Luxury French shoemaker Mephisto is stepping into downtown Seattle with a new store.
Michael LaMoria, who operates the Mephisto store in Bellevue Square, is opening his second location on the northeast corner of University Street and Fourth Avenue across from the Fairmont Olympic hotel this September.
The 601-square-foot space that Mephisto is occupying has been vacant for several years.
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. 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.''
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. 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.
New Zealand's annual trade deficit narrowed for the first time in four months in June as a contracting economy curbed demand imports, while exports rose more than forecast.
The gap narrowed to NZ$4.48 billion ($3.3 billion) in the 12 months ended June 30 from NZ$4.78 billion in the year through May, Statistics New Zealand said in Wellington today. The median estimate in a Bloomberg survey of nine analysts was for a NZ$4.64 billion shortfall.
New Zealand's economy contracted in the first quarter and eight of 13 economists surveyed expect it also shrank in the three months ended June 30, putting the nation in its first recession since 1998. Consumer confidence fell to a record low last month, curbing demand for imported cars and furniture.
“Domestic demand is slowing,'' said Khoon Goh, senior economist at ANZ National Bank Ltd. in Wellington. “We expect to see much sharper declines in imports of consumer goods.''
New Zealand's currency bought 74.22 U.S. cents at 11:45 a.m. in Wellington from 74.31 cents immediately before the report.
A record 49 percent of 1,119 people surveyed in the two weeks ended June 29 said it was a bad time to buy a major household item, according to research group Roy Morgan.
Economists monitor the rolling, 12-month trade balance because of volatility in the month-on-month figures, which aren't seasonally adjusted. In June, there was a NZ$223 million trade deficit compared with an NZ$518 million gap a year earlier. Economists expected a NZ$350 million deficit.
Fuel Imports
Imports rose 17 percent to NZ$3.81 billion in June from a year earlier, matching the May increase. The increase exceeded economists expectations after including a large aircraft valued about NZ$60 million.
Fuel imports rose 73 percent after prices almost doubled from a year earlier, the statistics agency said. Machinery and fertilizer imports also rose.
“It is heartening to see imports of capital goods because we want to increase capacity in the economy, but investment intentions have declined,'' said Goh.
Imports of cars fell 12 percent while there was less demand for sports equipment, furniture and textiles, the agency said.
Reserve Bank of New Zealand Governor Alan Bollard last week cut the benchmark interest rate by a quarter point to 8 percent after keeping borrowing costs at a record-high for a year. High credit costs and soaring fuel prices have helped stall the economy.
Exports Increase
Bollard is looking for exports, which make up 30 percent of the $104 billion economy, to buoy growth next year.
Exports rose 31 percent in June from a year earlier to NZ$3.59 billion. The increase was the largest in seven years. Economists forecast a 22 percent gain.
The statistics agency doesn't exclude inflation from the trade report, so values are affected by rising prices. In June, commodity prices rose 12 percent from a year earlier, according to an ANZ National index.
Sales of milk powder, butter and cheese, which make up almost one-fifth of overseas shipments, increased 58 percent in June from a year earlier.
Statistics New Zealand said export volumes of dairy products fell 15 percent in the second quarter.
“That's the effect of the drought. Dairy was unusually low,'' said Goh, referring to high temperatures and dry winds in the southern hemisphere summer that forced some farmers to stop milking their cows.
“It looks like primary export volumes contracted in the quarter,'' he said. “Overall net exports likely subtracted from gross domestic product again.''
Retail stores nationwide will be cutting prices on food and beverages to cushion the financial pain of soaring gasoline prices, according to the National Retail Federation.
The Washington D.C.-based trade organization’s survey showed almost 60 percent of consumer respondents said spiraling fuel prices will exercise a downward effect on their holiday spending.
Only 42 percent said the same thing in a survey a year ago.
"Americans will continue to commemorate Independence Day this year, though higher gas prices will impact how they celebrate," NRF President and CEO Tracy Mullin says in a statement. "Retailers are aware of the strain gas prices have on consumers’ wallets and will be offering special promotions on food and beverages for the millions of people planning summer barbecues."
That may help the 61 percent of survey respondents who said they plan to barbecue or attend a cookout during the holiday. Forty percent said they will go to a fireworks display, 10 percent will view a parade and 11 percent say they will take a vacation.
"A traditional Fourth of July trip to the beach or amusement park will be more expensive than it has ever been," says Phil Rist, vice president of strategy at BIGresearch, which conducted the survey of 8,351 consumers from June 3 to 10. "Instead of making elaborate travel plans, many consumers will choose to spend the holiday closer to home with family and friends."
www.nrf.com
Hawaiian Airlines said Wednesday it will add four Boeing 717-200s to its interisland fleet to meet growing demand.
Two planes will begin service in September while the other two will be in operation by the end of the year.
The move comes in response to the April 1 shutdown of Aloha Airlines.
The four planes, which will increase the carrier's interisland fleet to 15 aircraft, are being acquired under long-term leases from Boeing Capital Corp.
Hawaiian, a subsidiary of Hawaiian Holdings (Nasdaq: HA), flies 150 daily flights among Oahu, Kauai, Maui and the Big Island.
The airline has begun recruiting flight crew and additional ground staff to support the expanded operations.
Hawaiian also operates a fleet of 18 wide-body Boeing 767-300 aircraft on 16 flights to 14 destinations outside Hawaii.
Stock markets are up sharply since March. The recent batch of economic data has not looked as dire as feared. The U.S. Federal Reserve is finding fewer takers for its loan auctions. A fine-art sale drew a record $86 million price for a Francis Bacon painting.
So is the U.S. recession off? So far, so good — or at least not so bad. However, there are still quite a few dark clouds on the horizon.
“Although GDP has been stagnant, the economy does not look to have slipped into an outright contraction during the first half of the year,” said Bruce Kasman, chief economist with JPMorgan in New York.
While that is not exactly a ringing endorsement, it is certainly a vast improvement from the bleak projections that were the norm just a few weeks ago, when markets were braced for economic disaster.
With euro zone growth coming in stronger than expected for the first quarter and emerging markets showing resilience to the slowdown in the developed world, the financial doom and gloom has given way to a renewed sense of optimism.
“The general picture that emerges is that while global growth is clearly slowing, so far it has not slowed as dramatically as many had expected,” said Goldman Sachs global economist Peter Berezin.
“What will ultimately matter most is whether the better-than-expected growth momentum in the first quarter persists into the rest of the year. Here, the evidence is more worrisome,” he added, pointing to the still-strained U.S. housing market, sluggish consumer demand and cautious spending on the part of businesses.
HIGH ON THE HOG
Hawaii’s oldest food distribution company, Y. Hata, announced Friday that CEO and President Laurence Vogel is retiring.
Russell Hata, son of Frank Hata and grandson of founder Yoichi Hata, has been named chairman of the board, replacing Frank Hata, and interim president and CEO.
The company said it will conduct a search for a new top executive.
Russell Hata previously served as managing director.
Pacific Business News was named Hawaii’s best nondaily newspaper for the fifth year in a row by the Hawaii Publishers Association.
The award was announced Tuesday at the annual Pai awards luncheon, where more than 100 awards were presented to newspapers, magazines and visitor publications. The awards were given for work published in 2007.
In naming PBN the best nondaily newspaper, the judges described PBN as "clearly a must-have publication if you’re doing business in Honolulu."
"PBN covers it all - from the decline in the number of Japanese weddings to the transfer of wealth to smaller, rural Hawaiian towns," the judges continued. "Tremendous breadth of coverage of business news, and plenty of depth and enterprise as well. I also liked the range of commentary. Design is crisp, with appropriate font choices and sizes throughout the publication, and nice use of graphics. An excellent publication."
PBN’s Book of Lists received a second place award in the directory category.
ML Macadamia Orchards' production in 2007 was 6.1 percent lower than in 2006, according to a filing with the Securities & Exchange Commission on Wednesday that detailed the productivity and acreage of each orchard.
The Hilo-based company said average yield per acre ranged from 2,489 pounds to 7,149 pounds and were as follows:
Flowers that normally bloom in mid-to-late December did not develop until early February 2007. This late development had a negative impact on the fall 2007 nut production and will affect spring 2008 production, the company said.
The company reported on March 17 that it lost $4 million or 53 cents per share on revenue of $11.3 million for the year ended Dec. 31, 2007.
Shares of ML Macadamia Orchards (NYSE: NUT) closed at $3.22 on Wednesday.
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