U.S. Unemployment Rate Falls to 8.8%; GM Sells Delphi Stake

Arthi Gupta
01 Apr, 2011
New York City

U.S indexes climbed after better-than-estimated jobs report in March. The WTO ruled Boeing received at least $5.3 billion in illegal subsidies. GM sold stake in Delphi Automotive for $3.8 billion. Goodrich agreed to acquire Italy-based Microtecnica for $462 million.

[R]9:45 AM New York – U.S indexes climbed after better-than-estimated jobs report in March. The WTO ruled Boeing received at least $5.3 billion in illegal subsidies. GM sold stake in Delphi Automotive for $3.8 billion. Goodrich agreed to acquire Italy-based Microtecnica for $462 million.[/R]

Stocks in New York traded higher after the release of monthly jobs data. The closely watched report indicated an increase payrolls by 216,000 and unemployment rate declined to 8.8%.

Separately, Nsadaq OMX and ICE made a joint bid for NYSE Euronext that valued the stock market operator 19% higher than the bid from the Deutsche.

In Asian trading markets traded higher after commodities prices rose and crude oil regained its advance. Xstrata increased coal price by 19% in an annual contract with a Japanese electric utility, lifting prices of other commodities in Shanghai and London trading.

U.S. Payrolls Rise

The U.S. Labor Department said non-farm payroll employment increased by 216,000 jobs in March following an upwardly revised increase of 194,000 jobs in February.

Additionally, the Labor Department said that the unemployment rate edged down to 8.8% in March from 8.9% in February. The unemployment rate declined a full percentage point in four months.

Private businesses added 230,000 jobs in the month and extended the increase to 1.8 million in a year to the month.

Businesses and professional services added 78,000 jobs and healthcare and social services increased 44,000 and leisure and hospitality added staff by 37,000.

Various government agencies cut 14,000 jobs in the month, with most job cuts in the local government level.

China Manufacturing Expands

The Purchasing Managers’ Index from the China Federation of Logistics and Purchasing rose to 53.4 in March from 52.2 in February. Separately, India reported a surge of 50% in February exports.

Ireland to Merge Two Banks, Inject €24 billion

The Irish Central Bank said four Irish banks need another €24 billion or $34 billion in cash to restore market confidence after a stress test.

Allied Irish needs €13.3 billion, while Bank of Ireland needs €5.2 billion, Irish Life and Permanent needs €4 billion, and EBS Building Society requires €1.5 billion. Banks will need to raise capital between now and 2013.

A radical reform of the banking sector includes the merger of EBS Building Society into the nation's second largest lender Allied Irish Bank.

IL&P will be restructured, with the Irish government likely to take a majority stake, according to reports that also suggest the company will need to sell its Irish Life business.

After the financial restructuring only two large banks will survive a restructured Bank of Ireland and the combination of Allied/EBS.

WTO Rules Boeing Received Illegal Subsidies

The World Trade Organization ruled on Thursday that Boeing Co. received more than $5.3 billion in illegal subsidies between 1989 and 2006 from the U.S. and state governments, giving it an unfair advantage over its European rival Airbus.

The WTO has recommended that the U.S. withdraw $2.7 billion in programs and tax benefits to Boeing.

Separately, Boeing Co. said Turkish Airlines has exercised options for 15 next-generation 737s. The order, comprised of 10 737-800s and 5 737-900ERs, has an average list-price value of more than $1.2 billion.

GM Sells Stake in Delphi Automotive

General Motors Corp. announced the sale of its stake in auto parts supplier Delphi Automotive LLP for $3.8 billion back to Delphi.

The auto maker said it will make a gain of about $1.6 billion in the first quarter of 2011 from the sale.

Goodrich Acquires Microtecnica

Goodrich Corp., a supplier of systems to aerospace, defense and homeland security markets said it signed an agreement with SSCP Aero Holdings S.C.A. to acquire Microtecnica S.r.l. for €330 million or about $462 million.

Goodrich expects the business to have sales of $220 million in 2011.

Honda and Mazda Plan Resumption of Partial Car Production

Japanese automakers Honda Motor Co. and Mazda Motor Corp. announced on Thursday that it will resume limited production of vehicles at its plants from Monday.

Both automakers had suspended production at some of their plants following the destructive Tsunami that hit Northeastern Japan on March 11.

Earnings Review

Global Payments Inc. ((GPN)), the payment processor said third quarter revenue rose 15% to $456.38 million from $398.54 million in the same quarter last year. Net income in the quarter fell 1.8% to $47.8 million or 59 cents per diluted share compared to net income of $48.7 million or 59 cents per share for the year-ago quarter.

Office Depot, Inc. ((ODP)), the supplier of office products and services said that it will restate its fiscal year 2010 tax benefits by about $80 million, change net earnings for 2010 from $33 million to a net loss of $46 million and increase the net loss attributable to common shareholders from $2 million or $0.01 per share to $82 million or $0.30 per share.

SkyWest, Inc. ((SKYW)), an operator of regional airlines estimates first quarter to be significantly lower than its prior estimate, hurt by lower block hours, additional crew and maintenance costs, a reduction in contract rates and higher jet fuel prices.

The aircraft leasing company now projects a net loss in the range of $13 million to $ 15 million or $0.24 to $0.28 per share.