2024-03-05 19:33

Services PMI falls to 52.6 in February Production, new orders measures increase WASHINGTON, March 5 (Reuters) - U.S. services industry growth slowed a bit in February amid a decline in employment, but a measure of new orders increased to a six-month high, pointing to underlying strength in the sector. Despite the weakness in employment, comments from services businesses in the Institute for Supply Management (ISM) survey on Tuesday were generally upbeat, and suggested labor shortages remained a constraint for some. There were also no signs that inflation was picking up after a jump in prices at the start of the year, welcome news for Federal Reserve officials. Though financial markets expect the U.S. central bank to start cutting interest rates this year, the timing is uncertain because inflation remains high, with most of the price pressures coming from services such as housing and utilities as well as finance, healthcare and recreation. "While the easing of price pressure and moderation in hiring tilt this report in a dovish direction, the Fed will ultimately want to see these developments translate to the hard data on inflation and job growth," said Tim Quinlan, senior economist at Wells Fargo in Charlotte, North Carolina. The ISM said its non-manufacturing PMI slipped to 52.6 last month from 53.4 in January. A reading above 50 indicates growth in the services industry, which accounts for more than two-thirds of the economy. Economists polled by Reuters had forecast the index little changed at 53.0. The PMI was consistent with continued economic expansion, despite 525 basis points worth of interest rate hikes from the Fed since March 2022. Fourteen services industries reported growth last month, including construction, retail trade, and public administration, as well as utilities and wholesale trade. Arts, entertainment and recreation, mining and real estate, rental and leasing reported contraction. A measure of new orders received by services businesses increased to 56.1 last month, the highest level since last August, from 55.0 in January. Export orders, however, slowed after surging in January. Production accelerated, with a measure of business activity hitting a five-month high of 57.2 from 55.8 in January. Stocks on Wall Street were trading lower. The dollar fell against a basket of currencies. U.S. Treasury prices rose. UPBEAT COMMENTS Retailers said "business is good," adding "inflation is under control and trending downward." Construction businesses reported that "materials levels have returned to pre-coronavirus pandemic levels, and the outlook for 2024 is strong." Professional, scientific and technical services providers said they were "experiencing stabilization from external economic influences," while accommodation and food services businesses reported that "Red Sea issues have not yet impacted our purchasing conditions," a reference to attacks on shipping there. The increase in services inflation slowed last month. A gauge of prices paid for inputs by businesses fell to 58.6 from an 11-month high of 64.0 in January. That supports most economists' views that the pickup in inflation in January was driven by beginning of year price hikes, which were unlikely to repeat in February. "The underlying trend suggests that services inflation will remain on a downward trend in the first half, with some risk that it may not cool as quickly as Fed officials would like," said Oren Klachkin, financial market economist at Nationwide. There was also encouraging news on the supply side. The supplier deliveries measure decreased to 48.9 after rebounding to 52.4 in January. A reading below 50 indicates faster deliveries. The drop in this measure contributed to the fall in the services PMI. The survey's measure of services sector employment decreased to 48.0 from 50.5 in January. Employment levels were likely depressed by a combination of worker shortages and layoffs. Anthony Nieves, chair of the ISM Services Business Survey Committee said comments from businesses included "we have lost employees due to normal attrition and are having issues backfilling these positions" and "currently holding at post-peak employment levels, however, planning to bring in new associates as spring approaches." Providers of utilities reported "labor continues to be in highest demand," adding "finding qualified and available crews and administrative staff is still difficult." Businesses offering management of companies and support services said "employers remain cautious about hiring direct employees and are considering utilizing contract labor to cover project." Coming on the heels of a decline in factory employment in February, that would suggest a considerable slowdown in job growth. The ISM services and manufacturing employment measures have not, however, been reliable gauges when trying to predict nonfarm payrolls employment. Nonetheless, the labor market is cooling, with a Conference Board survey last Tuesday showing consumers less upbeat about the jobs market. The government is expected to report on Friday that nonfarm payrolls increased by 200,000 jobs in February after surging 353,000 in January, according to a Reuters survey of economists. The unemployment rate is forecast unchanged at 3.7%. "The ISMs have not been reliable bellwethers of payrolls since the pandemic," said Mark Streiber, economic analyst at FHN Financial in New York. (This story has been refiled to add a dropped word, in paragraph 2) https://www.reuters.com/markets/us/us-services-sector-cools-february-ism-survey-shows-2024-03-05/

2024-03-05 19:19

HAVANA, March 5 (Reuters) - Cuba has switched off nearly three-quarters of public lighting during peak hours to cope with a growing energy shortage, state media reported on Tuesday, as hopes to reverse a deepening economic crisis dim. The blackouts, which disrupt daily life and the economy, have plagued the Communist-run country for several years but have worsened in recent months due to a lack of fuel and the need to maintain decrepit infrastructure. Minister of Energy and Mines Vicente de la O Levy told a council of ministers meeting the measure was one of many that included shuttering thousands of state services and shifting production to lessen the blackouts roiling the country, according to state media. The import-dependent country has been mired in a deepening economic crisis that has seen gross domestic product decline 10% since 2019. The government largely blames Trump-era U.S. sanctions targeting foreign currency earners tourism, medical services and remittances and compounded by the pandemic, rising shipping costs and faltering efforts to restructure a centralized and state dominated economy. The shortage of foreign exchange to import food, medicine, fuel and other essentials appears to have worsened so far this year, official figures showed. De la O Levy said last month that Cuba has only received 46% of the planned fuel imports, causing long blackouts across the land, with the exception of the capital Havana. A phone survey of five of 14 provinces indicated residents were enduring daily six to 12 hour blackouts, broken up into two tranches. Yurkina Gracial, a 40-year-old state employee in eastern-most Guantanamo province said by phone “the power goes out for four hours twice a day and it is unbearable because of the heat." At the other end of the Caribbean island, in Pinar del Rio province, restaurant owner Jaime Carrillo said power outages were running up to eight hours per day. "Blackouts always complicate your daily work," he said. “For example, liquids and meats suffer from defrosting in refrigerators.” https://www.reuters.com/world/americas/cuba-turns-off-some-public-lighting-energy-crisis-worsens-2024-03-05/

2024-03-05 19:13

AMSTERDAM, March 5 (Reuters) - The Netherlands will not permit companies to drill for gas in the Dutch part of the protected Wadden Sea, the Dutch government said on Tuesday in a move that will block planned exploration by Shell (SHEL.L) , opens new tab and ExxonMobil (XOM.N) , opens new tab joint venture NAM. Mining minister Hans Vijlbrief said new projections for an accelerated rise of sea levels due to climate change had altered the picture for gas drilling at the site, increasing risks that extraction could pose for the seabed. NAM discovered gas reserves of up to 40 billion cubic metres (bcm) in the Wadden Sea in the mid-1990s and forecast additional volumes of 30 to 130 bcm might be found there. Since then, the issue of gas drilling in the environmentally sensitive nature reserve has become a sensitive topic. The Wadden Sea is a UNESCO World Heritage site but last year the United Nations warned it could lose that status if gas drilling were to be permitted there. https://www.reuters.com/business/energy/netherlands-wont-permit-gas-drilling-sensitive-wadden-sea-government-says-2024-03-05/

2024-03-05 19:07

WASHINGTON, March 5 (Reuters) - The U.S. Treasury Department on Tuesday announced new steps to boost the supply of affordable housing by unlocking billions of dollars in unspent COVID-19 aid funding to state and local governments to support a wider array of housing projects. The initiatives are part of a Biden administration drive to address a key economic challenge facing Americans: lack of housing affordability. This is in turn contributing to inflation and negative voter sentiment on President Joe Biden's handling of the economy. In the biggest of the moves, the Treasury said it would allow state and local governments to use unspent funds from the $350 billion State and Local Fiscal Recovery Fund to support housing projects serving families earning up to 120% of the area's median income, a big jump from 65% previously. These funds can also now be spent on projects that meet the terms of one of a dozen or more federal housing programs as well as those supported by government mortgage enterprises Fannie Mae and Freddie Mac to house essential workers such as teachers, firefighters and nurses. This will open up a significantly wider array of housing projects eligible for support. SPENDING DEADLINES LOOM The amount of funding still available for such projects could be as high as about $40 billion, based on Reuters calculations. As of Sept. 30, 2023, Treasury estimated that about 12% of the $350 billion in state and local funding had not been budgeted by states and the largest cities and counties, which received the lion's share of the funding. The 2021 American Rescue Plan Act stipulated that all of the state and local fiscal recovery funds must be obligated -- with contracts or other binding spending commitments -- by the end of 2024, and funds must be fully expended by the end of 2026. Anything left over then reverts to the federal government for Congress to redeploy. Another step announced by Treasury will allow communities with unspent COVID-era Emergency Rental Assistance Program funds can divert them to supporting "pre-development" and land acquisition costs for low-income affordable housing projects, in addition to construction and rehabilitation costs allowed previously. As of June 30, 2023, the most recent data available, about $6.9 billion was left in the original $46 billion rental assistance program started by the Trump administration and expanded under Biden to combat homelessness during the pandemic. Home prices are set to rise further in coming years as homeowners with low mortgage rates stay put, according to property experts. Increasing housing supply has proven difficult amid high interest rates and recent materials shortages. "The lack of supply is helping to drive up housing costs for American families," Deputy Treasury Secretary Wally Adeyemo said in a blog post, adding that the steps would have a "modest but important impact on housing supply." HUD BACKSTOP EXTENDED The Treasury also said it was indefinitely extending the Federal Financing Bank's support for a housing project risk-sharing initiative between the Department of Housing and Urban Development (HUD) and local housing agencies. The program was restarted in 2021, leveraging $5 billion in investments to develop and rehabilitate 42,000 affordable rental homes for low-income families, and Adeyemo estimated that the extension will add tens of thousands more units over the next decade. The Federal Financing Bank provides financing for federal agency borrowing and lending programs. https://www.reuters.com/markets/us/us-treasury-ease-rules-covid-aid-boost-affordable-housing-supply-2024-03-05/

2024-03-05 19:06

WASHINGTON, March 4 (Reuters) - A post on a hacker forum popular with cybercriminals has claimed UnitedHealth Group (UNH.N) , opens new tab paid $22 million in a bid to recover access to data and systems encrypted by the "Blackcat" ransomware gang, according to two researchers. Neither UnitedHealth nor the hackers involved have commented on the alleged ransom payment, but a cryptocurrency tracing firm partially corroborated the claim on Monday. It is not uncommon for large companies that have been victimized by ransomware gangs to decide to pay the hackers to regain control of their networks, especially in instances where a significant disruption to customers and partners occurred. The forum post, dated Sunday, said a partner of Blackcat was responsible for the intrusion into UnitedHealth. The message, allegedly from the partner, included a link showing that someone had moved about 350 bitcoins, now worth about $23 million as the value of the cryptocurrency rises, from one digital currency wallet to another. The owner or owners of the respective wallets is not publicly available, but blockchain analysis firm TRM Labs said the destination of the funds was "associated with AlphV," also known as Blackcat, noting it had seen that address used to collect ransom payments from other AlphV victims. Asked whether it had paid the ransom, UnitedHealth said only that it was "focused on the investigation and the recovery." Blackcat has not responded to repeated messages from Reuters sent over several days. Reuters could not immediately determine how to reach the purported partner hacker group or to access the cybercrime forum where the post was made, although it was able to view screenshots taken independently by two researchers, including Recorded Future's Dmitry Smilyanets. The break-in at UnitedHealth's Change Healthcare unit, which has sparked disruption across the United States, has been the object of online intrigue. Blackcat claimed last week that it had stolen millions of sensitive records in the hack, only to quickly delete its post without explanation. Meanwhile, the pain has continued to spread across the U.S. medical system as Change Healthcare's billing services remain paralyzed. The American Medical Association on Monday asked the Biden administration to make emergency funds available to physicians hurt by the outage. https://www.reuters.com/technology/cybersecurity/hacker-forum-post-claims-unitedhealth-paid-22-mln-ransom-bid-recover-data-2024-03-05/

2024-03-05 18:35

March 5 (Reuters) - Cadence Design Systems (CDNS.O) , opens new tab will buy BETA CAE Systems International AG, which makes software for analyzing car and jet engine designs, for $1.24 billion in cash and stock, Cadence said on Tuesday. California-based Cadence, whose shares fell more than 3%, will pay about $744 million in cash and the rest in stock. The company said it will take on debt to pay for the deal but will pay that down with cash generated from operations. One of the largest makers of software used in designing computer chips, Cadence helps chipmakers decide where to place billions of transistors to form complex circuits. But over the past six years, it has been moving into design software for the larger physical systems from circuit boards to airplanes. Last month, the company announced a supercomputer designed to help simulate how air flows around jet engines, among other uses. The BETA CAE deal continues that trend. Its software is widely used to analyze designs in automotive and aerospace industries, with customers such as Honda Motor Co (7267.T) , opens new tab, General Motors (GM.N) , opens new tab and Lockheed Martin (LMT.N) , opens new tab. The Cadence deal announced on Tuesday comes after the firm's largest rival, Synopsys, said it will spend $35 billion to buy Ansys, another maker of physical analysis software. "This also advances a portfolio that may match up against a Synopsys-Ansys combination at some future point," said Joe Vruwink, a senior analyst at Baird Equity Research. The BETA CAE deal is expected to close in the second quarter of the year and Cadence expects BETA CAE to contribute about $40 million to its 2024 revenue, Cadence said in a statement. https://www.reuters.com/technology/cadence-buy-analysis-platform-beta-cae-systems-124-billion-2024-03-05/