The Houston area registered the fastest annual rate in employment gain of the 12 largest metropolitan areas in June, according to the Southwest Regional Office of the U.S. Bureau of Labor Statistics. The agency says the gain is up 2.1 percent, as nationwide employment levels slipped 0.1 percent. Nationwide, construction jobs were down 6.1 percent, but were up 1.7 percent in the Houston area in June. Houston comes in a close second behind the Dallas-Fort Worth area in the actual number of jobs added in all of 2007—54,100 in Houston and 57,800 in Dallas.
A closely watched housing index shows home prices fell by the steepest rate ever in May, as the housing slump continued to deepen nationwide. The Standard & Poor’s/Case-Shiller 20-City Index is off 15.8 percent for May compared with a year ago, a record decline since its inception in 2000. The narrower ten-city index has fallen 16.9 percent, its biggest decline in its 21-year history. No city in the Case-Shiller 20-City Index saw price gains in May, the second straight month that’s happened. The monthly indices have not recorded an overall home price increase in any month since August 2006. The steepest decline in the index is in Las Vegas, where prices fell 28.4 percent in the month. Miami is a close second, with prices down 28.3 percent.
The Conference Board says consumer confidence picked up a bit this month. The group’s index rose to 51.9, up nearly a point for the month and slightly better than economists expected. Before the uptick, confidence had been dropping since February. Nearly a-third of those surveyed said jobs are “hard to get.” Lynn Franco with the business research group says the biggest key to further improvement in the coming months is the state of the job market. She says if oil and gasoline prices were to continue to fall, that would also be positive.
Whole Foods Market’s long-running effort to acquire rival organic supermarket chain Wild Oats Market isn’t completely out of the legal woods yet. A three-judge federal appeals court panel overturned a lower court ruling from last year that allowed Austin-based Whole Foods to acquire Wild Oats. The 2-1 ruling sends the case back to the lower court for further consideration, but doesn’t halt Whole Foods’ integration of the Boulder, Colorado-based Wild Oats chain or require that the deal be undone. However, if the district court ultimately rules in favor of the Federal Trade Commission, which sought last year to block the deal, it could disrupt whole foods’ efforts to combine the companies.
The union representing thousands of west coast dockworkers has reached a tentative contract deal with shippers that promises to keep ports running and avoid another blow to the U.S. economy. The International Longshore and Warehouse Union announced the six-year agreement following months of negotiations with the Pacific Maritime Association. Neither side released details of the deal, which still must be ratified by union and PMA members. The contract covers more than 25,000 dockworkers at 29 west coast ports. The current six-year contract covering dockworkers expired July 1st without a strike or lockout, with both sides insisting they wanted to keep the ports running smoothly–even if they had to keep talking after the deadline. The decision was a welcome break for the U.S. economy, since the billions of dollars in cargo handled by the 29 ports represents about 11 percent of the U.S. gross domestic product.
Some South Texas residents are waiting for FEMA relief. Hurricane Dolly ripped away roofs and flooded homes, but it wasn’t devastating enough to draw an immediate offer of aid from the federal government. FEMA officials have fanned out across the Rio Grande Valley this week to begin the process of deciding whether Dolly’s damage is bad enough to merit direct assistance. It would help residents pay for temporary housing, home repairs and replace some of their belongings. For stronger hurricanes such as Katrina and Wilma, the offers of federal help for individuals came the same day the storms made landfall. In Dolly’s case, FEMA says it factors in the number of homes destroyed or with major damage, the number of people displaced, and the level of insurance for property owners. Dolly slammed the South Texas coast as a Category 2 hurricane packing 100 mph wind last Wednesday. It dumped more than a foot of rain in places.
A survey by >Office Depot indicates that 26 percent of business owners along the Gulf Coast unprepared for disasters have no plans to invest in preparedness strategies. Another 19 percent say they don’t know how to adequately prepare their business. The survey reveals that 31 percent of the respondents report having been impacted by a natural disaster in the past five years.
The Coast Guard says ships should be moving on the Mississippi River at a normal pace, nearly one week after a barge and a tanker collided. Hundreds of thousands of gallons of fuel spilled in the New Orleans accident. Traffic along the big muddy was stopped for two days after last Wednesday’s spill. Some ships managed to trickle through on the weekend. More ships than usual passed through the waters Monday to make up for the backlog caused by the closure. The Coast Guard expects everything traffic will be back to normal Wednesday. Officials say wildlife has been largely spared since the spill hasn’t seeped into swamps and marshes.
Two Houston firms have been selected by NASA to work on concepts that contribute to how astronauts will live and work on the moon. Oceaneering Space Systems will focus on alternative packaging options in a 180-day study. United Space Alliance of Houston will study software. NASA plans to establish a human outpost on the moon through its Constellation Program with a series of lunar missions beginning in 2020. Lunar surface systems may include habitats, pressurized and un-pressurized rovers, communication and navigation elements, electrical power control and use of natural resources.
The Cullen College of Engineering at the University of Houston is receiving funding from Devon Energy and Marathon Oil for a new undergraduate program in petroleum engineering. The program is expected to be approved by the Texas Higher Education Coordinating Board this fall. Marathon has pledged $600,000 to the program over three years. Devon has committed $1 million to the program over three years. The new program is expected to help alleviate concerns about the energy sector’s aging workforce. The Society of Petroleum Engineers estimates that one-third of the energy workforce is over the age of 50.
Houston has been awarded $50,000 from the Environmental Protection Agency to help develop a solar energy plant on the site of a former landfill. Houston will revitalize a 300-acre site near downtown, using the funding for evaluation of environmental, engineering and regulatory issues. Funding is part of more than $500,000 in grants announced by the EPA for 16 Brownfields Sustainability Pilots nationwide. Brownfields are vacant, abandoned or under-used properties where there may be some environmental contamination.
President Bush says if lawmakers were truly worried about reducing gas prices, they would allow oil drilling in waters off America’s coastlines. The president renewed his push for offshore drilling in an energy speech Tuesday to employees of a welding plant in Ohio. Bush has lifted an executive ban on offshore drilling. But it won’t have effect unless Congress lifts its own legislative ban, an outcome that appears doubtful at best. Bush says it only makes sense to try to find more oil within the United States. Democrats say it is not worth the environmental risk and won’t do anything to shrink gas prices.
New York City Mayor Michael Bloomberg says the Big Apple will be $2.3 billion in the red next fiscal year. In response, Bloomberg says the city will slash spending 5.6 percent and delay some capital projects. The mayor says that even if he rescinds a seven percent property tax cut approved a year ago, the city will still face budget shortfalls of more than $5 billion in fiscal 2011 and 2012. One huge factor–the billions being lost on Wall Street, which drives the city’s economy.
Congressional investigators say businesses have failed to pay the IRS some $58 billion over the past decade in taxes they were supposed to have withheld from their employees’ paychecks and forwarded to the government. The Government Accountability Office says more than 1.5 million businesses owed the supposedly withheld income, social security and Medicare taxes as of the end of September last year. Because the taxes weren’t paid, the government had to dip into its general fund to cover shortfalls in social security and Medicare. The GAO report faults the Internal Revenue Service for relying too much on voluntary compliance in the past, even with the worst payroll tax offenders.
The Federal Reserve has auctioned another $75 billion in loans to squeezed banks to help them overcome credit problems. The central bank released the results of its most recent auction. It’s part of an ongoing program started in December that seeks to ease financial turmoil and credit stresses. In the latest auction, the Fed says commercial banks paid an interest rate of 2.35 percent for the 28-day loans. There were 70 bidders. The Fed says it received bids for $90.56 billion worth of the loans.
There’s a new effort in the U.S. aimed at helping the battered mortgage industry involving a debt instrument popular in Europe known as “covered bonds.” Top Bush administration financial officials were joined by nation’s four largest banks in endorsing the additional form of mortgage finance. Treasury Secretary Henry Paulson unveiled the guidelines designed to encourage banks to issue covered bonds. The administration hopes they will fill some of the void left by billions of dollars in losses on mortgage-backed securities. Officials from Bank of America, Citigroup, JPMorgan Chase and Wells Fargo issued a joint statement saying they “look forward to being leading issuers as the U.S. covered bond market develops.” The packaging of mortgage investments is similar to the approach in Europe, where the market is put at $3 trillion. Covered bonds are issued by banks and backed by cash flows from mortgages or other types of debt.
Merrill Lynch plans to sell off a big slice of its toxic asset-backed securities and issue new stock to raise $8.5 billion of fresh capital. The move is seen as a broad one to clean up the company’s troubled balance sheet. The world’s largest brokerage says it will issue more than 200 million new common shares as part of the deal. Merrill says it will write-down $5.7 billion because of additional losses on the sale of mortgage securities and hedging contracts. The move comes just over a week after Merrill reported a $4.6 billion second-quarter loss.
BP expects to resume full output from its Texas City refinery in the next few months. BP says the refinery’s processing capacity will be at 80 percent in a matter of days, according to Bloomberg. The refinery should be operating at 90 to 95 percent capacity by the end of the year. A 2005 explosion killed 15 workers.
Valero Energy announced its second-quarter profit fell by two-thirds as refining margins for products like gasoline shrank. San Antonio-based Valero is North America’s largest refiner. Valero’s net income for the April-June period fell to $734 million. That compares to year-ago net income of $2.25 billion. Revenue rose to $36.6 billion from $24.2 billion in the prior-year period. Refining margins fell as the cost of crude and other feedstocks grew more rapidly than the prices of gasoline, asphalt, fuel oil and other products. Valero’s operating income was squeezed by other factors in the quarter, including higher costs for electricity and natural gas. Operations also were hampered by maintenance and repairs at its refineries in Port Arthur, Delaware and Aruba.
Trash hauler Waste Management says its second-quarter profit fell six percent from results that included tax benefits in the same quarter last year. Houston-based Waste Management said it earned $318 million in the three months ended June 30th. That’s down from $338 million a year ago. Waste Management says revenue rose almost four percent to $3.49 billion from $3.35 billion in the second quarter of 2007. Chief Executive David Steiner says the gain resulted from disciplined pricing. Waste Management has made a bid for waste hauler Republic Services, which instead has struck a deal to buy rival Allied Waste Industries.
Centex says its fiscal first-quarter loss widened from the prior year as the homebuilder wrote down the value of land holdings and other assets as the housing market continued to deteriorate. The Dallas-based company said it lost $150.1 million in the three months ended June 30th. That compares with a loss of $128 million in the same period last year. The latest quarter includes $80 million in impairment charges. Revenue dropped 41 percent to $1.13 billion from $1.94 billion last year. Analysts polled by Thomson Financial expected sales of about $1.6 billion. Chief Executive Tim Eller says he doesn’t expect the housing market will improve this fiscal year.
Pilgrim’s Pride reports it lost $52.8 million in its third quarter. That compares with a profit of $62.6 million one year earlier for Pilgrim’s Pride. Revenue rose five percent. The Pittsburg, Texas,-based company cited record-high grain costs that have made animal feed far more expensive. Grains like soybeans and corn, which have skyrocketed in price over the past year, are a key ingredient in animal feed. Corn is used in ethanol production, as gasoline prices surged. Pilgrim’s Pride has been raising prices, but President and CEO Clint Rivers says it wasn’t enough. River says, given all the cost pressures, the company expects an operating loss in the fourth quarter.
Midsouth Bancorp, which has banking offices in Texas and Louisiana, saw its second-quarter earnings drop 43 percent as loans dropped to the petroleum-related businesses, as well as the real estate market. For the three months ending June 30th, Midsouth earned $1.4 million. That’s compared with second-quarter earnings in 2007 of $2.5 million. The company says increased cash flows in the petroleum sector cut the need for loans, while loan production also dropped in the commercial and residential real estate sectors. The company took an $855,000 provision for loan losses during the quarter, compared with $1.2 million during the first quarter and $350,000 in the second quarter of 2007. Interest income and non-interest income from fees increased $716,000, or 5.5 percent, from the second quarter of 2007.