Japanese production fell at the fastest rate on record in November as firms closed factories and cut jobs due to slumping demand brought on by the global economic crisis, according to data out Friday.
Industrial output in the world's second largest economy plunged a record 8.1 percent in November from the previous month, the ministry of economy, trade and industry said.
It was the biggest drop since the ministry began releasing output statistics in 1953 and was much worse than market forecasts of a 6.7% fall.
Production is likely to continue falling, with the ministry expecting an 8.0% drop in December and another 2.1% decline in January, as the auto industry feels the pinch.
"Overall, production is rapidly falling," the ministry said.
Unemployment meanwhile rose to 3.9% in November, worsening 0.2 percentage points from the previous month, the internal affairs ministry said.
The figure was slightly below average market forecasts of 4.0%.
The number of people out of work increased by 100,000 from a year earlier to a total of 2.56 million.
The data came as brand-name Japanese manufacturers, including Toyota Motor Corp., Sony Corp. and Canon Inc., lower production and eliminate jobs to adjust to the slump in overseas demand for their exports.
The job cuts have targeted mainly people on limited-term contracts or those who were dispatched from temp agencies.
The labour ministry said that a total of 85,012 temporary or dispatch workers have already lost their jobs or know they will be laid off by March.
The figure doubled in a month, reflecting the rapid deterioration of the employment environment for people without permanent contracts, a health ministry official said.
In other data, Japan said that core consumer prices rose 1.0 percent in November from a year earlier although they eased by 0.8 percent from the previous month.
Core consumer prices have been rising for more than a year, albeit at a slower pace than before as global energy prices come down.
Japan for a decade battled deflation, or falling prices, which sapped growth from the economy.
Source: Agencies
Friday, December 26, 2008
Will oil prices rebound in post-Christmas trade?
World oil prices rebounded in Asian trade on Friday after tumbling to four-year lows before the Christmas break, with economic gloom weighing on the market, analysts said.
New York's main contract, light sweet crude for February delivery, rose 93 cents to 36.28 dollars a barrel after closing down 3.63 dollars at 35.35 in US trade on Wednesday.
Brent North Sea crude for February delivery rose 1.04 dollars to 37.65 dollars. In London the contract settled on Wednesday 3.75 dollars lower at 36.61 dollars, its lowest since July 2004.
After taking a one-day trading break for Christmas, oil reopened higher on Friday partly because of technical factors, said Ken Hasegawa, manager of the energy desk at Newedge Japan brokerage.
"After a sharp drop in sentiment on Wednesday, before the holidays, today (there is) a slight technical rebound," he said from Tokyo.
Another factor boosting prices was the US government's latest weekly report on crude stockpiles in the world's largest energy consumer, Hasegawa said.
The Energy Information Administration (EIA) report, released Wednesday, showed US crude inventories sank 3.1 million barrels in the week ending December 19. The drop was far heavier than market expectations.
The EIA added that crude reserves were 9.1 percent higher than at the same stage last year.
Analysts said that recent US data showing that the world's biggest economy remains in a recession were likely to keep crude oil prices under pressure in the immediate term.
A sharp global economic downturn that has slashed the world's demand for energy has led the price of crude oil to collapse by about 75 percent since hitting record highs above 147 dollars per barrel in July.
Oil markets are pricing in a continued decline in economic activity despite efforts by governments around the world to stimulate activity, MF Global energy analyst John Kilduff said.
"The energy markets appear as unappreciative of the stimulus efforts as any of the other markets and the pricing in of doom and gloom are producing price levels that transcends reality," he said.
"Obviously we haven't reached the ultimate end point yet."
The Organisation of the Petroleum Exporting Countries (OPEC), which produces about 40 percent of the world's crude, agreed last week to cut output by 2.2 million barrels per day to shore up the market.
Prices have continued to slide despite OPEC's announcement.
Source: Agencies
New York's main contract, light sweet crude for February delivery, rose 93 cents to 36.28 dollars a barrel after closing down 3.63 dollars at 35.35 in US trade on Wednesday.
Brent North Sea crude for February delivery rose 1.04 dollars to 37.65 dollars. In London the contract settled on Wednesday 3.75 dollars lower at 36.61 dollars, its lowest since July 2004.
After taking a one-day trading break for Christmas, oil reopened higher on Friday partly because of technical factors, said Ken Hasegawa, manager of the energy desk at Newedge Japan brokerage.
"After a sharp drop in sentiment on Wednesday, before the holidays, today (there is) a slight technical rebound," he said from Tokyo.
Another factor boosting prices was the US government's latest weekly report on crude stockpiles in the world's largest energy consumer, Hasegawa said.
The Energy Information Administration (EIA) report, released Wednesday, showed US crude inventories sank 3.1 million barrels in the week ending December 19. The drop was far heavier than market expectations.
The EIA added that crude reserves were 9.1 percent higher than at the same stage last year.
Analysts said that recent US data showing that the world's biggest economy remains in a recession were likely to keep crude oil prices under pressure in the immediate term.
A sharp global economic downturn that has slashed the world's demand for energy has led the price of crude oil to collapse by about 75 percent since hitting record highs above 147 dollars per barrel in July.
Oil markets are pricing in a continued decline in economic activity despite efforts by governments around the world to stimulate activity, MF Global energy analyst John Kilduff said.
"The energy markets appear as unappreciative of the stimulus efforts as any of the other markets and the pricing in of doom and gloom are producing price levels that transcends reality," he said.
"Obviously we haven't reached the ultimate end point yet."
The Organisation of the Petroleum Exporting Countries (OPEC), which produces about 40 percent of the world's crude, agreed last week to cut output by 2.2 million barrels per day to shore up the market.
Prices have continued to slide despite OPEC's announcement.
Source: Agencies
Thursday, December 25, 2008
World Bank rejects Satyam's demand for an apology
The World Bank has rejected Satyam Computer Service’s demand to withdraw a statement by which the organisation imposed an eight-year ban on any business with the IT major.
Satyam Computers had earlier asked the international lender for an apology for its statement on the IT major's failure to give proper documentation on fees charged for sub-contractors, and asked the Bank to withdraw the statement.
"The Bank stands by its statement issued on its Indian website on December 23," the India spokesperson of the World Bank Sudip Mazumder said.
The World Bank had said on December 23 said that "Satyam was declared ineligible for contracts for providing improper benefits to Bank staff and for failing to maintain documentation to support fees charges for its sub- contractors."
Asked if the Bank would apologies as demanded by Satyam, he said any comment if at all had to come from the headquarters in Washington, but the Bank stands by its statement.
He said "It will be in appropriate to comment on Satyam's statement since I have not received it or read it."
It is important to note that these developments are based out of our headquarters in Washington and are not related to Bank's India Programme," Mazumder said.
Within two days of the Bank's announcement, Satyam had formally requested the World Bank to immediately withdraw those statements and asked it to "issue a new statement apologising to Satyam for the harm done to the company due to the Bank's actions."
Satyam, which is already reeling under a crisis over aborted acquisition of two firms promoted by family of Chairman Ramalinga Raju, advised the Bank that the IT firm would evaluate all options in view of both the Bank's "inappropriate" public statements and its response to Satyam's requests.
"Satyam usually does not comment publicly on matters involving our customer relationships. However, the inaccuracy and inappropriateness of the World Bank's public statements regarding Satyam has forced us to issue this brief statement in order to set the record straight," it added.
The issue will now come up for discussion at the December 29 Board meeting of the company, against which the Bank has imposed an eight-year ban.
Source: Agencies
Satyam Computers had earlier asked the international lender for an apology for its statement on the IT major's failure to give proper documentation on fees charged for sub-contractors, and asked the Bank to withdraw the statement.
"The Bank stands by its statement issued on its Indian website on December 23," the India spokesperson of the World Bank Sudip Mazumder said.
The World Bank had said on December 23 said that "Satyam was declared ineligible for contracts for providing improper benefits to Bank staff and for failing to maintain documentation to support fees charges for its sub- contractors."
Asked if the Bank would apologies as demanded by Satyam, he said any comment if at all had to come from the headquarters in Washington, but the Bank stands by its statement.
He said "It will be in appropriate to comment on Satyam's statement since I have not received it or read it."
It is important to note that these developments are based out of our headquarters in Washington and are not related to Bank's India Programme," Mazumder said.
Within two days of the Bank's announcement, Satyam had formally requested the World Bank to immediately withdraw those statements and asked it to "issue a new statement apologising to Satyam for the harm done to the company due to the Bank's actions."
Satyam, which is already reeling under a crisis over aborted acquisition of two firms promoted by family of Chairman Ramalinga Raju, advised the Bank that the IT firm would evaluate all options in view of both the Bank's "inappropriate" public statements and its response to Satyam's requests.
"Satyam usually does not comment publicly on matters involving our customer relationships. However, the inaccuracy and inappropriateness of the World Bank's public statements regarding Satyam has forced us to issue this brief statement in order to set the record straight," it added.
The issue will now come up for discussion at the December 29 Board meeting of the company, against which the Bank has imposed an eight-year ban.
Source: Agencies
MphasiS asks 1,300-1,500 employees to relocate or quit
IT services firm MphasiS has asked all 1,300-1,500 employees at its Noida office to either move to a low-cost location or quit.
Most of the employees have quit or are in the process of quitting the firm. Only a few have decided to shift to another centre, informed four former employees who quit recently.
MphasiS, majority-owned by EDS that was acquired by HP this year, offers outsourcing services in financial services, healthcare, communications, transportation, consumer & retail industries and has over 28,000 people on its rolls. It set up the Noida centre in 2005 for BPO operations and has over 1,000 BPO employees, besides some IT employees.
The four former MphasiS employees ET spoke to said the company had told the BPO employees about three months ago to decide between quitting or relocating to other MphasiS centres such as Indore and Vadodara. All employees were given time till December-end to decide and were not given any reason behind the move.
A company spokeswoman said that MphasiS continues to work out of the Noida centre. “We continue to shape our operations as per our client needs, and have recently set up a new centre in Vadodara.
MphasiS is known for its sensitive HR policies and the interests of its employees are a priority,” she said. The spokeswoman did not comment on the decision to relocate people.
Besides giving the option to relocate, MphasiS had invited rival firms such as HCL, ExlService Holdings and Tech Mahindra to recruit from among its employees.
One of the four ex-employees, who bagged a job with one of these firms, said most BPO employees at the Noida centre had managed to find another job.
However, those in the IT services business were not so lucky. One former IT employee at Noida said the company informed the team about a month ago that they need to find another job. “They also said that if we quit early, we will get our retention bonus, which was due later, with our November salary,” he said, adding he is yet to find another job.
Earlier this month, MphasiS opened a 400-seat BPO centre in Vadodara. The company had said it plans to increase the number of seats to 800 seats and employ 2,500 people within a year.
Source: Agencies
Most of the employees have quit or are in the process of quitting the firm. Only a few have decided to shift to another centre, informed four former employees who quit recently.
MphasiS, majority-owned by EDS that was acquired by HP this year, offers outsourcing services in financial services, healthcare, communications, transportation, consumer & retail industries and has over 28,000 people on its rolls. It set up the Noida centre in 2005 for BPO operations and has over 1,000 BPO employees, besides some IT employees.
The four former MphasiS employees ET spoke to said the company had told the BPO employees about three months ago to decide between quitting or relocating to other MphasiS centres such as Indore and Vadodara. All employees were given time till December-end to decide and were not given any reason behind the move.
A company spokeswoman said that MphasiS continues to work out of the Noida centre. “We continue to shape our operations as per our client needs, and have recently set up a new centre in Vadodara.
MphasiS is known for its sensitive HR policies and the interests of its employees are a priority,” she said. The spokeswoman did not comment on the decision to relocate people.
Besides giving the option to relocate, MphasiS had invited rival firms such as HCL, ExlService Holdings and Tech Mahindra to recruit from among its employees.
One of the four ex-employees, who bagged a job with one of these firms, said most BPO employees at the Noida centre had managed to find another job.
However, those in the IT services business were not so lucky. One former IT employee at Noida said the company informed the team about a month ago that they need to find another job. “They also said that if we quit early, we will get our retention bonus, which was due later, with our November salary,” he said, adding he is yet to find another job.
Earlier this month, MphasiS opened a 400-seat BPO centre in Vadodara. The company had said it plans to increase the number of seats to 800 seats and employ 2,500 people within a year.
Source: Agencies
Despite meltdown: No job loses in BPO sector!
Software and BPO industry body Nasscom on Wednesday said the business process outsourcing sector is not in the danger of losing jobs due to the ongoing economic downturn rather a net hirer in the current fiscal.
In a statement here Nasscom said, "Media reports suggest that the Indian BPO industry will see 2.5 lakh job losses by the first quarter of 2009, in the wake of downturn in the US and other developed economies. Nasscom’s research and interaction with its member companies is not in support of this statement. Our detailed industry performance and forecast for FY09 will be released in the next fortnight. However, on employment the industry will continue to be a net hirer in FY09 as a direct corollary of industry growth and fears of large scale job losses at an industry level are unfounded."
The industry body's comment comes in the wake BPO Industry Association President Samir Chopra stating that "severe job loss is expected because of recession. We are going to request for a fiscal package from the Government but if that doesn't happen, then there be huge amount of losses in terms of manpower. I think a quarter of a million jobs will go."
The $11-billion BPO sector employs about seven lakh people.
Source: Agencies
In a statement here Nasscom said, "Media reports suggest that the Indian BPO industry will see 2.5 lakh job losses by the first quarter of 2009, in the wake of downturn in the US and other developed economies. Nasscom’s research and interaction with its member companies is not in support of this statement. Our detailed industry performance and forecast for FY09 will be released in the next fortnight. However, on employment the industry will continue to be a net hirer in FY09 as a direct corollary of industry growth and fears of large scale job losses at an industry level are unfounded."
The industry body's comment comes in the wake BPO Industry Association President Samir Chopra stating that "severe job loss is expected because of recession. We are going to request for a fiscal package from the Government but if that doesn't happen, then there be huge amount of losses in terms of manpower. I think a quarter of a million jobs will go."
The $11-billion BPO sector employs about seven lakh people.
Source: Agencies
Has US economy sunk deeper into recession?
Bleak housing data showed the United States and Britain were sinking deeper into recession and authorities from Washington to Tokyo worked hard to spend their way out of the worst downturn in decades.
Japan's government on Wednesday approved its biggest-ever budget to revive its economy while US President-elect Barack Obama sought to clinch a deal with congressional lawmakers on a massive stimulus package even before the Christmas Day.
"Japan cannot avoid the tsunami of the world recession, but it can try to find a way out," Japanese Prime Minister Taro Aso said announcing the budget.
"The world economy is in a once-in-a-hundred years recession. We need extraordinary measures to deal with an extraordinary situation," he said.
A record drop in U.S. existing home sales and prices last month reported on Tuesday showed the world's biggest economy was on track for what one Federal Reserve official said could be the longest downturn since the World War Two. Housing is at the root of the U.S. slump and the global malaise and economists expect the economy to decline much more in the current quarter after a 0.5 percent contraction in the third quarter. Britain, the world's fifth-largest economy, is in an equally dire shape.
The Royal Institution of Chartered Surveyors said house prices were set to fall by 10 percent next year, confirming the bleak outlook after Tuesday's data showed the economy shrinking by 0.6 percent in the third quarter.
The relentless flow of bad news overshadowed rescue efforts and prompted a warning from European Central Bank President Jean-Claude Trichet that investors could be overlooking the importance of steps already taken by policymakers.
Japan had its share of gloom this week, reporting a record drop in exports -- the mainstay of an economy dogged by weak consumer spending -- and a similarly sharp collapse in business sentiment.
RECORD BUDGET FOR JAPAN
Grim data and warnings from the central bank that the worst may not be over fanned expectations that it will cut its key rate to zero from 0.1 percent and revive a policy of flooding banks with interest free cash it abandoned just two years ago.
Doing its part, Japan's cabinet approved a record 88.5 trillion yen ($980.6 billion) budget for the next fiscal year starting in April. The plan boosts overall spending, excluding debt servicing costs, by 9 percent compared to this year's initial budget and aims to accommodate part of 12 trillion yen in extra spending on government stimulus packages.
Source: Agencies
Japan's government on Wednesday approved its biggest-ever budget to revive its economy while US President-elect Barack Obama sought to clinch a deal with congressional lawmakers on a massive stimulus package even before the Christmas Day.
"Japan cannot avoid the tsunami of the world recession, but it can try to find a way out," Japanese Prime Minister Taro Aso said announcing the budget.
"The world economy is in a once-in-a-hundred years recession. We need extraordinary measures to deal with an extraordinary situation," he said.
A record drop in U.S. existing home sales and prices last month reported on Tuesday showed the world's biggest economy was on track for what one Federal Reserve official said could be the longest downturn since the World War Two. Housing is at the root of the U.S. slump and the global malaise and economists expect the economy to decline much more in the current quarter after a 0.5 percent contraction in the third quarter. Britain, the world's fifth-largest economy, is in an equally dire shape.
The Royal Institution of Chartered Surveyors said house prices were set to fall by 10 percent next year, confirming the bleak outlook after Tuesday's data showed the economy shrinking by 0.6 percent in the third quarter.
The relentless flow of bad news overshadowed rescue efforts and prompted a warning from European Central Bank President Jean-Claude Trichet that investors could be overlooking the importance of steps already taken by policymakers.
Japan had its share of gloom this week, reporting a record drop in exports -- the mainstay of an economy dogged by weak consumer spending -- and a similarly sharp collapse in business sentiment.
RECORD BUDGET FOR JAPAN
Grim data and warnings from the central bank that the worst may not be over fanned expectations that it will cut its key rate to zero from 0.1 percent and revive a policy of flooding banks with interest free cash it abandoned just two years ago.
Doing its part, Japan's cabinet approved a record 88.5 trillion yen ($980.6 billion) budget for the next fiscal year starting in April. The plan boosts overall spending, excluding debt servicing costs, by 9 percent compared to this year's initial budget and aims to accommodate part of 12 trillion yen in extra spending on government stimulus packages.
Source: Agencies
Where has the US bailout money gone?
The US Treasury Department said on Tuesday that it completed purchases of equity in 49 banks on Friday and 43 on Tuesday as part of a plan to stabilize the financial system and restore normal lending.
The 49 banks that received Treasury capital on Friday included 14 privately held institutions, marking the first government capital injections into private banks since the Treasury widened the reach of its capital purchase program.
Congress approved a $700 billion financial rescue program in early October, and the Treasury has said it would use $250 billion to bolster banks' capital position. Currently, the Treasury has authority to use only half of the overall $700 billion approved by Congress.
Following are details on what has been spent or pledged so far of the $350 billion the Treasury currently has authority to draw on:
What has been spent so far
==> $250 billion to buy senior preferred shares and warrants in banks and thrifts.
The latest equity purchases brought the total of investments made so far to $162 billion. A further $10 billion is approved for Merrill Lynch but has been deferred pending its merger with Bank of America.
==> $40 billion investment in troubled insurer American International Group, which has been completed.
==> $20 billion investment in Citigroup pledged as part of a bailout announced on November 23.
Global stimulus package I 2008: Year of financial crisis
Recession hits IT companies I India battles credit crisis I Credit crisis strikes Europe I Financial turmoil grips Europe
What has been spent so far
==> $13.4 billion to prop up General Motors Corp and Chrysler LLC. The Treasury has said GM could qualify for a further $4 billion in March, which would have to come from the final $350 billion tranche of the financial rescue fund.
==> $5 billion pledged to cover potential losses on a portfolio of Citigroup mortgage-related assets.
==> $20 billion pledged to cover potential losses for a Federal Reserve program aimed at improving consumer access to credit.
Source: Agencies
The 49 banks that received Treasury capital on Friday included 14 privately held institutions, marking the first government capital injections into private banks since the Treasury widened the reach of its capital purchase program.
Congress approved a $700 billion financial rescue program in early October, and the Treasury has said it would use $250 billion to bolster banks' capital position. Currently, the Treasury has authority to use only half of the overall $700 billion approved by Congress.
Following are details on what has been spent or pledged so far of the $350 billion the Treasury currently has authority to draw on:
What has been spent so far
==> $250 billion to buy senior preferred shares and warrants in banks and thrifts.
The latest equity purchases brought the total of investments made so far to $162 billion. A further $10 billion is approved for Merrill Lynch but has been deferred pending its merger with Bank of America.
==> $40 billion investment in troubled insurer American International Group, which has been completed.
==> $20 billion investment in Citigroup pledged as part of a bailout announced on November 23.
Global stimulus package I 2008: Year of financial crisis
Recession hits IT companies I India battles credit crisis I Credit crisis strikes Europe I Financial turmoil grips Europe
What has been spent so far
==> $13.4 billion to prop up General Motors Corp and Chrysler LLC. The Treasury has said GM could qualify for a further $4 billion in March, which would have to come from the final $350 billion tranche of the financial rescue fund.
==> $5 billion pledged to cover potential losses on a portfolio of Citigroup mortgage-related assets.
==> $20 billion pledged to cover potential losses for a Federal Reserve program aimed at improving consumer access to credit.
Source: Agencies
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