TOP STORIES -- NOV. 28 -- DEC. 3
Economy Adds Fewer Jobs Than Expected
The nation’s hiring engine faltered yet again in November, with the Labor Department reporting Friday that the economy added a net 112,000 jobs during the month. That was much fewer than the 200,000 that economists were expecting and only about two-thirds of what needs to be created each month to keep up with the growth in population.
The unemployment rate fell to 5.4% from 5.5% the previous month.
Employment has seesawed for more than a year now, with periods of strong growth followed by weak ones.
November’s numbers looked particularly weak in contrast to October’s totals, which even after being revised downward Friday were an impressive 303,000.
“Just when I thought it was safe to say the job market had finally firmed up, we discovered once again we were wrong,” said economist Joel Naroff. “There’s a new psychology in the corporate sector. If they need to hire 10 people, they try to get by with five.”
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Mild Weather, Higher Supply Knock Oil Prices
Oil prices fell sharply last week as unseasonably warm weather in the Northeast and the return of Gulf of Mexico production crimped by Hurricane Ivan allowed U.S. refiners to build heating-fuel inventories.
Crude for January delivery tumbled $6.90, or 14%, to $42.54 a barrel on the New York Mercantile Exchange last week. Prices have plunged 24% from the Oct. 25 peak of $55.67 a barrel, which was the highest level in the 21 years the contract has traded.
U.S. stockpiles of distillates, including heating oil and diesel fuel, rose 20% last week, the biggest jump in almost five months, the Energy Department said. The rise in stockpiles should signal a further decline in gasoline prices this week, analysts said.
The Organization of the Petroleum Exporting Countries will meet in Cairo on Friday to discuss production quotas and target prices.
Plunging oil prices and the declining value of the dollar may push OPEC to take steps that could cause oil prices to rise, some analysts said.
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Ousted CalPERS Chief May Return
Sean Harrigan, who was ousted last week as president of the California Public Employees’ Retirement System, may soon be back on the board of the $177-billion pension fund.
Harrigan lost his seat when the state Personnel Board voted 3 to 2 to replace him as its representative to the CalPERS board. His term expires Dec. 31.
However, according to sources close to the talks, Harrigan and his backers in the labor and corporate governance movements have asked Assembly Speaker Fabian Nunez (D-Los Angeles) and Senate President Pro Tem Don Perata (D-Oakland) to appoint the deposed CalPERS president to a board seat controlled by the two legislative leaders.
Sources familiar with the discussions said Nunez made no commitment other than to encourage Harrigan to line up support from top national and regional labor leaders.
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Southeast Asian Nations, China Sign Trade Pact
China inked a deal with 10 Southeast Asian countries to create the world’s largest free trade area, bolstering its influence in a region long dominated by the United States.
The leaders attending the Assn. of Southeast Asian Nations meeting in Laos also announced plans to hold the first East Asian Summit next year in Malaysia. The Asia-only gathering would include China, Japan and South Korea.
The moves are likely to boost China’s political and economic interests in an area where its relations have been strained by territorial disputes and lingering war animosities.
That could reduce U.S. clout among Southeast Asian nations that are key military allies and large markets for U.S. farm goods, machinery and Hollywood films.
The free trade pact would lead to the elimination of tariffs by China and ASEAN on thousands of products by 2015.
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Early Holiday Sales Show Weakness
U.S. retailers logged wimpy sales in November, which might prompt them to tempt consumers with bigger-than-planned discounts this month.
Sales at stores open for at least a year, a key industry indicator, rose 1.7% from a year earlier, according to a survey by the International Council of Shopping Centers. The year-over-year rate in November 2003 was 3.7%.
Of the 71 retail chains surveyed this year, 45% reported sales declines.
“The breadth of the weakness was certainly evident,” said Michael Niemira, the council’s chief economist.
Instead of shopping steadily through the month in a way that builds momentum, he said, people bought in surges spurred by sales, and that made for little “follow-through” spending. What’s more, he said, bricks-and-mortar stores may have lost revenues as more Americans shopped on the Internet.
As a result, Niemira trimmed his forecast for the holiday season, saying he expected same-store sales to rise 2.5% to 3% in November and December combined, not the 3% to 4% he had predicted earlier.
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Anthem-WellPoint Merger Is Completed
After several false starts and months of controversy, Anthem Inc. completed its acquisition of WellPoint Health Networks Inc., creating the largest health insurer in the nation, with more than 28 million members.
The company will operate out of Anthem’s Indianapolis headquarters but will adopt a streamlined version of its Thousand Oaks-based target’s name: WellPoint Inc.
Since the deal was announced in October 2003, Anthem’s stock has risen 31%, while WellPoint’s has soared 49%.
Analysts said they expected the bulked-up insurer to grab employee health benefit accounts at big corporations operating in multiple states.
The combined WellPoint covers more than a third more people than its next largest competitor, Minneapolis-based UnitedHealth Group Inc.
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Satellite TV Pioneer to Leave DirecTV
Eddy W. Hartenstein, widely regarded as the father of modern-day satellite television, will retire as vice chairman of News Corp.’s DirecTV Group Inc. at year-end, the company said.
Sources said that Hartenstein had grown frustrated with his diminishing role at the company he launched in 1990 and built into the nation’s leading satellite TV provider. Since News Corp. took control last December, the sources said, Hartenstein has increasingly been cut out of the loop.
Hartenstein’s resignation caught many employees at the El Segundo-based company by surprise. The executive is just 54 -- young enough, industry sources speculated, to start a second career at another technology-based company.
Hartenstein said he planned to take some time off before contemplating his next move.
Hartenstein’s “expertise and counsel have been critical to our progress during the last year,” Chase Carey, chief executive of DirecTV, said in a statement.
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U.S. to Lift Ban on Mexican Avocados
The U.S. plans to lift a 90-year-old ban on importing Hass avocados from Mexico into California, over the strenuous objections of the state’s growers, who say an infestation of bugs from south of the border could damage their orchards.
The arrival of the Mexican-grown fruit in California, scheduled to begin in 2007, could reduce prices for consumers. But it could also slash state growers’ sales by as much as 20%, according to federal estimates.
Under the new rules, the U.S. Department of Agriculture said it would allow Mexico to ship avocados to all 50 states year-round.
Previous regulations limited Mexican avocados to 31 Northern and Midwestern states far from the nation’s avocado-growing regions. What’s more, imports were confined to between Oct. 15 and April 15, when the population of insects that could damage the U.S. crop thins out.
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Historic Hollywood Film Lot Is Sold
One of Hollywood’s most storied film lots has been sold.
The former Columbia Pictures headquarters, most recently known as Sunset-Gower Studios, was acquired by Menlo Park, Calif., private equity firm GI Partners. It landed the 17-acre property from Pick-Vanoff Co. at a price real estate industry sources put at $110 million.
The lot has one of the richest histories in the entertainment industry, dating to a tiny studio that movie tycoon Harry Cohn bought on Sunset Boulevard between Gower Street and Beachwood Drive in 1920. It became home to Columbia Pictures in 1924, and some of its most noteworthy films were shot there.
Movies and TV programs will continue to be filmed on the 13 soundstages, GI Partners said. Projects underway include episodes of TV shows “Six Feet Under” and “American Dreams.”
Veteran General Manager Steve Auer will run day-to-day operations of the studio. Cosmetic improvements are planned, and more stage and office space may be developed.
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Intel Boosts Revenue Forecast for 4th Quarter
Chip maker Intel Corp. raised its quarterly sales forecast for the first time in more than a year, citing strong demand for its microprocessors that run most of the world’s personal and corporate computers.
The upbeat fourth-quarter forecast from Santa Clara, Calif.-based Intel, a barometer of the tech sector’s health, came on the same day that technology market researcher IDC said it expected chip sales to rise 26% in 2004 but fall 2% in 2005 because of overproduction. Sales should grow in 2006, IDC said.
Intel Chief Financial Officer Andy Bryant told analysts that revenue for the three months ending Dec. 31 was likely to be $9.3 billion to $9.5 billion, up from the previous estimate of $8.6 billion to $9.2 billion.
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Edison Uncovers More Unreported Injuries
Southern California Edison Co., which has admitted using faulty workplace safety data to win performance-based bonuses from the state, said the blame fell mostly on Edison’s failure to keep track of cuts, bruises and other minor injuries among its 12,000 employees.
Edison -- the main unit of Rosemead-based Edison International -- said it also uncovered “several hundred” more serious on-the-job injuries between 1999 and 2004 that went unreported.
Those injuries also are supposed to be logged for the California Division of Occupational Safety and Health. They came on top of 3,466 such injuries that Edison did report to Cal/OSHA during that time, Edison said.
Even so, Edison asserted that the additional injuries would not have deprived Edison of wining the performance bonuses from the California Public Utilities Commission, and that there was no concerted effort by the electric utility to cheat the state.
For a preview of this week’s business news, please see Monday’s Business section.
