U.S. Unemployment Hits 9.5%

The U.S. unemployment rate rose to a 26-year high of 9.5% last month, according to a Labor Dept. report released on July 2. Employers cut a larger-than-anticipated 467,000 jobs, while average weekly earnings fell to $611.49, their lowest level in nearly a year. While there are signs that the recession is starting to ease, economists are still predicting that the jobless rate will hit 10% by year-end and keep rising into 2010.

Today’s unemployment report looks even uglier when one drills beneath the headline number, which doesn’t include so-called discouraged workers. Those are people who’ve quit looking for work altogether. If those folks were counted, the jobless rate in June rose to 10%, Labor Dept. figures show. Look for unemployment to jump once the economy starts growing again, as the once-discouraged regain hope and start job hunting again.

Source: Associated Press, The Atlantic

Oil and Gas Prices Drop

News that U.S. unemployment hit 9.5% in June drove prices for crude and gasoline to a five-week low on July 2. Oil fell by more than $2 a barrel, to $66.75, as of morning trading on the New York Mercantile Exchange, while gasoline futures declined 3.3% to $1.80.

Source: Bloomberg

U.S. Factory Orders Up in May

Orders at U.S. factories rose 1.2% in May, the Commerce Dept. reported on July 2. The May increase was the largest since June 2008 and marked the fourth consecutive months of gains. Yet analysts cautioned that the sector is still in distress, as manufacturers continue to cut inventories rather than revving up production.

Source: Bloomberg

U.S. Car Sales Down 28% in June

June car sales stabilized somewhat in the U.S. But the pain was spread unevenly among carmakers and types of vehicles, as fears of gas price increases continued to slaughter purchases of big sport-utility vehicles. Overall, total auto sales were down 27.7% last month compared with June 2008, according to Autodata. Ford posted a decline of just 10.7% in June, the lowest drop of any major automaker. Ford also outsold Toyota in June for the third consecutive month, while sales fell 33% at GM and 42% at Chrysler.

Source: BusinessWeek, New York Times

SEC Moves to Make Companies More Accountable

The Securities and Exchange Commission announced steps on July 1 to give shareholders new powers to shape corporate boards, as well as more information about how companies pick their directors and pay their management. Among the changes: Retail stockbrokers will no longer be allowed to submit proxy votes on behalf of their customers without the assent of the shareholders they represent, a move the SEC says could make it easier for activist investors to effect change.

Source: Washington Post

Telefónica Could Join Pursuit of T-Mobile UK

A potential bidding war may be heating up for the British unit of Deutsche Telekom’s T-Mobile, the fourth-largest operator in Britain’s crowded and competitive mobile services market. Reports emerged last week that Vodafone is considering a run at the business, and now both France Telecom’s Orange unit and Telefónica-owned O2—the country’s No. 1 provider— are reportedly weighing competing offers.

Source: Financial Times

Challenges for BP-Led Group in Iraq

British Petroleum and its Chinese partner have won a bid to be the first foreign partners let back into Iraq to rehabilitate its floundering oil industry. But with the contract win out of the way, now the tough work begins. The success of the venture to exploit one of the world’s biggest oil fields will be a test of how outside companies are received in Iraq.

Source: BusinessWeek, Wall Street Journal

Rio Tinto Sees Strong Demand for Rights Issue

The world’s largest iron ore producer and third-largest miner overall sold 97% of a $15.2 billion rights issue in Britain as part of a plan to reduce its huge debt and get back to business as usual. Among the buyers was China’s Chinalco, which snapped up $1.5 billion in shares to maintain its 9% holding in Rio, despite recently-soured relations between the companies after Rio scotched a larger planned investment in the firm by the Chinese aluminum giant.

Source: Reuters

H&M Stays Upbeat in Tough Times

No retailer can entirely escape the effects of the downturn. But Swedish discount fashion chain H&M is faring better than many, with sales up 23% in its most recent quarter and plans to continue international expansion by adding 159 additional stores by November.

Source: BusinessWeek

Crabtree & Evelyn Files Chapter 11

The British maker of soaps and other bath products sought bankruptcy protection on July 1 for its U.S. business, making it the latest retail chain to be laid low by the recession. The company, which operates 125 stores in the U.S., says it will continue to operate under Chapter 11 and hopes to restructure its debt and reevaluate its real estate portfolio. The company’s non-U.S. operations aren’t affected by the filing.

Source: Los Angeles Times

Virgin Atlantic to Trim Winter Service, 600 Jobs

Facing travel cutbacks due to the recession, Richard Branson-led Virgin Atlantic airline said July 1 that it will cut about 10% of its service next winter, including daily flights from Heathrow to Chicago and one of its two daily Hong Kong flights, and lay off up 600 workers. Meanwhile, rival British Airways is nearing a standoff with its unions as it scrambles to slash costs.

Source: Guardian

Toyota Builds Patent Wall Around Prius Hybrids

Since it started developing the gas-electric Prius more than a decade ago, Toyota has kept its attorneys just as busy as its engineers, meticulously filing for patents on more than 2,000 systems and components for its best-selling hybrid. Toyota’s goal: to make it difficult for other auto makers to develop their own hybrids without seeking licenses.

Source: Wall Street Journal