Manufacturing Spending Continue Slide; Macy's Cuts 7,000 Jobs; Banks Still Not Lending; Renew Energy Files for Bankruptcy; Morgan Stanley Slashes Workforce; Oil Prices Slide 4%; Steelcase Shows Weakness
Manufacturing in the U.S. shrank again last month and consumer spending recorded an unprecedented sixth monthly decline in January. The Institute for Supply Management's factory index was 35.6 in January; readings of less than 50 signal a contraction. Meanwhile, the Commerce Department said personal spending fell 1% in December, offering no sign the economy has hit bottom.
Macy's Inc. (M), the second-largest U.S. department-store company, said it is cutting 7,000 jobs, or 3.9% of its workforce after slashing prices failed to lure shoppers during the worst holiday season in 40 years, Bloomberg reported. The retailer also cut its quarterly dividend to 5 cents a share from 13.25 cents. Sales at stores open at least a year have dropped in 10 of the past 11 months.
A majority of U.S. and foreign banks tightened lending standards to businesses and households over the past three months, despite government efforts to spur banks to increase lending, Reuters reported. In its January senior loan officers report, a closely watched quarterly survey of lending conditions, the U.S. Federal Reserve said the number of banks that tightened lending remains "elevated." The central bank also said demand for loans from both businesses and households continued to weaken.
Renew Energy LLC, a closely held ethanol producer based in Jefferson, Wisconsin, filed for bankruptcy amid falling prices for the grain-based fuel and rising costs for corn, Bloomberg reported. Ethanol producers have idled about 1.8 billion gallons, or 16%, of total U.S. production capacity, according to the Renewable Fuels Association in Washington. Ethanol plants were forced to reduce capacity in January as volatile corn prices hit profits.
Morgan Stanley (MS) will cut about three to four percent of its work force, up to 1,880 people, Reuters reported, citing an anonymous source. Most of the cuts will be in back-office jobs where trades are processed. The broker has been struggling with spiraling costs and slowing business as stock market volatility has whipsawed investors since the Dow Jones Industrial Average peaked at over 14,000 in October 2007.
Oil prices fell nearly 4% Monday as gloomy U.S. economic data darkened projections for energy demand. U.S. light crude for March delivery fell $1.60 to settle at $40.08 a barrel on the New York Mercantile Exchange. London Brent crude shed $2.06 to $43.82 a barrel, Reuters reported. News that union and oil industry negotiators in the United States averted a strike that would have cut fuel production put added pressure on oil prices.
Steelcase Inc. (SCS), the world's largest office furniture maker, said it will cut base salaries of its North American salaried workforce by about 5% and suspend matching contributions to its retirement plan for 2010, Reuters reported. The company also will cut the annual salaries of its chief executive and chief financial officer, and its board members will take a voluntary salary reduction of 15% for one year.