Finance & Business World

The Bank of Japan says business confidence at major Japanese manufacturers slightly improved in March.

In the central bank’s quarterly “tankan” survey of business sentiment released Friday, the index for large manufacturers climbed to 6 in March from 5 in December.

The figure represents the percentage of companies saying business conditions are good minus those saying conditions are unfavorable, with 100 representing the best mood and minus 100 the worst pay day loan lenders.

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The restaurant industry, hit hard by recession and high unemployment, is seeing less investor appetite for its stocks.

Although people must eat, they are increasingly careful about how they spend their money to do so.

As in any severe shakeout, some types of restaurants and individual brands have used the opportunity to re-examine and perfect their businesses. They’ve shown gains in an industry still offering investment opportunities in 2011.

“The strong growth in demand in restaurants is the ‘quick-casual’ sector that is positioned between fast food and casual dining,” said Bryan Elliott, restaurant analyst with Raymond James in Atlanta. “These restaurants have no ‘wait staffs’ (table servers) and are perceived to offer better food quality and a better buying experience than fast food, which helped them do well during recession and continues to help now.”

Smaller staffs at these restaurants mean lower labor costs, while customers consider them not only convenient but also economical because there isn’t any tipping.

The leading companies of quick-casual dining have posted strong results and powerful stock-price gains over the past two years:

The cost of a plane ticket keeps jumping, and it seems the sky’s the limit for price. Why? Because you’re willing to pay.

The major U.S. airlines have hiked fares six times so far this year, already doubling the total number of increases for 2010, according to Rick Seaney, chief executive of Farecompare.com.

But consumers have continued to pay the increased fares, so the airlines have become bolder in driving the prices up even further.

The average roundtrip airfare between major U.S. cities has crept up to $311, which is getting awfully close to the spring-summer peak of $318 in 2008. This is an important benchmark for how high consumers are willing to go, Seaney said, and sticker shock could soon set in.

"I don’t expect prices to rise unchecked," he said.

But prices may have already overtaken 2008 levels. Seaney said that the average airfares of $318 in 2008 versus $311 today do not include ancillary fees for checked baggage, pet travel, non-alcoholic drinks, food and other services that were free in 2008. So many travelers are probably paying more to travel now than they were in 2008, or even 2001 — the previous peak no fax needed payday loans.

"I think airlines may be getting close to travelers’ wallet breakpoint," said Seaney. "When or if that does happen, airlines will begin pulling the lever on seat cuts and fee hikes."

But for now, airlines have been hiking up fares, practically on a daily basis, said Tom Parsons, travel pricing guru at BestFares.com. They also hiked up fuel surcharges by more than 20% since 2008, even through oil prices are down about 28% since their 2008 peaks.

The airlines have also cut capacity, meaning they eliminated their least fuel-efficient flights. This has been a highly successful strategy for airlines, allowing them to fly fuller planes and provide fewer choices for consumers.

"I wouldn’t touch an airline ticket right now," he said. "Don’t blink. Let the airlines blink first." 

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Most 401(k) accountholders continue to plug away at setting aside a portion of their pay. That consistency, along with a rising stock market helped push balances in plans managed by Fidelity Investment to a 10-year high, the retirement plan provider said Wednesday.

An analysis based on 11 million accounts showed the average balance rose to $71,500 at the end of December.

For participants continuously active in saving for the past 10 years, average balances rose to $183,100 at the end of last year from $59,100 at the end of 2000, Fidelity said.

To put the numbers in perspective, however, keep in mind baby boomers between 46 and 54 should have about 14.6 times their final salary saved in order maintain a similar lifestyle in retirement, according to calculations by human resources consultant Aon Hewitt.

Let’s say you’re a baby boomer making $60,000 a year. That’s means you would need about $876,000 set aside. Total savings should include workplace accounts like a 401(k), accumulated Social Security benefits, and any pension or other retirement savings you may have available.

Younger workers will need even more, advises Aon Hewitt. Those between 31 and 45 will need about 16 times their final pay and the youngest workers _ those between 18 and 30 _ should save 18.7 times their final salary.

The Fidelity study shows workers are remaining consistent with their contributions. The average amount workers defer from their paychecks into their 401(k) plans remained at 8.2 percent for the eighth straight quarter.

That contribution level still falls short of the common advice of planning experts who recommend setting aside 10 to 15 percent of your salary. That figure includes an employer match, which is most often about 3 percent. Assuming most workers receive the common match, they are at least reaching the low end of the suggested savings range.

About 8 percent of the companies offering 401(k) plans through Fidelity reduced or eliminated the employer match at the height of the recession. Since then 55 percent of those have indicated they plan to reinstate the match within 12 months.

“At the end of the day saving at appropriate levels, saving continuously and ensuring that you have the appropriate asset allocation are the most critical components to help ensure that you have sufficient savings for retirement,” said Beth McHugh, vice president of market insights at Fidelity.

The Fidelity study also indicated the recession and stock market downturn may have turned the focus of more workers toward retirement planning. About three out of four active participants contacted Fidelity by telephone or Internet in 2010 and more than 1.1 million took advantage of online tools.

Of those who used the savings tools, 47 percent increased contributions to their 401(k)s by an average of three percentage points from 4 percent to 7 percent.

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A failure by lawmakers to raise the legal limit on U.S. borrowing could be “very dangerous” and have “enormous potential negative impacts on the markets,” White House Chief of Staff William Daley said.

While both parties need to come together to deal with the nation’s ballooning debt, Daley warned of “devastation” should an increase in the government’s debt ceiling be rejected. He noted that Republican and Democratic leaders have acknowledged such dangers, especially as certain parts of the world, including Europe, are still recovering from a global recession.

“To go through a traumatic sort of vote would have enormous potential negative impacts on the markets,” Daley said today at the Bloomberg Breakfast in Washington.

The government will hit the $14.29 trillion debt limit by the end of May, a little later than initially projected because tax revenues have been more robust than expected, the Treasury Department said today in a statement.

Lawmakers are headed for a showdown over the debt limit vote, with Republicans and some Democrats demanding big cuts in government spending as the price of any increase.

House Speaker John Boehner said Jan. 31 that while a U.S. default would be a “financial disaster,” the Obama administration needs to cut spending if it seeks an increase in the debt ceiling.

‘Split Control’

“Split control of Congress is apt to lead to a longer- than-usual debate over increasing the statutory debt limit, and could result in at least one failed attempt at an increase before the limit is raised,” Goldman Sachs said this week in a research note pay day advance. The debt stood at $14.003 trillion on Jan. 31.

“We’re going to make the strong case that we ought to just deal with the debt limit, at the same time we’re all saying we’ve got to do something about this deficit,” Daley said. “But to sort of play this typical Washington game of threatening and trying to leverage off the debt would be very dangerous for the markets.”

Daley, a former executive at JPMorgan Chase & Co., said President Barack Obama’s proposal to overhaul the corporate tax code has been well received by the business community.

“There’s a general belief” that greater simplification and lower rates would make U.S. companies “more competitive internationally” and help them create more jobs in the U.S., Daley said.

During his Jan. 25 State of Union address, Obama said he would cut corporate tax rates if loopholes and breaks also could be eliminated so that an overhaul wouldn’t add to the deficit.

Treasury Secretary Timothy Geithner plans to meet today with Senate Majority Leader Harry Reid of Nevada, Budget Committee Chairman Kent Conrad of North Dakota and Finance Committee Chairman Max Baucus of Montana, all Democrats, to discuss priorities for the current Congress, the Treasury Department said.

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Goldman Sachs Group Inc.’s offering of 30-year bonds, its first in more than three years, signals waning concern among investors that inflation is accelerating.

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A fire ripped through a Venezuelan government office belonging to the agency that handles land takeovers Saturday, and officials said there was evidence pointing to arson.

The blaze damaged 70 percent of the regional headquarters of the National Land Institute in the western state of Zulia, Agriculture and Land Minister Juan Carlos Loyo said.

“There is a combination of evidence, very strong, that appears to suggest it was not a natural fire but one in which a group of individuals were involved,” Loyo said in comments broadcast by state television. He did not elaborate.

The agency is in charge of carrying out land seizures as part of a socialist-oriented program under which President Hugo Chavez’s government is taking over big swaths of agricultural terrain.

Last month, officials accompanied by soldiers and pro-government farmers began taking control of 47 private ranches in Zulia covering more than 93 square miles (240 square kilometers) _ about the size of the city of Seattle.

At the time, Chavez called them “national lands” and argued that the owners had illegally taken them over the years. Chavez later said officials decided to let 16 ranch owners keep properties that are relatively small and being used productively.

Loyo said the land agency office has backups of all the documents and information destroyed, so the fire should not hinder the takeovers.

“No matter what happens, there can be no intimidation,” he said. “The politics of social justice, the liberation of our lands, must continue.”

The president of the national cattle ranchers’ association urged authorities to conduct a “serious and impartial” investigation. Speaking by phone, Manuel Cipriano Heredia said he hoped the incident “does not get turned into an excuse to further threaten a national industry that, through the effort of several generations, created their ranches from nothing in the middle of the forest.”

Chavez has said the government will make part of the seized land available to the poor and use it to house thousands displaced by recent floods and mudslides.

The government says it has taken over about 8,750 square miles (23,000 square kilometers) of rural land in recent years, targeting farmland that officials contend was either fallow or underused or whose ownership could not be proven through documents.

The leftist leader has also expropriated or nationalized a growing list of businesses, pledging compensation in most cases, although payments have been spotty and there have been disputes.

More than 200 businesses were seized in the past year, according to private-sector estimates.

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Thailand’s manufacturing output growth unexpectedly slowed in November, a sign producers may be anticipating easing global demand after a rebound lifted exports this year.

The industrial production index rose 5.6 percent last month from a year earlier, the Office of Industrial Economics said on its website today. That compares with a revised 6 percent increase in October and the 6.8 percent median estimate of 12 economists in a Bloomberg News survey. The revised October number was calculated by Bloomberg News based on data provided by the agency, which only gave the growth rate for November.

Europe’s debt crisis and U.S. unemployment that’s above 9 percent may cap overseas demand for goods by Asian manufacturers such as Bangkok-based Hana Microelectronics Pcl, which makes parts for computers and phones including Apple Inc.’s iPhone. Thai Finance Minister Korn Chatikavanij said last week Southeast Asia’s largest economy after Indonesia may expand more than 4 percent in 2011, slowing from this year’s pace.

“Industrial growth slowed as the recovery in the U.S. and Europe weighs down the demand for electronics exports,” Chandara Lim, an economist at Moody’s Analytics in Sydney, said before the report. “Tighter monetary settings could weaken private investment and slow manufacturing orders over the upcoming month.”

Rate Increase

The central bank raised its one-day bond repurchase rate by a quarter of a percentage point to 2 percent earlier this month, signaling policy makers view inflation as a bigger threat than slowing growth. Governor Prasarn Trairatvorakul said Dec. 24 Thailand can’t have “low wages, a weak baht and low interest rates forever.”

Thai export growth accelerated to 28.5 percent in November, and shipments should rise by as much as 28 percent this year, Commerce Minister Porntiva Nakasai said last week.

Still, the baht has appreciated more than 10 percent this year, the best performer in Asia after the Japanese yen and Malaysian ringgit, raising concern that Thailand’s goods may become more expensive relative to its regional rivals. Korn said Dec. 15 the baht will probably extend gains next year and capital flows will make the currency volatile.

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The Toronto stock market was little changed in early trading Tuesday as investors look to an afternoon announcement from the U.S. Federal Reserve on interest rates and economic conditions.

The S&P/TSX composite index was off 7.09 points to 13,288.76 while the TSX Venture Exchange gained 1.56 points to 2,132.32.

The Canadian dollar shed early gains against the U.S. dollar, down 0.24 of a cent to 99 cents US.

Analysts aren

Sales at U.S. retailers climbed in October by the most in seven months, brightening the outlook for holiday shopping even as unemployment holds near 10 percent.

Purchases rose 1.2 percent, exceeding the highest forecast among economists surveyed by Bloomberg News, according to data from the Commerce Department issued today in Washington. Another report showed manufacturing in the New York region unexpectedly shrank in November as orders dropped.

Stock gains over the past two months and growing employment are helping households repair finances, indicating consumer spending will play a bigger role in the recovery. At the same time, merchants from J.C. Penney Co. to Wal-Mart Stores Inc. are offering promotions to guard against any letdown in the last two months of the year, typically the biggest shopping season and hiring time for retailers.

“We expect the holiday shopping season to really ramp up in November,” said Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia, who forecast a 1.1 percent gain in sales. “The breadth of discounting” and steady income gains are “providing some support,” he said.

The improvement in spending comes as other parts of the economy show signs of cooling.

Manufacturing in the New York region contracted in November for the first time in more than a year, according to the Federal Reserve Bank of New York’s so-called Empire State Index. The measure, which covers New York, northern New Jersey and southern Connecticut, fell to minus 11.1 from 15.7 in October. Readings less than zero signal declines in activity.

Shares Climb

The Standard & Poor’s 500 Index fell 0.1 percent to 1,197.75 at the 4 p.m. close in New York as increasing concern over Fed policy and the government budget deficit wiped out earlier gains. The S&P Consumer Discretionary Index, which includes auto dealers, hotels and restaurants where sales are more sensitive to the economic outlook, fell 0.3 percent after having been up as much as 0.7 percent.

The median estimate of 74 economists surveyed projected retail sales would increase 0.7 percent. Forecasts ranged from increases of 0.4 percent to 1.1 percent. The Commerce Department revised the September rise up to 0.7 percent from the 0.6 percent gain previously reported.

Nine of 13 categories in today’s report showed an increase in demand, led by a 5 percent gain among auto dealers. Vehicles sold at a 12.25 million seasonally adjusted annual rate last month, the strongest performance since the government’s cash- for-clunkers program in August 2009, according to industry data released earlier this month.

Effect on Growth

Sales excluding automobiles advanced 0.4 percent, matching the median forecast of economists surveyed.

Excluding autos, gasoline and building materials, which are the figures used to calculate gross domestic product, sales improved 0.2 percent after a 0.4 percent gain the prior month.

Non-store merchants, which include Internet retailers, sporting goods and building material stores, were among the other categories that showed increasing demand.

The National Retail Federation has forecast November- December holiday sales will rise by 2.3 percent from a year ago, the most since 2006.

J.C. Penney, the third-largest U.S. department-store company, last week said third-quarter profit rose 63 percent. Fourth-quarter sales at stores open at least a year will rise 3 to 4 percent, the Plano, Texas-based company said in a Nov. 12 statement, adding that the holiday shopping environment will “remain highly promotional.”

Rebuilding Inventories

Companies may be stocking up ahead of the holidays in anticipation of better sales, another report showed today. Inventories rose 0.9 percent in September, more than forecast, according to figures from the Commerce Department. Auto dealers and building material stores led the advance.

The pace of job growth and Americans’ drive to pay down debt and boost savings may remain hurdles for retailers. Payrolls grew by 151,000 workers in October, the first gain in five months, and the unemployment rate held at 9.6 percent, the Labor Department said Nov. 5.

Joblessness will average 9.3 percent in 2011, according to the median forecast of economists surveyed by Bloomberg this month.

Shares over the past two months rallied in anticipation of more action by the Fed to spur growth. Policy makers this month announced a plan to buy an additional $600 billion of Treasuries through June with the aim of reducing joblessness and averting a drop in prices that would hurt the recovery.

The government may also be poised to extend support for American households.

Tax-Cut Extension

President Barack Obama has said he’s committed to extending tax cuts for middle-class Americans that are due to expire by the end of the year and indicated he’s willing to negotiate with Republicans an extension for the country’s highest earners.

The Democratic Party this month lost control of the House of Representatives to Republicans amid voter discontent over the outlook for the economy.

“It is good to see consumer spending coming back,” Rebecca Blank, the Commerce Department’s undersecretary for economic affairs, said in an interview. “If middleclass Americans see their taxes increase, that is going to have a negative effect. I’m very hopeful that we are going to maintain the current tax setting.”

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