Finance and Economic

U.S. airline passenger revenue rose in January for the first time in more than a year as ticket prices increased, according to a trade group.

Revenue based on a sample of U.S. carriers was up 1.4% in January compared to the same month in 2009, following 14 consecutive months of declines, the Air Transport Association (ATA) said Tuesday.

The boost in sales came as the average ticket price to fly one mile jumped 0.6%, the first rise since November 2008, offsetting the 0 guaranteed approval cash loans.4% drop in passengers.

Revenue was also boosted by a 3.4% increase in passenger sales on trans-Atlantic routes in January, the ATA said.

In December, cargo traffic surged 17% year-over-year amid growth in international trade. That compares to an 11% decline for the full year of 2009. January 2010 cargo data were not yet available. 

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The United States, which led the world into recession, may now see its fragile recovery stifled by events across the globe.

Dangerously high debt levels in Greece and some other European countries could trigger a wave of national defaults, undermining revival in Europe and probably in the United States as well.

And China’s recent steps to cool its economy also complicate President Barack Obama’s plan to attack high unemployment here by increasing U.S. exports. Financial markets have been whipsawed over concerns that debt problems in Greece — and perhaps also in high-debt Spain, Portugal, Ireland and even Italy — might infect stronger European neighbors.

Euro zone countries are key U.S. trading partners, and the United States can’t meet Obama’s goal of doubling exports in five years — or reap the benefits in new jobs — if debt default contagion spreads throughout Europe.

China is also deemed an important growing export market for U.S. goods. But Beijing’s recent steps to curtail bank lending and its economic saber-rattling at the United States have increased trade tension between the world’s largest economy and a country poised to soon surpass Japan for second place.

The Obama administration says it wants to move away from an economy fueled by heavy consumer spending and reliance on imports toward what economic adviser Lawrence Summers calls "an economy that’s based on investment, that’s based on exports, that’s based on saving payday loans." Unfortunately, all the other major economies also are counting on digging out, at least in part, through expanded exports. For every nation to be able to meet such a goal, of course, is a mathematical challenge.

The financial turmoil in Europe does have one potential silver lining for the U.S.: The uncertainty has raised the value of the dollar as measured against the currencies of 15 of the nation’s 16 biggest trading partners.

But there’s a downside to that, too. A stronger dollar makes made-in-America goods more expensive in overseas markets.

The U.S. trade deficit surged to a larger-than-expected $40.18 billion in December, the biggest imbalance in 12 months.

The Commerce Department said the December deficit was 10.4 percent higher than November. It was much larger than the $36 billion economists expected, with much of the increase coming from a big jump in oil imports.

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Uncertainly about the future prospects for jobs in America got even foggier Wednesday as two reports on job cuts revealed conflicting results.

A report from Automatic Data Processing, a firm that collects monthly payroll data, suggested that the pace of job cuts may be slowing. But a separate report from Challenger, which predicts job cuts based on forward-looking announcements from companies, said planned cuts hit a 5-month high in January.

ADP (ADP, Fortune 500) said private-sector employers cut 22,000 jobs in January, marking the smallest decline since February of 2008. Economists surveyed by Briefing.com had forecast a loss of 30,000 jobs in January.

The number of cuts in December was revised down to 61,000 from the previously reported 84,000.

"We aren’t doing a whole lot of hiring yet, but I think you can safely say the firing is starting to stop," said John Canally, an economist at LPL Financial. "And this shows that we’re close to adding more jobs."

The service sector reported an increase of 38,000 jobs in January, marking the second consecutive month of job growth for that sector following a 21-month decline.

The figure was offset by a loss of 60,000 in the goods-producing sector and a drop of 25,000 manufacturing jobs, which marked its lowest level since January, 2008.

In a separate report Wednesday, outplacement firm Challenger, Gray & Christmas Inc, said planned job cuts had accelerated in January.

"[The Challenger report] uses a different metric," said Canally. "The job cut announcements aren’t actual layoffs, they are plans in place to cut jobs in the future, but not all of those end up being lost — some are unfilled positions and some are added back later."

Challenger said employers announced 71,482 layoffs in January, reversing what had been a steady decline in layoff announcements.

January’s figure is up 59% from December 2009, when layoffs fell to a 24-month low of 45,094. But it was a sharp drop from the 241,749 cuts announced a year ago.

"It is not uncommon to see a surge in job-cut announcements to begin the year," said Challenger CEO John Challenger. "Companies are making adjustments based on the previous year’s results and the outlook for the year ahead.

The retail and telecom sectors were the hardest hit in January, with 16,737 and 14,010 job cuts, respectively. Last month Wal-Mart (WMT, Fortune 500) said it would shed 11,200 positions at its Sam’s Clubs Warehouse outlets, and Verizon Communications (VZ, Fortune 500), announced 13,000 layoffs.

"The beginning of the year is particularly rough on retail workers, as [their] employers enter one of the slower sales periods of the year," Challenger said.

Despite the monthly decline, Canally said the report signals future job growth.

"This is still pretty much a decade-low for job cut announcements, which shows that the economy is probably about to turn around," said Canally. "The outlook is getting clearer, so I wouldn’t be too concerned about this bump in January."

Wednesday’s reports precede the closely watched monthly jobs report from the Labor Department due Friday. That’s expected to show employment levels essentially unchanged in January, according to a consensus of economists polled by Briefing.com, compared to a loss of 85,000 jobs in December.

The unemployment rate is expected to remain unchanged at 10%. 

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Buffalo Wings & Rings restaurant is opening a franchise in south Charlotte.

The restaurant is scheduled to open Wednesday at 16715 Orchard Stone Run in Ballantyne.

The facility features a bar and 23 high-definition plasma televisions. It has seating for 172 diners indoors and 72 on the patio.

The menu will include Buffalo-style wings, chicken tenders, burgers, salads, gyros and appetizers such as nachos, popcorn shrimp and mozzarella sticks. The eatery will operate from 11 a.m. to 11 p.m. Sunday through Thursday and 11 to 2 a.m. Fridays and Saturdays.

Last year, Entrepreneur magazine named Buffalo Wings & Rings one of the top 500 franchises.

The company, based in Cincinnati, was founded in 1988. The chain has N.C. locations in Roanoke Rapids, Greensboro and Morrisville.

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Bank of Japan board members were divided over how financial markets might interpret their range for price stability in December, minutes show.

Some members said it “might be acceptable” for investors and traders to see the inflation range of up to 2 percent as indicating the duration for maintaining the central bank’s low interest-rate policy, according to minutes of the Dec. 17-18 meeting released today in Tokyo. Another member said the range “wasn’t aimed at the so-called policy duration effect.”

Bank of Japan policy makers this week affirmed their forecasts that consumer prices will keep falling through March 2012, marking a third consecutive year of declines. Keisuke Tsumura, a parliamentary secretary at the Cabinet Office, said yesterday that he assumes the BOJ’s range is “effectively inflation targeting” and indicates the bank is far from ending its accommodative monetary stance.

“Given that the Bank of Japan predicted prices won’t rise for a few more years, it can’t be helped that the range is regarded as some kind of policy commitment,” said Mari Iwashita, chief market economist at Nikko Cordial Securities Inc. in Tokyo.

Japan’s central bank has kept interest rates at 0.1 percent since December 2008 as the country grapples with deflation. Consumer prices excluding fresh food fell 1.3 percent in December from a year earlier, a 10th monthly decline, government figures showed today.

Deflation Spurs Bonds

Bond yields are close to the lowest level this year as signs that deflation will linger underpin demand for government debt. The yield on the benchmark 10-year bond was at 1.315 percent as of the morning close in Tokyo after earlier reaching 1.305 percent, the lowest since Jan. 4.

BOJ policy makers said at last month’s meeting that they consider consumer prices to be stable as long as they stay in a positive range of 2 percent or below over the medium to long term. The board said it “doesn’t tolerate” price declines and the median estimate is about 1 percent.

Kazumasa Iwata, a deputy governor until 2008, speaking at the same event as Tsumura yesterday said the bank’s range is vague and policy makers should clearly state that they consider prices to be stable is 1 percent.

Variety of Risks

Some members said the bank needs to assess a variety of risks when it sets policy, not just price stability. The board should consider factors such as asset prices and imbalances in financial markets, taking a lesson from “the experience of the recent global financial crisis,” the minutes show.

The central bank has specified policy-duration commitments in the past. When it introduced a quantitative-easing policy of pumping cash into the banking system in March 2001, it said the measure would remain until consumer prices stopped falling.

The central bank today also released minutes from a Dec. 1 emergency meeting at which it unveiled a 10 trillion yen ($112 billion) credit program.

At that gathering, the board judged that reducing short- term interest rates would be the most effective way to support the recovery and concluded that a volatile yen poses a threat to the economy, the minutes show.

“Given that the overnight call rate had been virtually at zero percent, encouraging a further decline in interest rates on term instruments in the money market would be most effective” to guide borrowing costs lower, many members said.

Surging Yen

The central bank introduced the facility for commercial lenders after the yen reached a 14-year high against the dollar and Cabinet ministers urged it to step up its fight against deflation. Governor Masaaki Shirakawa has said the bank can lend beyond the limit should demand for the program increase.

“The Bank of Japan still has policy options, and the first choice is probably to increase the size of the loan program or extend the period of lending,” said Kyohei Morita, chief economist at Barclays Capital in Tokyo.

One board member said recent discussions about Japan’s deflation might have “negative effects on household and business confidence” and “intensify the downward pressure on economic activity,” the minutes show.

The government in November declared a state of deflation for the first time in three years, and Finance Minister Naoto Kan has been leading calls for the central bank to do more to stem price declines.

More households are expecting prices to fall over the next year, a central bank survey showed this month. The government’s declaration was a “big factor” in fueling people’s expectations for lower prices, said Izuru Kato, chief market economist at Totan Research Co. in Tokyo.

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Imagine, in an alternate universe, Ontario had been in lengthy negotiations with Samsung Group to bring 16,000 green-collar jobs to the province, part of an ambitious plan by the Korean industrial giant to manufacture and deploy green-energy gear.

But at the 11th hour the province fails to step up and Samsung goes with Michigan, New York or Ohio instead.

Opposition parties would be accusing the McGuinty government of "losing jobs to the Americans." Industry groups would be calling Ontario a laggard without vision or guts.

Now, back to this universe. Ontario is the winner.

It kept a $7 billion clean-energy deal from flowing south, and it did it by putting the right regulations and policies in place to attract that investment.

Samsung, which has committed to building four manufacturing plants in Ontario and developing 2,500 megawatts of wind and solar projects, said it and its consortium partners were lured to Ontario because this province’s new Green Energy Act and feed-in-tariff program stood out in North America.

The response so far?

Boos from the opposition, which is accusing the government of cutting a backroom deal with a foreign company that will lead to higher electricity prices.

This kind of rhetoric ignores the fact that we’re living in 2010, not 1960.

Electricity infrastructure is aging and replacing it is going to cost more – more so in a world that puts a price on carbon emissions.

The days of cheap, dirty electricity are coming to an end. There’s no way around it.

Another reaction to the Samsung deal has been panic from local power producers, including wind and solar developers, who argue they’re being treated unfairly because of special treatment given to Samsung.

Samsung is getting roughly 4 per cent more for the solar and wind power it produces than other participants in Ontario’s feed-in-tariff (FIT) program, which already pays a generous amount to producers of renewable electricity.

The government calls this extra incentive an "economic adder," which is used as a flexible negotiating tool – not unlike tax breaks used to lure foreign investment.

It’s expected this adder, which over 25 years has a net-present value of $437 million, will contribute $1.60 more a year to the average residential electricity bill.

Put another way, that’s an increase of 0.15 per cent on the power bill of a typical household.

As one industry observer said, that’s the cost of paying for a large double-double at Tim Horton’s once a year.

The $437 million also comes with many strings attached. If Samsung and its consortium partners don’t deliver on manufacturing and jobs, then they forfeit the adder.

A legitimate question, however, is whether other parties can qualify for the same kind of economic adder granted to Samsung.

At least two other consortia, both based primarily in Ontario, are attempting to establish supply chains in the province to manufacture wind turbines and create thousands of jobs.

They may not have a long track record, and they may lack the brand power and deep pockets of a Samsung, but they are local companies deserving of local support and the confidence of their own government.

Premier Dalton McGuinty made clear last week that if any other consortia – local or foreign – want to talk about manufacturing, energy development and job creation on a large scale, then he’s all ears online payday loans.

He should be held to those words, for the sake of fairness.

Speaking of fairness, why has 500 megawatts of transmission capacity been set aside for the Korean consortium when everyone else has to duke it out for access?

The industry protest on this point is understandable.

The whole point of the Green Energy Act and FIT program is to provide equal access to the grid and electricity rates that are the same for all participants.

Only 2,500 megawatts of transmission capacity are available in Ontario, and they’re particularly scarce in the areas of southwest Ontario where Samsung is being given priority.

Other developers waiting patiently for grid access see the Korean giant as a VIP being shuffled to the front of the line. They’re angry.

But on further reflection, taking this position is akin to saying the government doesn’t have a right to reserve transmission for any big project, like a natural gas power plant?

In fact, it did exactly that when it negotiated a deal to have Sithe Global, a large U.S. power developer, build an 840-megawatt natural gas plant in Brampton. It may be a hard pill for some to swallow, but why is the Samsung deal any different? Critics, however, have another concern. They charge that the McGuinty government broke protocol by striking a sole-sourced deal with Samsung. The insinuation here is that a request for proposals should have been put out so Samsung’s rivals could submit competing bids. Opposition parties, for example, are already calling this another e-health scandal in waiting.

The leap of logic here is mind-boggling. Governments put out tenders for specific things, like fleet vehicles, office equipment and IT systems as a way to notify industry of a particular need. The vague but ongoing task of building the economy and creating jobs, on the other hand, is an open invitation to anyone with a proposal, and you can bet those proposals are being shopped around to other job-hungry jurisdictions.

We’re in a seller’s market. This isn’t about Ontario ensuring competition. This is about Ontario having to desperately compete for jobs during difficult economic times.

Indeed, the province’s strategy in this regard is quite clever, even if it is somewhat sneaky. Think about it. There appears nothing in this Samsung deal that impacts the budget. The McGuinty government is, in effect, using electricity rates to cover the cost of a major economic development strategy – kind of like adding a special fee on gasoline sales to lure a major automaker to the province.

A controversial approach to be sure, particularly with the HST coming to our hydro bills in July, but certainly this is one creative way of investing in jobs without adding to a record provincial deficit.

The Samsung deal isn’t perfect, but it’s pretty darn good. Now, Mr. Premier, you just need to open your ears and land a couple of large local deals. They’re out there, in your own backyard. You just have to listen and have a little faith in Ontario entrepreneurs.

thamilton@thestar.ca

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For the first time in a decade, Pennsylvania's bridges are actually getting healthier. That is, the number of structurally deficient bridges has decreased from a high of 6,035 in 2008 to 5,646, according to the latest rankings from the state's Department of Transportation.

Pennsylvania's focus on bridge repair has been building, beginning with the accelerated bridge program which identified 411 needy structures for repair in 2009, but actually bid 470 with another 403 bridges expected to be under contract by the end of the fiscal year.

When the federal Recovery Act came around in early 2009, dishing out $1.026 billion for transportation infrastructure to Pennsylvania, the state quickly identified another 476 crossings for repairs fast cash.

"We're making headway," said PennDOT spokesman Rich Kirkpatrick.

But much more work, not least of which will involve securing funding for bridge repairs, remains ahead.

The state is working against an infrastructure that's older than in most other parts of the country.

Almost half of its 25,322 bridges were built 50 years ago or more.

That's more than twice the national average.

Click here for a searchable database of Pennsylvania's bridges, and their current conditions.

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Accounting firm Watkins Meegan LLC has hired the managing partner of Sturn Wagner Lombardo & Co. LLC, a dissolving Annapolis accounting and consulting firm.

Kurt Sturn, founder of Sturn Wagner Lobardo, will join Bethesda-based Watkins Meegan Jan. 1 and will bring his entire book of business and five to 10 other professional employees with him, said Sean Roddy, chief operating officer of Watkins Meegan, which already has an Annapolis office with about 15 employees.

The deal is part of a new acquisition strategy for Watkins Meegan, the second-largest locally-based accounting firm in the Washington area with about 240 employees and four offices.

“We’re hoping to double over the next five years,” Roddy said.

Over the last five years, the firm has grown its staff 33 percent, according to the Washington Business Journal list of accounting firms — all of it organic.

The firm also is talking to a few potential acquisition targets, Roddy said.

With the current deal, Sturn approached Watkins Meegan, saying he and his partners were going in different directions and were thinking about dissolving, Roddy said.

The firm signed a deal with Sturn last week and is still in negotiations to bring on some of the other accountants that worked under him.

“I am both proud and confident that this merger brings together the best and brightest to serve the Annapolis business community and provide it with the resources of exceptionally trained professionals,” Sturn said in a statement.

Sturn Wagner Lobardo was founded in 1990 and began dissolving several weeks ago. As of a couple of years ago, it had about 33 accountants, though that has been reduced to about 20, Roddy said.

It has offices in Annapolis, Baltimore and Washington, according to its Web site.

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Malaysia’s exports unexpectedly rose for the first time in a year in October as demand from China jumped amid an Asian economic recovery.

Overseas shipments climbed 1.6 percent from a year earlier to 54.3 billion ringgit ($16 billion) after falling 24.2 percent in September, the trade ministry said in a statement in Kuala Lumpur today. The median estimate in a Bloomberg News survey of 13 economists was for a 10.5 percent decline, with none expecting an increase.

Asia is leading the world’s recovery from its worst recession since the 1930s after policy makers pledged more than $950 billion in stimulus measures and cut interest rates to revive growth. Malaysia’s government, which raised its 2009 economic forecast in October, said this week that next year’s expansion may exceed the current 2 percent-to-3 percent target.

“The outlook on the export front is getting brighter as recovery remains unabated,” said Irvin Seah, an economist at DBS Bank Ltd. in Singapore. “Investment is still a drag on the economy as companies have remained cautious on business spending while waiting for outlook to improve further. This will change if the improvement in export performance proves sustainable.”

Malaysia is able to achieve economic growth of 5 percent next year, aided by private investment, Second Finance Minister Ahmad Husni Hanadzlah said Dec. 2. That target may be “easily” achieved as improving exports spur business expansion and employment, boosting consumption, Seah said.

Stimulus Measures

Prime Minister Najib Razak has unveiled 67 billion ringgit of stimulus measures in the past year to help the nation climb out of its recession no faxing payday loans. Southeast Asia’s third-largest economy shrank 1.2 percent in the three months through September, the smallest decline in three quarters.

The benchmark stock index has risen more than 40 percent this year as Asia’s recovery boosted demand for emerging-market assets. The ringgit has increased more than 3 percent in the past six months.

Shipments to China, Malaysia’s second-biggest market during the month, jumped 39.2 percent in October from a year earlier as electronics sales rose, the trade ministry said. Exports to Hong Kong surged 28.2 percent, while those to Thailand and Australia also gained. The decline in sales to Singapore, Japan and the U.S. eased.

Sales of electrical and electronics products by companies including Malaysian Pacific Industries Bhd. and Unisem (M) Bhd. climbed 18.4 percent in October, compared with a 19.2 percent decline the previous month. Such goods made up 43 percent of total exports.

Malaysia’s imports dropped 2.3 percent in October from a year earlier to 42.8 billion ringgit, the smallest decline in a year. That widened the trade surplus to 11.5 billion ringgit.

Exports fell 20.7 percent to 448.58 billion ringgit in the 10 months through October while imports contracted 21.4 percent to 351.2 billion ringgit, resulting in a trade surplus of 97.4 billion ringgit, the report showed.

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In an aggressive effort to highlight their growth and health at a time of challenge for all publishers, The Business Journal Serving Greater Milwaukee and the 39 other papers in the American City Business Journals group this week took a novel approach to tell their story: All 40 business journals printed a four-page “wrap” around their papers filled with statistics and testimonials from readers in their local markets, detailing the niche their papers fill in each of their communities.

To see the wrapper, click here.

The testimonials highlighted ways that their papers have connected them to new sales, new jobs, and new ways to grow their businesses, and most recently, ways to tap government stimulus dollars. The national campaign cites statistics that include recent numbers for paid circulation, time spent reading business journals, and event attendance.

Collectively, the papers gained in paid circulation by 3.85 percent between 2005 and 2009, while daily newspapers in those same markets lost 18.81 percent in the same years, according to Audit Bureau of Circulations publisher statements. From 2007 to 2009 alone, the ACBJ circulation growth totaled 2.7 percent, according to ABC figures.

Nationally, ACBJ readers spend an average of 50 minutes reading their local business journal each week, according to media audits.

And through 2009, about 175,000 business leaders have attended business journal events across the country.

The campaign has linked the papers together under a single message that asks, “Who Do You Want To Meet Today?” That message centers on the way each paper connects business leaders with each other, via print, in person, at events, or online through the bizjournals pay day loans.com network of local business journal sites.

ACBJ newspapers reach 4 million readers each week with in-depth coverage of their business communities. ACBJ cites recent research as evidence of the sweet spot it occupies in the media: 83% of all business news is local. Further, the company attributes it commitment to exclusive, top-quality journalism as vital to its success.

“No one in the local business community is more connected, more aware, more in touch than business journals are,” says ACBJ CEO Whitney Shaw, in a Q&A offered in each paper’s four-page wrap. “We're giving vital, up to the minute information to corporate executives, small business owners, community leaders, to virtually anybody who has a stake in the economy. And we're giving that information with a depth they can't get anywhere else.”

ACBJ is a unit of Advance Publications Inc., which also operates Conde Nast Magazines, Parade magazine, Fairchild Publications, the Golf Digest companies, Newhouse Newspapers and cable television interests.

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