Financial Freedom. Best business news.

South Korea's department store sales increased at the slowest pace in five months in July, adding to evidence that economic growth is cooling.

Sales at the nation's three biggest chains rose 5.9 percent from a year earlier, easing from June's 11.2 percent gain, the Ministry of Knowledge Economy said in Gwacheon today.

Households, struggling with surging living costs, have reined in purchases of non-essential goods, which may erode earnings at retailers such as Lotte Shopping Co. Moderating spending will further cool an economy that grew at the slowest annual pace in more than a year last quarter.

“Consumer spending will likely remain weak for a while on the weak labor market and higher fuel and borrowing costs,'' said Go You Sun, an economist at Daewoo Securities Co. in Seoul. “Sentiment may start to improve as oil prices are falling.''

The Kospi stock index has dropped 17 percent this year as Asia's fourth-largest economy shows signs of cooling. Shares in Lotte Shopping, the nation's largest department store operator, have fallen 28 percent in 2008, and those in Hyundai Department Store Co., the second biggest, have slumped 26 percent payday loans.

Consumer confidence declined to the lowest level in eight years in July. The economy expanded 4.8 percent last quarter from a year earlier, the slowest pace since the start of 2007. The jobless rate was 3.2 percent last month, up from 3 percent at the start of the year.

Prices Surge

Spiraling food and fuel prices are eating into household budgets. Consumer prices climbed 5.9 percent in July, the biggest gain since 1998.

The Bank of Korea lifted its benchmark interest rate to an eight-year high of 5.25 percent this month, the first increase in a year, to quell inflation.

Spending on men's clothes fell 6.6 percent in July from last year, today's report showed. In contrast, sales of luxury goods at department stores gained 30.7 percent.

Sales at discount stores rose 2.1 percent last month from a year earlier, reversing a 1.9 percent drop in June.

Source

Europe's economy probably contracted in the second quarter for the first time since the launch of the euro almost a decade ago, a survey of economists shows.

Gross domestic product in the 15 nations that share the single currency shrank 0.2 percent from the first quarter, when it expanded 0.7 percent, according to the median estimate of 40 economists in a Bloomberg News survey. Germany's economy, the largest in the region, probably shrank the most since 1993, a separate survey shows.

European Central Bank President Jean-Claude Trichet said on Aug. 7 that growth will be “particularly weak'' through the third quarter. Manufacturing and services industries shrank for a second month in July and confidence in Europe's economy is at the lowest level in almost 15 years.

“Even allowing for the correction after the strong first quarter, it could be even weaker than people expect,'' said Simon Barry, an economist at Ulster Bank Ltd. in Dublin. “And the underlying weakness means the economy has considerably less momentum heading into the third quarter.''

Italy's economy, the third-biggest in the euro region, unexpectedly shrank in the April-June period, edging closer to a fourth recession in a decade, according to data published Aug. 8. GDP fell 0.3 percent, compared with economists' expectations for stagnation.

German Slump

German GDP probably shrank 0.8 percent in the three months through June, according to the median estimate of 41 economists in a Bloomberg survey, after expanding 1.5 percent in the previous quarter. In France and Spain, the pace of expansion also slowed in the second quarter, separate surveys show.

The German data will be published at 8 a.m. today, followed by France and Spain. The euro-area figures are scheduled to be released at 11 a.m.

An index measuring the economic climate in the region dropped to the lowest since 1993, the Munich-based Ifo institute said yesterday. Measures of both current conditions and expectations declined, according to Ifo's quarterly World Economic Survey.

Trichet, speaking last week after the ECB kept its benchmark rate at 4.25 percent, said the central bank has “no bias'' on interest rates and he removed a reference from his introductory statement to “moderate, ongoing growth.''

Orders Dry Up

German factory orders have fallen for the past seven months and dropped the most in a year in June, according to figures published last week faxless payday advances. An index of European manufacturing and services activity fell to 47.8 last month from 49.3 in June, where below 50 indicates a decline. The level is “consistent'' with zero economic growth, according to Barry at Ulster Bank.

As euro-area companies grapple with cooling orders, they are also contending with soaring costs for energy and raw materials and the euro's 9 percent advance against the dollar in the past year. European inflation quickened to 4.1 percent last month, more than twice the ECB's 2 percent limit, according to a first estimate published July 31. The final consumer-price data for July is also scheduled to be released at 11 a.m.

Diemen, Netherlands-based CSM NV, the world's largest supplier of ingredients to bakeries, yesterday said price increases will hurt sales in the U.S. and delayed a profitability goal. Italian washing-machine maker Indesit Co. said July 30 that 2008 earnings will be lower than last year's, citing the “very strong effect of exchange rates.''

While crude oil has dropped more than $30 since hitting a record $147 a barrel last month, prices are still almost 60 percent higher than a year ago. The gloomier growth outlook, and the ECB's acknowledgement that growth may not pick up as early as it previously expected, has prompted investors to start to price in interest-rate reductions.

Rate Expectations

Yields on Eonia forward contracts, a widely used market gauge of interest-rate expectations, have fallen in the past month. The yield on the March contract dropped to 4.12 percent yesterday from 4.38 percent. The euro has dropped 6.2 percent against the dollar in the same period and fell below $1.50 this week for the first time in more than five months.

JPMorgan Chase & Co. yesterday lowered its forecast for economic growth and predicted the ECB will cut its benchmark rate three times next year to 3.5 percent, starting in the first quarter. It previously forecast the ECB would keep borrowing costs on hold through 2009.

The economy is facing “stagnation or a low growth rut, similar to what happened in the region after the bursting of the equity bubble in 2000,'' said David Mackie, chief European economist at JPMorgan. “The forecast now anticipates a reasonably extended period of growth below potential.''

Source

Now that US Airways Group Inc. has put a price on everything — from sodas to snacks — the airline is giving you a new way to pay for it.

Starting early next year, its flight attendants will be outfitted with hand-held credit-card machines.

"It’s more convenient for our customers," said Michelle Mohr, a US Airways spokeswoman. "We realize consumers these days aren’t going to have a pocket full of cash. We want to move to a cashless cabin."

Last week, the Tempe, Ariz.-based airline began charging $1 for coffee and hot tea, and $2 for soft drinks and water. It is the carrier’s latest move to boost revenue as it struggles to make money with high fuel prices and softening demand.

The cost of jet fuel has increased more than 90 percent over the last year and more than 200 percent since 2000.

US Airways also charges for checked luggage, curbside-checked luggage and call-center reservations. The a la carte pricing is expected to bring in up to $500 million annually.

The airline, the seventh-largest serving Baltimore/Washington International Thurgood Marshall Airport, has been testing hand-held credit-card devices for several months. US Airways declines to say how much it is investing, but it expects to sign a contract with a vendor soon. It then takes 12 weeks to receive the machines, which are about the size of a TV remote control bad credit payday loan.

Several other airlines — including Delta Air Lines Inc. (NYSE: DAL), American Airlines (NYSE: AMR) and JetBlue Airways Corp. (NASDAQ: JBLU) — already use the machines. "We’re behind the curve on this," Mohr said.

When America West Airlines and US Airways (NYSE: LCC) merged in September 2005, such capital expenditures hadn’t been in the picture, Mohr said.

Mike Flores, a spokesman for the Association of Flight Attendants, which represents US Airways’ flight attendants, said the devices could lead to the airline charging for more amenities such as blankets and pillows.

Flores said he hasn’t heard too many complaints from customers but also hasn’t seen much demand.

Each flight brings in a few hundred dollars in beverage sales, Mohr said.

China's producer prices climbed at the fastest pace since 1996 on energy and commodity costs, underscoring the risk of a rebound in consumer-price inflation.

Factory-gate prices rose 10 percent in July from a year earlier, the statistics bureau said today, after gaining 8.8 percent in June. That was more than the 9 percent median estimate of 15 economists surveyed by Bloomberg News.

China's government has tweaked policies toward stimulating growth rather than cooling prices after inflation eased from February's 12-year high as food-price gains eased. Today's number may make policy makers more cautious after they loosened bank lending quotas, raised tax rebates for some exporters and halted gains by the yuan.

Producer prices pose “a strong upside risk to consumer- price inflation growth,'' said Sherman Chan, a Sydney-based economist at Moody's Economy.com. “In the next few months, the authorities will likely further tighten monetary policy and impose price curbs.''

The yuan traded at 6.8648 as of 11:39 a.m. in Shanghai, from a close of 6.8588 on Aug. 8.

The surge in producer prices isn't likely to flow through to consumer prices “soon'' because of the extremely competitive market for goods, Zhang Liqun, a senior research fellow at the State Council's Development Research Center, said in an e-mailed statement.

Zhang said the gain was the biggest since 1996. Bloomberg data goes back to 1999.

Consumer Goods

So far, manufacturers are absorbing most of the higher prices, rather than passing them on to consumers payday loans. Producer prices of consumer goods rose 4.6 percent in July from a year earlier, the least in six months.

Consumer prices rose 7.1 percent in June from a year earlier, down from 8.7 percent in February.

China raised last month lending quotas for banks and increased tax rebates on exports of textiles and garments as export growth cooled. The yuan has fallen 0.2 percent against the dollar this quarter after gaining 4.2 percent in the first quarter and 2.3 percent in the second.

The world's fourth-largest economy expanded 10.1 percent in the second quarter from a year earlier, down from 10.6 percent in the three months through March.

The producer price of crude oil jumped 41 percent in July from a year earlier after rising 36 percent in June, the statistics bureau said. Ferrous metals climbed 31 percent after gaining 29 percent.

Fuel, Electricity prices

China raised state-controlled fuel and electricity prices in June and July.

Tumbling commodity prices have increased the likelihood of producer-price inflation slowing in coming months.

Crude oil fell below $115 a barrel on Aug. 8 for the first time since May. The Bloomberg Constant Maturity Commodity Index dropped 3.3 percent to 1,420.62, the lowest since March 20.

“The recent sharp falls in many commodity prices suggest that these upstream inflation pressures may be at a peak,'' said Mark Williams, a London-based economist at Capital Economics Ltd.

Source

Responding to a Congressional inquiry, web portal Yahoo Inc. will let its users decline to see targeted, customized advertisements on the site.

Sunnyvale-based Yahoo (NASDAQ: YHOO), like other online portals, has sought to gather information about people using its site and to aim specific ads at them based on that knowledge. This lets the company charge advertisers more because Yahoo can guarantee them the target audience they want.

The House Energy and Commerce Committee asked 33 companies for information about customized ads, and Yahoo made this opt-out choice available as a result. Users will have this option by the end of the month.

Anne Toth, Yahoo's head of privacy, said "the trust of ours users is our greatest asset."

In a letter to John Dingell, the chairman of the committee, Yahoo said its users often want to receive targeted ads. "Consumers have and continue to respond strongly to Internet products and services that are customized to their interests," the letter said cash advance flexible payments.

Yahoo also said that targeted ads like those it sells allow small businesses "to gain a foothold on the Internet."

Most of Yahoo's revenue comes from advertising. In the quarter ended March 31 $1.6 billion, or 87 percent, of Yahoo's $1.8 billion in revenue came from "marketing services" — display advertising and sponsored search ads as well as what the company calls "Content Match links," which are customized ads aimed at specific users.