chief Christine Lagarde keeps urging more stimulus for the region. The European Union, of which Germany is the biggest economy, is the world’s largest economy and trading bloc. It’s a key export market for many firms in the U.S., and a source of investment capital, big-ticket goods and technology for China. In particular, U.S. auto firms such as Ford Motor Co. and General Motors, through its Opel subsidiary, have struggled through a long slump in consumer demand for cars in Europe.
STIMULUS NEEDED: Things in Europe are so worrisome that the European Central Bank is launching more stimulus measures. It cut its interest rate to near zero and is preparing to purchase bundles of bank loans to encourage more lending. Yet even bank President Mario Draghi has warned that the stimulus will not be effective unless several eurozone governments act to make their economies more business-friendly fast payday loan no faxing. France and Italy are often mentioned as countries that could make labor rules more flexible to encourage hiring and investment. But progress is slow.
THE PUTIN EFFECT: Germany makes what economists call investment goods — big-ticket items like printing presses, heavy trucks, or industrial lasers that companies use to make other goods. Uncertainty makes businesses and consumers hesitate, because they can always put off such purchases until things look a little clearer. That’s the effect of the conflict between Russia and Ukraine, which has resulted in the EU and the U.S. imposing economic sanctions on Moscow. Business in the Middle East has also been dented by military conflict in Syria and Iraq.
IN THE BLACK: Some say Germany can help right its economy by spending more. It has good public finances, after all. But Chancellor Angela Merkel’s government has focused on balancing the budget, even as her governing partners, the Social Democrats, have called for more investment spending to fix roads and bridges. Germany can borrow money for essentially zero interest on bond markets; even its longer 10-year bonds yield an astonishingly low 0.91 percent annually, compared with 2.31 percent for U.S. 10-year Treasuries.
But Finance Minister Wolfgang Schaeuble has made it clear the government’s in no mood to increase borrowing.
DON’T PANIC: Andreas Rees, chief Germany economist at Unicredit, says he’s “not in the doomsday camp” predicting a recession. He points out that the German economy has several “airbags” to cushion the bumps and help growth resume. Those include low unemployment of only 4.9 percent, which supports consumer demand from Germany’s large domestic market. A weaker euro — which has dropped to $1.26 from $1.39 in May — should help exporters in coming months. And growth in the U.S. economy should provide more demand for German exports.
In particular, Rees points to a calendar effect that made the latest figures industrial production and exports look particularly bad. Summer vacations were bunched up in August, shutting auto plants at the same time.
LOOKING FORWARD: Rees says the next reading of the Ifo institute’s business confidence survey — a closely watched indicator of where the economy may be going in the months ahead — will be a key indicator of how things are developing. It’s out Oct. 27.
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A shooting near Weston Rd. and Rogers Rd., has left one man with life-threatening injuries.
Toronto Paramedics said they received a call at 5:48 a.m. about a possible shooting.
A man in his 40s was rushed to hospital with several gunshot wounds, including one to his torso that paramedics called “very serious.”
Toronto Police are investigating.
WASHINGTON (AP) — In a burst of hiring, U.S. employers added 248,000 jobs in September and helped drive down the unemployment rate to 5.9 percent, the lowest since July 2008.
The Labor Department’s report Friday also showed that employers added a combined 69,000 more jobs in July and August than the government had previously estimated.
The unemployment rate fell from 6.1 percent in August and is now close to 5.5 percent, which many economists consider a healthy level for the United States. The lower rate, combined with the surge in hiring, will intensify debate within the Federal Reserve on whether to raise its benchmark interest rate earlier than expected. Most economists have predicted that the Fed would start raising rates in mid-2015.
The Fed might now feel heightened pressure to raise rates to prevent a strengthening economy from igniting inflation. On the other hand, inflation remains so low — even lower than the Fed’s 2 percent target rate — that it might decide to maintain ultra-low rates well into next year to try to further strengthen the economy. The Fed’s low-rate polices have helped keep borrowing rates low for consumers and businesses.
Average hourly wages didn’t budge last month, a surprising trend in light of the healthy job growth. Joseph Brusuelas, chief economist for the consulting firm McGladrey LLP, suggested that more jobs in better-paying industries haven’t yet translated into higher pay because employers still have so many applicants to choose from.
“Policymakers will certainly be worried by the lack of wage growth,” said Chris Williamson, chief economist at Markit. “Without substantially higher wage growth, the fear is that households will pull back on consumption if interest rates and borrowing costs start rising, snuffling out the wider economic recovery.”
September’s robust hiring eased fears that a tepid job gain in August might have signaled the start of a slowdown. But the 142,000 gain that was initially reported for August was revised up Friday to 180,000. In addition, July’s job gain was upgraded from 212,000 to 243,000.
Stock prices jumped after the release of the jobs report. The Dow Jones industrial average was up 119 points in late-morning trading.
The job gains for September were broad-based and included many higher-paying industries. Professional and business services, which includes engineers, accountants and architects, added 81,000 jobs, the most in seven months. Construction companies added 16,000 jobs, manufacturing 4,000.
Government jobs, which usually pay solid wages, rose 12,000, the most in five months. Retailers added 35,000 jobs and hotels and restaurants 23,000.
The average work week rose for the first time in six months, to 34.6 hours from 34.5 in August. Sam Coffin, an economist at UBS, predicted that employers won’t be able to increase that figure much and will likely instead have to step up hiring no teletrack payday loan.
The average hourly wage, though, dipped a penny to $24.53. In the past year, the average has increased just 2 percent. That’s scarcely higher than inflation, which rose 1.7 percent in the past year. In a healthy economy, wages usually rise 3.5 percent to 4 percent a year.
Typically, a falling unemployment rate signals a likely increase in wages. The main reason is that employers have to pay more to attract the workers they need. Some Fed members have already warned that the unemployment rate is low enough to spur higher inflation.
But Fed Chair Janet Yellen has said she is tracking many other gauges besides the unemployment rate, most of which still show scars from the Great Recession. For example, there were 7.1 million people working part-time jobs last month even though they want full-time work. That figure is up from just 4.6 million before the recession.
From the Fed’s perspective, Coffin said the sluggish wage growth and tame inflation may offset solid job growth and low unemployment rate. That could keep the Fed on schedule to wait until the middle of next year to increase rates.
There are still signs of job market weakness in the other measures Yellen tracks: Among the 9.3 million unemployed, 3 million have been out of work for more than six months. That figure has declined in the past three years but is still more than twice its precession proportion.
And a broader measure of unemployment that includes part-time workers who would prefer full-time jobs, as well as those who have stopped searching, is 11.8 percent. Still, that’s down from 12 percent in August and 13.6 percent a year ago.
The improved job growth comes after President Barack Obama touted his administration’s economic achievements in a speech Thursday. The economy is the top issue in voters’ minds as the November elections near.
The number of unemployed fell in September by 329,000. Most of them found jobs. But nearly 100,000 stopped looking for work. Their exodus lowered the percentage of Americans working or looking for work to 62.7 percent, the lowest proportion since February 1978.
September’s job gain means more Americans are earning paychecks and can spend more. The annual pace of economic growth is expected to remain above 3 percent for the rest of the year. Business investment is picking up, and consumer spending is growing at a steady if modest pace.
AP Economics Writer Paul Wiseman contributed to this report.
When she found her mom collapsed on the floor and unresponsive, Gelila Aedmasu remembered what she’d learned that year at school: stay calm and call 911.
The Grade 3 student did just that — and while giving the 911 operator information about where she lives and her mother’s condition, Gelila also calmed her three younger siblings, caring for them until emergency personnel arrived.
“If it wasn’t for her quick actions, the situation could have resulted in tragic circumstances,” said police Supt. John Tanouye, unit commander of 41 Division, who presented her with a certificate for being courageous “in the face of fear” and performing a “heroic action to save your mom.”
While Gelila was a little overwhelmed by all of the attention at the special assembly held in her honour at J.G. Workman Public School, she was comforted by a teddy bear given to her by Toronto EMS.
“I feel proud,” she said later, clutching the stuffed animal while sitting with two of her younger siblings in the school’s library.
She said when she woke up that August morning, her mom “was on the ground, so I helped her.”
After calling 911, “my baby brother was crying, so I took care of him,” she also said. “I tried to pick him up so he would stop crying.” She also played with her other siblings — age 5 and 4 — “so they would not get worried.”
Emergency operator Michelle Everest said Gelila herself was crying when she called, but not panicking; because she used a cellphone, Everest had to find out her address and home phone number, “and she was able to answer every question.” She also had her check her mom’s breathing.
Principal George Vlahos also presented his student with a school certificate for bravery, noting the Grade 2 curriculum covers safety at home.
“You put what you learned into action, and you are a real-life hero,” he said.
Gelila’s mom, who also attended the assembly, said she’d fainted from low blood pressure and woke up in the hospital to find out her daughter had saved her.
WELLINGTON, New Zealand (AP) — The New Zealand dollar sank Monday after the central bank disclosed it conducted its biggest sell-off of the currency in seven years to lower an exchange rate that is squeezing exporters.
Data released by the Reserve Bank showed it sold 521 million New Zealand dollars ($410 million) during August. That came after the central bank governor, Graeme Wheeler, said the currency was too strong.
The disclosure pushed the currency known as the Kiwi down nearly 2 percent against the U.S. dollar to its lowest level in over a year before it recovered slightly to trade at $0.78. The currency has dropped 12 percent since July, when the central bank announced it was suspending its program of interest rate hikes.
The bank had earlier been the first among developed nations this year to begin hiking interest rates. It raised the benchmark rate four times to 3.5 percent as it tried to cool the economy, which had been growing at a relatively fast clip of 4 percent.
Even as rates were rising, farmers who play a key role in the economy were facing tougher times personal loans for people with bad credit. Wholesale dairy prices have fallen by more than 40 percent since February, prompting dairy giant Fonterra to last week announce a big cut in projected payouts to farmers over coming months.
Those farmers will be hoping for a boost from the central bank’s actions as a weaker dollar makes New Zealand exports more attractive abroad.
Wheeler has repeatedly said he believes the Kiwi is too high. He went further last week by releasing a statement saying conditions would justify intervention.
“The exchange rate has yet to adjust materially to the lower commodity prices,” he said. “Its current level remains unjustified and unsustainable. We expect a further significant depreciation, which should be reinforced as monetary policy in the U.S. begins to normalize.”
Sales in New Zealand
A top Federal Reserve official counseled investors against putting too much emphasis on the central bank
Ameren Missouri customers won’t be seeing lower bills anytime soon after an overearnings complaint from its largest customer failed to sway state utility regulators.
In a Wednesday hearing, Missouri Public Service Commissioners said they did not agree with an overearnings complaint filed by Noranda Aluminum, which had accused the utility of making $50 million in excess profits. That could have led to lower bills for Ameren customers, who have seen electric bills rise by about 40 percent since 2006.
While the PSC still must issue a final ruling, the commissioners said Noranda did not convince them that Ameren was consistently earning above the profit level they set.
“Noranda had to meet the burden of proof,” Commissioner Stephen Stoll said. “I don’t believe they did prove that Ameren’s rates were unjust and unreasonable.”
Noranda had contended that Ameren overearned by $50 million last year, half of which it attributed to an allowed rate of return that was too high. While the PSC staff agreed that Ameren appeared to have earned about $25 million above its rate of return last year, it maintained that earnings flatten out over time and a more comprehensive study was needed first no fax payday loan. PSC commissioners agreed.
“This system envisions that revenues, expenses and profits will fluctuate, sometimes significantly … but will even out over time,” Commissioner Daniel Hall said.
The PSC ruling against Noranda is the second loss at the commission this year for the Missouri aluminum smelter, which also sought to lower its rates with a concurrent PSC action filed in February. That request would have lowered its rates at the expense of other Ameren customers, who would have likely seen rate increases.
Noranda filed the overearnings complaint at the same time, which won the support of consumer groups that regularly fight against higher utility rates. The commission denied Noranda’s rate request last month, and Noranda said last week it would lay off 125 to 200 people as a result of the decision.
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