S&P slashes debt rating
Standard & Poor’s (S&P) cut the nation’s sovereign debt rating on Wednesday by two notches to just above junk level, citing the deepening recession and strains from the country’s troubled banks. S&P cut the rating to “BBB-” from “BBB+” with a “negative outlook” to the rating, a warning of a possible further downgrade over the medium term. Moreover, S&P expressed doubts that all of the eurozone governments would give their backing to efforts to recapitalize Spain’s banks.
Inflation surges on sales tax
The nation’s inflation rate surged to a 17-month high last month, driven by an austerity-driven rise in sales tax and medicine prices, official figures showed yesterday. Consumer prices rose 3.5 percent over the year to September, the highest rate since April last year and a sharp climb from the 2.7 percent recorded in August, the National Statistics Institute said. Prime Minister Mariano Rajoy’s administration raised the top rate of sales tax to 21 percent from 18 percent on Sept. 1.
Machinery orders contract
Core machinery orders turned down 3.3 percent month-on-month in August, official data showed yesterday as Europe’s debt crisis and China’s slowdown cut into the export-reliant manufacturing industry. The private-sector data, excluding volatile orders from power companies and for ships, registered its first drop in three months and reversed a 4.6 percent jump in July, according to figures from the Cabinet Office. Meanwhile, the consumer confidence index stood at 40.1 last month, down from 40.5 in August, indicating that the nation’s household spending remains stagnant, the Cabinet Office said in a monthly survey.
Property boosting growth
Stronger housing markets helped boost economic growth in 10 of 12 regional banking districts from mid-August through last month, according to a US Federal Reserve survey released on Wednesday. The report, known formally as the Beige Book, also cited an increase in auto sales in most parts of the country. Still, consumer spending was flat or up only slightly in most districts. Manufacturing activity was mixed, with half of the districts reporting a slight improvement since the previous Fed report, while hiring was unchanged in most districts.
Siemens likely to cut jobs
Germany’s Siemens AG was expected to outline job cuts and office closures yesterday to stop profits sliding, as chief executive Peter Loescher’s strategy of boosting growth with energy-saving and infrastructure products has not worked. Analysts expect him to announce between 2 billion euros and 4 billion euros (US$2.57 million to US$5.14 million) in savings when he spoke to 600 managers in Berlin, some of whom may lose their jobs in the program. He was also expected to shut offices in some of the 190 countries where Siemens operates.
Fedex to shed workers
Fedex Corp, the global delivery company, said on Wednesday it was planning to cut “several thousand” people from its workforce via a voluntary departure program beginning early next year. Chairman Fred Smith said at an investment conference in Memphis, Tennessee, that the cuts would come in the company’s Fedex Express global express delivery service and in the US unit Fedex Services.