Slower Construction Spending+Sound Manufacturing

Elena
30 Nov, -0001
New York City

Commerce Department reported residential and commercial construction spending for June dropped from the spending in May but grew at 8% from a year earlier. The ISM manufacturing survey indicated robust manufacturing activity across many industries. The 26 month manufacturing expansion continues at a healthy pace.

U.S. Averages

In the morning trading major averages have positive bias as nation’s industrial activity continues in the 26th month. The ISM manufacturing survey reported that the July PMI index came in at 56.6 indicating 2.8% jump from activity level in June.

Commerce Department reported slowing but still strong construction activity for the month of June. The June spending was 0.3% lower than revised level in May and 7.9% higher than a year ago.

Proctor & Gamble reported 4Q profit of 56 cents vs. 50 cents a year ago on 10% rise in sales. Humana reported 2Q profit of 51 cents vs. 50 cents a year ago and raised earnings guidance for 2006 and reaffirmed 2005 earnings.

Economic News

Construction Spending

The U.S. Census Bureau of the Department of Commerce announced today that construction spending during June 2005 was estimated at a seasonally adjusted annual rate of $1,093.0 billion, 0.3 percent below the revised May estimate of $1,096.0 billion. The June figure is 7.9 percent above the June 2004 estimate of $1,013.2 billion.

During the first 6 months of this year, construction spending amounted to $514.8 billion, 9.3 percent above the $471.0 billion for the same period in 2004.

Spending on private construction was at a seasonally adjusted annual rate of $843.8 billion, 0.2 percent below the revised May estimate of $845.6 billion. Residential construction was at a seasonally adjusted annual rate of $602.4 billion in June, 0.4 percent below the revised May estimate of $604.8 billion. Nonresidential construction was at a seasonally adjusted annual rate of $241.4 billion in June, 0.2 percent above the revised May estimate of $240.9 billion.

In June, the estimated seasonally adjusted annual rate of public construction spending was $249.2 billion, 0.5 percent below the revised May estimate of $250.3 billion. Educational construction was at a seasonally adjusted annual rate of $64.6 billion, 1.2 percent below the revised May estimate of $65.4 billion. Highway construction was at a seasonally adjusted annual rate of $67.0 billion, 0.4 percent below the revised May estimate of $67.3 billion.

ISM Manufacturing Survey

The Institute for Supply Management reported that the ISM Manufacturing Index PMI for July came in at 56.6 indicating that manufacturing activity has picked up in the last month.

The report was issued today by Norbert J. Ore, C.P.M., chair of the Institute for Supply Management Manufacturing Business Survey Committee. """"The manufacturing sector grew for the 26th consecutive month in July based on the ISM data. An improved rate of growth in New Orders and Production continues to drive improvement in the sector. It appears that the sector hit a low point in May, and has rebounded nicely in June and July. The Prices Index apparently reached the end of its run in June, as the July index indicates that pricing power, at least for the short term, is now once again favoring buyers.""""

INTERNATIONAL MARKET NEWS

Asian stocks closed mixed, reflecting Wall Street losses Friday, soaring oil prices and weaker-than-expected economic data, showing that American economy grew at 3.4% annual rate in the second quarter, below 3.8% in the first quarter. The Nikkei advanced 0.4% on strong earnings reports from Komatsu which gained 6.4% and NTT DoCoMo, which added 4.6%. Hong Kong and Singapore were among the other regional gainers, rising 0.7% and 0.6% respectively. South Korea’s Kospi climbed 0.4% after reversing early losses and gains made by Samsung Electronics and Kookmin Bank. The Philippines, Taiwan and Australia were among the decliners. In after-hours trading on the NYME crude-oil for September delivery was $60.99 a barrel.

European shares traded up at mid-day as oil majors gained on rising crude-oil prices. The news that Saudi Arabia’s King Fahd died sent oil prices as high as $61. 11 a barrel, boosting oil companies such as Royal Dutch Shell which rose 1.2% and Total, with shares up 0.3%. The German DAX 30 climbed 0.3%, the French CAC 40 advanced 0.2% and London’s FTSE 100 added 0.2%. The euro was steady against the dollar at $1.2180, while the pound gained 0.3% to trade at $1.7625.

ENERGY, METALS AND CURRENCIES MARKETS

Crude-oil prices briefly touched $61 a barrel after Iran threatened to restart its nuclear enrichment program. Light sweet crude for September delivery added 21 cents to $60.78 on the NYME, after jumping to a session high of $61.02 a barrel in Asian trading. London Brent September delivery opened 48 cents up, at $59.85, before sliding to $59.60.

Gold futures advanced for a fourth consecutive session on lingering weakness of the U.S. currency which boosted investors’ interest in the precious metal. Gold for December delivery traded up $2 at $437.80 per ounce on the NYME. Silver for September delivery was up 4.8 cents to trade at $7.31 per ounce. September copper dropped 0.35 cents to $1.641 a pound.

EARNINGS NEWS

Ivax, generic drug maker, posted 2Q profit decline of 17 cents a share, down from 18 cents a year ago on higher net income tax rate and sales expenses. The quarterly results failed to meet expectations of 20 cents a share.

Public Service Enterprise, electric energy group, posted a 2Q loss of 34 cents a share, down from a profit of 52 cents a share in the year-ago period despite a rise in revenue, missing analysts’ expectations of 54 cents a share.

Mercury General, automobile insurance underwriter, posted 2Q earnings of $1.35 a share, down vs. $1.43 a share in the same period last year. Apart from a one-time investment gain, earnings would have been $1.31 a share, beating analysts’ expectations of $1.26 a share.

Cal-Maine Foods, shell eggs producer and distributor, posted 4Q net loss of 28 cents a share, down from an income of 70 cents a share in the same period last year on decline in sales.

The Dixie Group, marketer and manufacturer of carpet and rugs, posted 2Q earnings from continuing operations of 28 cents a share, up vs. 27 cents a share in the same period a year earlier on sales growth.

Symbol Technologies, mobile and wireless information management systems designer, posted a 2Q loss of 12 cents a share, vs. a year-earlier net income of 12 cents a share on restructuring charge. Special charges and benefits aside, the company would have earned 2 cents a share in the quarter, matching analysts' estimates.

Martin Marietta, aggregates for the construction industry producer, posted 2Q earnings of $1.30 a share, up from 92 cents a share in the year-ago period on revenue growth, beating analysts’ expectations by a penny.

Entergy, energy company, reported 2Q profit rise of $1.33 a share compared with $1.14 a year ago on 9% revenue growth. The company backed its 2005 forecast of earnings between $4.60 and $4.85 a share.

Bluegreen, vacation and residential lifestyle choices marketer, posted 2Q earnings of 46 cents a share, up vs. 31 cents a share in the same period last year on revenue growth, beating analysts’ expectations of 33 cents a share.

Tyson Foods, prepared foods producer, posted 3Q net income of 36 cents a share, down from 45 cents a share the same period last year despite sales growth, missing the forecasts by a penny.

Administaff, personnel management system provider, posted 2Q earnings of 28 cents a share, up against 10 cents a share in the same period last year on accelerated unit growth and increased pricing, beating analysts’ predictions of 19 cents a share.

Prrocter & Gamble, household products company, posted 4Q net income rise of 56 cents a share, up from 50 cents a year ago on 10% revenue growth, beating estimates of 55 cents a year.

Lincoln Educational Services, reported 2Q profit decline of 0 cents a share compared with 4 cents last year on higher costs.

CommScope, cables and fiber optic cable producer, posted 2Q earnings of 25 cents a share, down vs. $1.16 a share, despite a rise in revenue, beating analysts’ forecasts of 18 cents a share.

Holly Energy Partners, pipelines and distribution terminals operator, announced it gained 40 cents a share in 2Q on strong revenue, missing analysts’ predictions of 48 cents a share.

Harvest Natural Resources, oil and gas producer, posted 2Q earnings of 37 cents a share, up vs. 16 cents for the year-ago period on revenue growth.

Oregon Steel Mills, commodity steel products manufacturer, posted 2Q net income of 80 cents a share, up vs. 52 cents gained last year on strong sales, missing analyst forecasts by a penny.

Humana, health insurer, announced 2Q net profit was up to 51 cents a share on strong revenue growth, meeting analyst forecasts.

HSBC, banking and related financial services group, announced first-half pre-tax profit was up to 5.1%, following a 8.66% gain in North American pre-tax profits and 32.1% growth in Asian ex-Hong Kong profits on expanding personal financial services and commercial banking businesses in new and emerging markets.

Teva, pharmaceuticals group, posted 2Q net income earnings per share rose up to 36 cents, compared with last year the same period on strong net sales and balanced business model.

Playtex, consumer and personal products manufacturer, posted 2Q earnings of 10 cents a share, down against 13 cents a share in the same period a year earlier. Non-recurring items aside, earnings would have been 14 cents a share, topping analyst estimates of 12 cents a share on decline in revenue.

CORPORATE NEWS

Allied Holdings sought Chapter 11 bankruptcy-court protection last night. Allied, which posted $895 million in revenue last year and has been struggling with losses, has been making efforts to deal with increasing labor and fuel costs, high debt, and a drop in delivery volume. The filing by Allied follows a row of bankruptcy-protection filings by auto-parts makers such as Collins & Aikman Corp. and Tower Automotive.

General Electric Co. is in talks to buy technology used in offshore oil and natural-gas production, in a deal of more than $1 billion, as the company tries to expand its role in the fast growing market. Under the conditions of the future deal, GE would buy parts of oilfield-services company Vetco International from a consortium of private-equity firms, including Candover, 3i and JPMorgan Partners. According to reports, negotiations are in progress and could be completed in two weeks.

ITT Educational Services Inc. announced that the U.S. SEC terminated its investigation of the company and recommended no action be taken against them.

Home Depot Inc. said it got a grand jury subpoena from the U.S. Attorney's Office in Los Angeles for documents connected to the company's handling, storage and disposal of hazardous waste.

Avon Products Inc. became the target of a class action alleging that the direct seller of cosmetics failed to make material statements to the marketplace regarding the state of its business.

OTHER NEWS]

The Japanese Trade Ministry said that Japan will impose 15% levies on U.S. steel imports from September, 1st in retaliation for America’s steel industry protection measures. The tariffs which could rise as high as $51 million will target ball bearings, airplane parts and other steel products.