Monday, June 3, 2013

Surprise Manufacturing Downturn Holds Back U.S. Growth: Economy

Manufacturing (NAPMPMI) in the U.S. unexpectedly shrank in May at the fastest pace in four years, showing slowdowns in business and government spending are holding back the world’s largest economy.
The Institute for Supply Management’s factory index fell to 49, the lowest reading since June 2009, from the prior month’s 50.7, the Tempe, Arizona-based group’s report showed today. Fifty is the dividing line between growth and contraction. The median forecast of 81 economists surveyed by Bloomberg was 51.
Enlarge imageMay ISM Manufacturing Index Decreased to 49 from 50.7 in April
Wrenches are stored in a cabinet at the Buttonwood Corp. button manufacturing facility in the Brooklyn borough of New York. Photographer: Scott Eells/Bloomberg
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Across-the-board federal budget cuts and overseas markets that are struggling to rebound will probably continue to curb manufacturing, which accounts for about 12 percent of the economy. At the same time, demand for automobiles, gains inresidential construction and lean inventories may spark a pickup in orders and production in the second half of the year.
“Manufacturing is really stymied by slow corporate spending and government spending cutbacks,” said Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia, who was the only analyst in the Bloomberg survey to correctly project the drop in the index. “Manufacturing will grow at a modest pace this year” although it “is unlikely to accelerate in coming months,” LeBas said. “This is part of the slower expansion we’ll have in the second quarter.”
Estimates in the Bloomberg survey ranged from 49 to 54.
Stocks fluctuated between gains and losses after the report. The Standard & Poor’s 500 Index fell 0.3 percent to 1,626.19 at 12:39 p.m. in New York. The gauge had posted its first consecutive weekly losses since November.

Global Manufacturing

Other reports today showed most manufacturers globally were also struggling. Figures fromChina indicated small factories contracted at a faster pace in May even as larger counterparts improved.
Euro-area manufacturing output shrank less than initially estimated last month. A gauge in the 17-nation euro area increased to 48.3 last month from 46.7 in April, Markit Economics said. That’s above an initial estimate of 47.8 on May 23. It’s been lower than 50 since July 2011.
The U.S. ISM index was pushed down by declines in orders and production and smaller gains in exports. The group’s employment gauge was little changed at just above the break-even level of 50.
Pall Corp. (PLL), a producer of water-filtration and purification systems, is among manufacturers cautious about sales as global demand remains uneven.
While demand in the U.S. is holding up, “not all markets and geographies are working well,” Lawrence Kingsley, chief executive officer of the Port Washington, New York-based company, said on a May 31 earnings conference call. “The macro-environment continues to be a mixed one.”

Construction Figures

One area of the economy that remains a bright spot is residential real-estate as sales climb and encourage more homebuilding projects.
Spending on construction increased 0.4 percent in April to an $860.8 billion annualized rate, figures from the Commerce Department showed today. Outlays on private construction projects rose 1 percent in April from the month before. Government projects fell by 1.2 percent, to the lowest spending level since October 2006, after slumping in the prior month by a revised 2.9 percent.
Ten of 18 industries in the ISM factory survey grew last month, down from 14 in April, according to today’s report. Some of those contracting included larger groups including chemicals and transportation.

Sales Outlook

The report is at odds with the group’s semiannual survey issued at the end of April, a sign the slump may be short-lived, Bradley Holcomb, chairman of the group’s factory committee, said in a conference call today with reporters. Manufacturers then projected sales would grow 4.8 percent this year, up from a December estimate of 4.6 percent.
“We’ve hit a little bit of a pothole,” Holcomb said. “Hopefully, this is a momentary lull.”
Automobile purchases may help keep assembly lines running as households use low borrowing costs to replace older vehicles. Ford Motor Co. (F), Chrysler Group LLC, and Nissan Motor Co. today reported May sales gains that exceeded analysts’ estimates. The industry tally, to be released later, may show purchases of cars and light trucks improved last month from a 14.9 million annual rate in April, according to economists surveyed.
Rockwell Automation Inc. (ROK), a Milwaukee, Wisconsin-based maker of factory automation software, is benefiting as businesses strive to improve productivity and reduce costs.

Auto Industry

Among regions, “the U.S. and Canada are stable and we continue to see investments across most industries,” Chief Executive Officer Keith Nosbusch said during a May 31 conference presentation. “Automotive looks solid for the next several quarters” and capital spending in consumer-related industries is “stable,” he said.
Gross domestic product rose at a 2.4 percent annualized rate in the first three months of 2013, figures showed last week. While inventory accumulation was slower than initially estimated, providing less of a boost to the economy, it sets the stage for growth this quarter as higher sales may prompt more stockpiling.
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Containment of Calif. Fire Doubles to 40 Percent

PHOTO: A Los Angeles County firefighter approaches a fire along a road in what has been called the Powerhouse fire in Lake Hughes, Calif., early Sunday, June 2, 2013.
A Los Angeles County firefighter approaches a fire along a road in what has been called the Powerhouse fire in Lake Hughes, Calif., early Sunday, June 2, 2013. (Reed Saxon/AP Photo)
By ROBERT JABLON Associated Press
PALMDALE, Calif. June 3, 2013 (AP)

Firefighters working in darkness doubled containment of a massive wildfire north of Los Angeles to 40 percent overnight, as cool, moist air moved in Monday to replace torrid weather.
The fire expanded to more than 46 square miles but moved out of rugged mountains of the Angeles National Forest and onto the floor of the high desert Antelope Valley, where it became easier to fight.
"The fire moved into an area where vegetation changed from real dense to real sparse," said U.S. Forest Service spokesman Matt Corelli.
"We were able to engage it (at) 1- to 2-foot flame lengths versus 30-foot flame lengths," he added. "So you've got an area that we can get (to) and put troops right on the edge of the fire and stop its forward growth."
With only widely scattered homes in the area, firefighters will be able to work more on attacking flames than on structure protection, he said.
The cause of the fire was under investigation. Three firefighters had minor injuries, but no one else was hurt.
Named after an aqueduct station near the site where it erupted Thursday, the Powerhouse Fire burned furiously during the weekend as gusty winds swept the region and vegetation withered in triple-digit heat and humidity levels that plunged to single digits.
At least six houses were destroyed, 15 more were damaged, and 2,800 people fled 700 homes in the rural hamlets of Lake Hughes and Lake Elizabeth, 45 miles northwest of downtown Los Angeles.
Weather conditions changed dramatically Sunday night through early Monday with the arrival of a heavy dose of Southern California's "June gloom," a gray layer of wet marine air pushing deep inland from the Pacific.
"The flames really laid down overnight," said Nathan Judy, also of the Forest Service.
Firefighters halted the fire's progress on its northeastern front and were focusing the attack on the northwestern side.
"It's not in steep, rugged terrain anymore, so wind is our biggest factor right now, and heat," Corelli said.
Both factors, however, were expected to be more moderate. Winds were expected to range from 5 mph to 10 mph with gusts to 15 mph, compared to 40 mph gusts on Sunday. High temperatures were expected to be down in the low 90, with humidity percentages in the upper teens and 20s.
Despite the improved situation, evacuations remained in effect while firefighters checked communities for hazards such as hotspots, downed power lines, damaged gas lines and propane tanks.
The fire was fueled in part by chaparral that was "extremely old and dry" and hadn't burned since 1929, U.S. Forest Service Incident Commander Norm Walker.
About 2,100 firefighters took on the flames, aided by water-dropping aircraft, including three helicopters that stayed aloft through the night.
"We're putting everything that we have into this," Walker said.
George Ladd, 61, said among the structures burned was a cabin at Lake Hughes that his family had owned since 1954 but sold just last week.
"We had always worried about that thing going off like a bomb," Ladd said.
He walked through the ashes of his former cabin and the other destroyed homes on Sunday.
"All of them are nothing," Ladd said by phone from his home in nearby Palmdale. "A few scraps, a few pieces of wood with nails sticking out, but mostly just broken up concrete."
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Fort Hood suspect to represent himself at murder trial

Nidal Hasan, the Army psychiatrist charged in the deadly 2009 Fort Hood shooting rampage.
Nidal Hasan, the Army psychiatrist charged in the deadly 2009 Fort Hood shooting rampage. / AP PHOTO/BELL COUNTY SHERIFF'S DEPARTMENT
FORT HOOD, TEXASA military judge is allowing the Army psychiatrist charged in the 2009 Fort Hood shooting rampage to represent himself at his upcoming murder trial.
The judge also ruled Monday that Maj. Nidal Hasan's attorneys will remain on the case, but only if he asks for their help.
The judge, Col. Tara Osborn, said last week that a report indicates Hasan is mentally competent to represent himself.
A doctor testified Monday that Hasan's paralysis won't have a significant impact during proceedings. He's paralyzed from the waist down after being shot by police the day of the attack on the Texas Army post.
Jury selection is set to start Wednesday.
Hasan faces the death penalty or life in prison without parole if convicted in the attack that killed 13.
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Floods inundating central Europe kill at least seven people

A canoe is steered past a street sign for the Danube river and the city centre of Passau, Germany,
A canoe is steered past a street sign for the Danube river and the centre of Passau, Germany, as flood levels neared 2002's historic highs. Photograph: Lennart Preiss/Getty
Volunteers piled up sandbags in an effort to keep the Vltava river from swamping the Czech capital's historic centre after floods across centralEurope forced factories to close and drove thousands from their homes. At least seven people have been killed.
Five people were killed at the weekend in the Czech Republic, where theflooding was the worst in a decade and a state of emergency was declared, while in Austria two people died and another two were missing.
Officials in Prague, which is listed by the UN as a World Heritage Site, shut the metro system, and in streets near the river soldiers put up flood defences.
Tigers at Prague zoo were tranquilised and moved out of an enclosure at risk from flooding. The Charles bridge, a favourite spot for tourists that dates back to the 14th century, was closed.
Officials hoped the flood defences in Prague should hold, but said the river level was likely to rise again on Tuesday morning. "The story is not yet over here," said the environment minister, Tomáš Chalupa.
Tree trunks floated by in the muddy brown water. A riverside path, usually populated with cyclists and people sitting at cafes, was under water on Monday.
"We left England yesterday and it was sunny and warm. We didn't expect this; we don't even have our raincoats," said a British tourist, Alison Tadman, who came to Prague with her husband, Adrian, to celebrate her 47th birthday. She and her husband were sheltering in a McDonald's restaurant. "We're pretty disappointed," she said.
Some of the worst flooding was around the Danube river, which starts inGermany and snakes its way through countries including Austria,Slovakia and Hungary on its way to the Black Sea. The river was swollen by heavy rain at the weekend.
In Germany, the interior minister flew to the flood-hit regions on Monday and the chancellor, Angela Merkel, was preparing to go on Tuesday, a government spokesman said.
Shipping was stopped on parts of the Danube and Rhine rivers in Germany, and along the whole Austrian stretch of the Danube, because of the high waters. The rivers are important arteries for moving grain, coal and other commodities.
Thousands of people living in low-lying areas in Austria and the Czech Republic had to be evacuated from their homes.
The death toll in Austria rose on Monday after a man listed as missing was found dead in the province of Vorarlberg, local police said. The 58-year-old had failed to return home from a party on Saturday.
In the Austrian city of Salzburg, 160 passengers were put up overnight in army barracks after the floods stranded their train. The Austrian foreign minister, Michael Spindelegger, told reporters the situation in some areas was very fraught.
The risk on Monday was that the flood danger could follow the course of the Danube river downstream to other European countries along its route.
Workers put up flood barriers along the banks of the Danube where it passes through the Slovak capital, Bratislava, and police shut several roads.
"We are getting bad news from Germany and Austria. We have to do all we can to protect ... the capital," the Slovak prime minister, Robert Fico, said.
In Hungary, where the capital, Budapest, is also built on the banks of the Danube, state media quoted György Bakondi, head of the national disaster authority, as saying that 400 people were working on flood defences.
He said water levels in the river could reach or even exceed the height seen in the record flooding of 2002.
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Dehui poultry plant fire: Locked exits 'blocked escape'


Survivors told state TV how they escaped from the blaze

Related Stories

A fire at a poultry processing plant in China has killed at least 119 people, officials say.
The fire broke out at a slaughterhouse in Dehui in Jilin province early on Monday.
Accounts speak of explosions prior to the fire, which caused panic and a crush of workers trying to escape. Most exits were said to be locked.
A labour activist told the BBC it was the worst factory fire in living memory.
The fire is now said to have been mostly put out and bodies are being recovered.
President Xi Jinping, who is on a visit to the Americas, ordered every effort to go into the rescue operation and treatment of survivors, adding that the investigation into the cause of the accident would be vigorous.
Sources including the provincial fire department suggest there may have been an ammonia leak which either caused the fire or made fighting the blaze more hazardous.
Footage from inside the plant shows burning embers and piles of ash, as Damian Grammaticas reports.
Other reports speak of an electrical fault.
It is China's deadliest fire since 2000, when 309 people died in a blaze in a dance hall in Luoyang, in Henan province.
About 100 workers had managed to escape from the Baoyuan plant, Xinhua said, adding that the "complicated interior structure" of the building and narrow exits had made rescue work more difficult.
It said the plant's front gate was locked when the blaze began, and other official media reports said there was only one unlocked door in the whole building.
Firefighters have still not completed the job of recovering bodies from the building, meaning the death toll may rise yet further, say correspondents.
Some 60 injured people have been sent to hospital, but the severity of their injuries remains unclear. State media quoted hospital staff as saying that some wounded were being treated for inhalation of toxic gases such as ammonia while others had burns of varying degrees.
Pictures from the scene showed the roof mostly burned away to reveal blackened, twisted girders.
The provincial government said it sent more than 500 firefighters and at least 270 doctors and nurses to the scene, evacuating an area nearby that is home to 3,000 people as a precaution, reported Reuters news agency.

Analysis

Celia HattonBBC Beijing correspondent
China's central government in Beijing has created thousands of workplace safety regulations, from the handling of toxic chemicals to the prevention of occupational illnesses. But those laws are not always enforced, since local officials and factory bosses often place profits ahead of safety.
Many buildings in China, including factories, are constructed without consideration for health and safety concerns. Worries over factory thefts often dictate that building exits are locked, making it difficult for workers to leave in a hurry.
The authorities in Beijing are attempting to change that pattern. Workplace accidents have dropped by a third in the past five years, according to comments attributed to former Vice-Premier Zhang Dejiang. The death toll from those accidents dropped by almost the same proportion.
However, China's Public Security Bureau notes that in 2011 fires on construction sites rose nearly 6% and in agricultural factories nearly 9% compared to 2010. Factory bosses failed to obey safety procedures, using heat sources and electricity in unsafe ways, it said.
Critics argue that factory bosses are rarely punished for workplace accidents.
Panic
Workers interviewed by state broadcaster CCTV said the fire broke out at about 06:00 (22:00 Sunday GMT) during a shift change and may have started in a locker room.
Those who managed to escape from the factory describe panic and chaos as the lights went out, the building filled with smoke, and they found exits blocked or locked.
Guo Yan told Xinhua the emergency exit for her workstation was blocked and that she was knocked to the ground in a crush of workers trying to escape through a side door.
"I could only crawl desperately forward," said Ms Guo, 39. "I worked alongside an old lady and a young girl, but I don't know if they survived or not."
Another unnamed survivor said: "I escaped by climbing out of a window. There was a huge cloud of black smoke coming down the corridor. It was burning hot. It engulfed me. As soon as I was outside I collapsed unconscious."
Family members were quoted as saying the factory doors were always kept locked during working hours.
The plant is owned by Jilin Baoyuanfeng Poultry Co. It was only established in 2009 and is not an antiquated facility.
Located around 800km (500 miles) north-east of Beijing, it employs some 1,200 people and produces some 67,000 tonnes of chicken products every year.
Chickens are slaughtered at the plant and then cut up for retail - a process that takes place in cold conditions. Ammonia is used as part of the cooling system and in such plants flammable foam insulation is commonly used to keep temperatures low.
China map
Workplace safety standards are often poor in China, with fatal accidents regularly reported at large factories and mines, says the BBC's John Sudworth in Shanghai.
Those lax standards are variously linked to corruption, the prioritisation of efficient production over worker safety in building design, and poor enforcement of safety rules.
Comments posted on the Chinese micro-blogging site Weibo about the fire included:
  • "If mainstream media report this accident at all, it will be about how leaders take this seriously and direct the rescue the work from the scene, and the relatives are calm etc. There won't be a list of the victims, and no-one will be made to account for this, because we want to build a harmonious society, and to achieve this, human life is ignored"
  • [User commenting on a picture of an official bowing in a gesture of sadness]: "So many people have been killed in one fire. If this had happened in other countries, the leaders might cut short a foreign trip, or the prime minister would apologise publicly. Here, more than 100 lives just led to this bow!
  • "Why was the gate locked from outside?"
  • "Work safety... everyone should be responsible. Sense of safety... should be taught early."
  • "The province should lower national flags. Relevant bosses should be sacked."
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The Stunning Tornado Videos of Storm Chaser Tim Samaras, Who Has Died


Video from 2009—Follow National Geographic Explorer and storm researcher Tim Samaras as tornado season touches down in the U.S.
Video from Wild Chronicles
Storm chaser Tim Samaras was killed Friday doing what he loved: chasing tornadoes. He and his son Paul perished in the El Reno, Oklahoma tornado along with frequent partner on storm chasing adventures, photographer Carl Young.
Samaras had a long relationship with National Geographic, providing some of our most memorable videos of storms.
A week before he died, he submitted what may have been the best, most complete video of a tornado being ‘born,’ in which he describes the formation as it’s happening. Paul was the videographer, and Carl is also seen in this video from Kansas.
Sometimes Tim and his crew found more than just tornadoes. Here, Tim and Carl, along with photographer Carsten Peter, found themselves in the midst of a storm with very large hail stones. Paul Samaras is the videographer.
Paul was also the videographer for this next video, in which the crew was following a tornado as it crossed a Kansas highway April 14, 2012.
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Tornado Chaser Tim Samaras Killed in Oklahoma Twister

Portrait of storm chaser Tim Samaras after a storm.
Severe-storms researcher Tim Samaras was 55.
Photograph by Carsten Peter, National Geographic
Melody Kramer
National Geographic
Published June 2, 2013
Tim Samaras, one of the world's best-known storm chasers, died in Friday's El Reno, Oklahoma, tornado, along with his son, according to a statement from Samaras's brother.
"They all unfortunately passed away but doing what they LOVED," Jim Samaras, Tim's brother, wrote on Facebook, saying that storm chaser Carl Young was also killed. "I look at it that he is in the 'big tornado in the sky.'"
Tim Samaras, who was 55, spent the past 20 years zigzagging across the Plains, predicting where tornadoes would develop and placing probes he designed in the twister's path to measure data from inside the cyclone. (Read National Geographic's last interview with Tim Samaras.)
"Data from the probes helps us understand tornado dynamics and how they form," he told National Geographic. "With that piece of the puzzle we can make more precise forecasts and ultimately give people earlier warnings."
Samaras's instruments offered the first-ever look at the inside of a tornado by using six radially placed high-resolution video cameras that offered complete 360-degree views. He also captured lightning strikes using ultra-high-speed photography with a camera he designed to capture images at one million frames per second.
Samaras's interest in tornados began when he was 6, after seeing the movieThe Wizard of Oz. For the past 20 years, he spent May and June traveling through Tornado Alley, an area that has the highest frequency of tornadoes in the world.
Samaras's team used probes that Samaras designed to measure the pressure drops within the tornadoes themselves, but the results were often frustrating. Tornadoes developed from only two out of every ten storms the team tracked, and the probes were useful in only some of those tornadoes.
But when the probes did work, they provided information to help researchers analyze how and when tornadoes form.
"This information is especially crucial because it provides data about the lowest ten meters of a tornado, where houses, vehicles, and people are," Samaras once said.
In 2003, Samaras followed an F4 tornado that dropped from the sky on a sleepy road near Manchester, South Dakota. He deployed three probes in the tornado's path, placing the last one from his car 100 yards ahead of the tornado itself.
"That's the closest I've been to a violent tornado, and I have no desire to ever be that close again," he said of that episode. "The rumble rattled the whole countryside, like a waterfall powered by a jet engine. Debris was flying overhead, telephone poles were snapped and flung 300 yards through the air, roads ripped from the ground, and the town of Manchester [was] literally sucked into the clouds.
"When I downloaded the probe's data into my computer, it was astounding to see a barometric pressure drop of a hundred millibars at the tornado's center," he said, calling it the most memorable experience of his career. "That's the biggest drop ever recorded ... like stepping into an elevator and hurtling up a thousand feet in ten seconds."
Samaras received 18 grants for fieldwork from the National Geographic Society over the years.
"Tim was a courageous and brilliant scientist who fearlessly pursued tornadoes and lightning in the field in an effort to better understand these phenomena," said Society Executive Vice President Terry Garcia in a statement on Sunday. "Though we sometimes take it for granted, Tim's death is a stark reminder of the risks encountered regularly by the men and women who work for us."
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