Economy

TOKYO (Reuters) – Japanese Finance Minister Shunichi Suzuki said on Friday that the government would stick to its aim of balancing the primary budget by the fiscal year end in March 2026 and it’s too early to refer to other measures as additional fiscal targets.Japan will strive to continue efforts to restore its tattered public finances so as to achieve the budget balancing while trying to bring down debt-to-GDP ratio in a stable manner, Suzuki told reporters after a cabinet meeting. More

TOKYO (Reuters) – Japan’s current account extended its surplus for a full year in January, Ministry of Finance data showed on Friday, as rises in overseas interest rates boosted gains from foreign bond holdings.The data showed Japan’s current account surplus stood at 438.2 billion yen ($2.96 billion) in January, compared with economists’ median forecast for a deficit of 330.4 billion yen in a Reuters poll.It followed 744.3 billion yen of surplus in December.A breakdown of the data showed exports grew 7.6% year-on-year in January driven by demand for cars, car parts and chip-making equipment while imports fell 12.1% reflecting declines of coal, liquefied natural gas and communications equipment.Primary income gains, or returns from past direct investment and portfolio investment overseas, saw Japan log a primary income surplus of 2.8516 trillion yen.In addition, the current account data showed a record gain in travel account due to a boost from inbound tourism.($1 = 148.0500 yen) More

(Reuters) -Costco Wholesale fell short of Wall Street estimates for quarterly sales on Thursday due to tepid demand for higher margin goods, pulling its shares down 5% in extended trading. With elevated day-to-day costs hammering household budgets, customers have kept a tight lid on their spending, particularly for big-ticket non-essential purchases such as home furnishings, sporting goods and garden supplies.In January, U.S. retail sales fell by the most in 10 months with decreases in sales of electronics and appliances as well as clothing, health and personal care products.However, demand for Costco (NASDAQ:COST)’s consumables and groceries held steady and helped the company’s comparable sales, excluding the impact of fuel and currency fluctuations, jump 5.8% in the second quarter. “The same store sales actually came out better than the street expected, which again was weird because you kind of knew what the number was heading into this year,” Telsey Advisory Group analyst Joseph Feldman said.Total sales were up 6% at $58.44 billion but missed LSEG estimates of $59.16 billion.The company said that net sales were negatively impacted by a shift in the fiscal calendar and gasoline price deflation.However, Costco’s e-commerce sales surged 18.4% in the quarter, driven by strong demand for gold and silver bullions, appliances and gift cards. The company now offers online sales of gold bars and more recently 25-count tubes of 1 ounce Canada Maple Leaf Silver coins, exclusively for members.Costco sold $100 million in one-ounce gold bars last quarter.These precious metals are considered a hedge against inflation and a safe-haven investment, especially in anticipation of potential U.S. Federal Reserve rate cuts.Meanwhile, gold prices reached an all-time high of $2,164.09 on Thursday and spot silver prices have also been on the rise over the past year.The company’s profit of $3.92 per share topped estimates of $3.62 on easing freight and commodity costs. More

TOKYO (Reuters) – Big Japanese companies look set to formally offer hefty pay hikes at annual wage talks with unions that wrap up on March 13, a move that will virtually cement the case for the central bank to phase out its unprecedented monetary easing in coming months.Economists see the wage negotiations resulting in an average increase of around 3.9% in annual pay for union workers at major firms. That would be the biggest rise in 31 years and heighten expectations the BOJ would end negative interest rates by April.The central bank has long contended that robust wage growth was a prerequisite for rolling back more than a decade of a radical monetary experiment that has aimed to lift Japan out of a protracted cycle of deflation and economic stagnation. The annual “shunto” negotiations, long a defining feature of Japanese business, were closely watched in the high growth era, but became less important in the decades after the asset bubble burst in the early 1990s, as companies scrambled to shed the three excesses of debt, workers, plant and equipment.Three decades on, wage negotiations are once again in the spotlight, as Prime Minister Fumio Kishida has made pay increases a top priority, as he looks to put an end to the years of meagre wage growth that have kept well behind the average for the OECD grouping of rich countries. “This year, big firms will probably offer wage hikes of near 4%, which should prompt the BOJ to end negative rates in April,” said Takeshi Minami, chief economist at Norinchukin Research Institute.A fierce labour crunch in Japan has also driven home the message that companies need to increase pay, Minami said.”Businesses can no longer stay afloat if they don’t offer attractive pay to bring in young talent,” he said.While the wage talks directly impact workers at the biggest firms – a sliver of the workforce – they set the tone for the rest of the economy. Toyota Motor (NYSE:TM), for instance, has long been seen as a pacesetter.Wages increases are increasingly important to attract workers as Japan is now grappling with higher prices, said Atsushi Takeda, chief economist at Itochu Economic Research Institute. That’s also a big change from the past three decades when prices also budged little.Japan’s largest trade union confederation, Rengo, has demanded pay rises of 5.85% this year, topping 5% for the first time in 30 years.Unions representing workers in industries ranging from automobiles, electronics, metals, heavy machinery as well as in the service sector have followed suit, demanding record pay hikes. Many of their demands are expected to be fully met.”Strong pay offers are a done deal,” a senior government official told Reuters requesting anonymity. “The BOJ could end negative rates in either March or April, if they wanted. It’s just a question of timing.”INFLATION Even though Japanese companies have been raising pay, the increases have largely failed to keep up with inflation.Real wages, which are adjusted for inflation, have now fallen for 22 straight months. In January, the latest month available, real wages fell 0.6% year-on-year.With inflation running at or above the BOJ’s 2% target for nearly two years, nominal wages need to accelerate by more than 0.5%, meaning that the outcome of the wage talks would need to be a 4.5% increase to beat inflation, Norinchukin’s Minami said. Toyota workers are seeking pay rises of up to 28,440 yen ($190.85) a month and a record bonus payment worth 7.6 months of salary. The world’s largest carmaker by volume is expected to formally respond to those requests on March 13.Rival car companies Honda (NYSE:HMC) Motor and Mazda Motor (OTC:MZDAY) struck early deals last month, meeting union demands in full.One important question is whether pay hikes would continue from next year and after – and whether they will spread to the smaller firms that employ seven out of 10 Japanese workers.Smaller companies tend to have less leverage to pass on costs to clients, making it harder for them to raise pay.Last year, the anti-monopoly watchdog laid out guidelines aimed at making it easier for smaller companies to pass on higher labour costs to bigger customers.Tokyo has also extended collaboration among government, labour and management to regional levels so that the three parties can work together to improve wages across the country.To overcome a labour crunch, Hisashi Yamada, a Hosei University professor and expert on labour issues, calls for improving productivity at small firms, many of whom engaging in labour-intensive operations.”Small firms must boost productivity by investing in labour saving technology such as automation and robots,” he said. ($1 = 149.0200 yen) More

(Reuters) – The Consumer Financial Protection Bureau was sued on Thursday over its new rule capping late fees on credit cards at $8, which banking groups and the U.S. Chamber of Commerce say punishes consumers who pay their bills on time.In a complaint filed in the Fort Worth, Texas, federal court, the fee’s opponents accused the bureau of exceeding its authority, and ignoring Congress’ intent that fees be high enough to deter late payments, ensure cardholder accountability, and compensate issuers for their costs when payments are late.The plaintiffs include the Chamber, the American Bankers Association, the Consumer Bankers Association, and three Texas-based trade groups.In a statement, the consumer bureau pledged to defend the rule, saying it “closes a longstanding loophole abused by credit card giants to turn late fees into a major revenue stream,” and will save American consumers more than $10 billion.Credit card late fees have been a boon to issuers, totaling more than $14 billion in 2022 as the average fee swelled to $32, the bureau estimated.The new rule caps fees for issuers with more than 1 million open accounts, unless they can prove higher fees are necessary to cover their costs, and end what the bureau called “abuse” of an automatic adjustment for inflation.More than 95% of outstanding credit card balances are expected to be covered. CFPB Director Rohit Chopra has characterized the higher fees as “junk fees.”In Thursday’s complaint, opponents said capping late fees would cause irreparable harm through higher card losses and compliance costs for issuers, including on accounts they would have never opened had they known about the cap.”The agency’s own analysis has found that by limiting late fees, associated costs will be passed onto all credit card users, even those who have never made a late payment,” said Neil Bradley, the Chamber’s chief policy officer.The case was assigned to U.S. District Judge Reed O’Connor, an appointee of former President George W. Bush.His rulings have included a 2018 decision declaring unconstitutional the Affordable Care Act, also known as Obamacare. That ruling was reversed on appeal.The case is Chamber of Commerce of the United States of America et al v Consumer Financial Protection Bureau et al, U.S. District Court, Northern District of Texas, No. 24-00213. More

(Reuters) -An Oregon state jury on Tuesday ordered Berkshire Hathaway (NYSE:BRKa)’s PacifiCorp to pay at least $29.2 million to nine homeowners and a summer camp whose properties were damaged by 2020 wildfires they claim were sparked when the Oregon utility failed to shut off its power lines during high winds.The verdict came in a trial that kicked off on Feb. 27 in Multnomah County Circuit Court in Portland, where PacifiCorp is based. The trial, which Reuters viewed via the Courtroom View Network, was the second of at least three scheduled this year to serve as test cases to determine how much PacifiCorp owes Oregon residents and business owners, whose homes and properties were ravaged by a series of fires that torched parts of the state over Labor Day weekend in 2020, causing nearly $1.9 billion in property damage and other harms, according to a state estimate. The company could face billions of dollars in liability to compensate homeowners and business owners who claim the fires damaged approximately 2,400 properties across the state. The victims claimed in their 2020 class action that PacifiCorp had a duty to safely operate its electrical equipment, but negligently failed to shut it off.The company has said it is appealing previous verdicts against it. It said in a statement on Tuesday that it has settled separate claims related to the fires, and will continue to settle other “reasonable” claims as well.”Wildfires pose a catastrophic threat to communities, and require holistic solutions involving businesses, governments and other key stakeholders working together to design and implement enduring solutions for all Oregonians,” the company said.A separate jury last year already determined PacifiCorp was liable for the fires, finding the company was grossly negligent when it failed to shut down power lines that sparked during high winds and set off fires across the state. That trial involved 17 people whose homes or properties were damaged, but the liability findings apply to all the plaintiffs in the class action.The jury also set punitive damages, which are damages reserved for defendants whose behavior is deemed particularly egregious, at 25% of compensatory damages. That finding also applies to all of the plaintiffs, which should boost their overall recovery.The award from Tuesday’s verdict will exceed $42 million once punitive damages and other post-trial additions are made, attorneys who represented the plaintiffs said in a statement.In January, another jury ordered PacifiCorp to pay at least $62 million to nine homeowners whose properties were damaged by the wildfires.The company has defended its fire-prevention efforts, saying power shutoffs were not necessary based on what it knew. It has also said the plaintiffs did not establish that its equipment was to blame for the wildfires.Wildfires throughout Oregon in 2020 burned approximately 1,900 square miles (1.22 million acres), destroying an estimated 5,000 or more structures and killing at least nine people.The U.S. government has also threatened to sue the company over natural resources damages and fire suppression costs associated with the 2020 Slater wildfire in southern Oregon and northern California. More

The money-losing electric vehicle company, which makes vans, trucks and S.U.V.s, is trying to preserve cash as it works to produce and sell more affordable vehicles.Rivian, a young electric vehicle company, said on Thursday that it was halting construction of a new factory in Georgia. The company also announced two new models, one of which will now be produced at its plant in Illinois.The company had nearly completed preparing the roughly 2,000-acre site in Georgia that is about 50 miles east of Atlanta, and it was expecting to break ground on the $5 billion plant this year.But the growth of electric vehicle sales has slowed in the past six months, forcing many automakers to reassess their plans for new factories and models.Rivian said delaying the Georgia plant would save it about $2.25 billion, a large sum from a business that has been losing billions of dollars for several years. The company said it was committed to building the plant but did not say when it hoped to restart construction.“Our Georgia site remains really important to us,” Rivian’s chief executive, R.J. Scaringe, said at an event on Thursday where he unveiled two new sport-utility vehicles. “It’s core to scaling across all these vehicles.”One of the S.U.V.s, called the R2, is a five-passenger vehicle that is expected to be available in the first half of 2026. Originally, the R2 was supposed to be the first vehicle produced in Georgia. Shifting production to Normal, Ill., where the company has an operating factory, will allow Rivian to begin delivering the vehicle to customers sooner, Mr. Scaringe said.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

Friday’s nonfarm payrolls report is expected to show growth of 198,000 and the unemployment rate holding steady at 3.7%.
A jobs market that remains red-hot could deter the Federal Reserve from cutting interest rates this year as expected.
In its most recent survey of economic conditions, the Fed found that the ultra-tight labor market has loosened somewhat, but there are still active pockets.

A workers stocks the shelves in a CVS pharmacy store on February 07, 2024 in Miami, Florida. 
Joe Raedle | Getty Images

Job growth in the U.S. likely decelerated in February while still a long way from stall speed as companies continue to keep up demand for workers.
When the Labor Department releases the nonfarm payrolls report Friday at 8:30 a.m. ET, it’s expected to show growth of 198,000 and the unemployment rate holding steady at 3.7%, according to Dow Jones consensus estimates.

If the forecast is close to accurate, it would mark a considerable downshift from January’s explosive growth of 353,000, but still representative of a fairly vibrant labor market.
“This is kind of a cautious labor market. Employers are hiring to keep pace with business activity,” said Julia Pollak, chief economist at ZipRecruiter. “Many businesses still report higher than expected sales. But they’re not aggressively hiring for growth and to expand. For that, many are still taking a wait-and-see approach.”
January’s surge followed a robust gain of 333,000 in December, seemingly countering the picture of an apprehensive hiring climate.
However, Pollak noted that both numbers were inflated from seasonal distortions, where retailers in particular cut fewer holiday jobs than expected. February, though, could see growth as high as 240,000, as companies look to fill an elevated level of open positions, Pollak said.

Too much growth?

ZipRecruiter’s quarterly job-seeker survey showed expectations for the medium-term outlook hitting a series high, while applicants also indicated stronger levels of confidence in their financial wellbeing and current state of the labor market.

Under normal conditions, those would all be positive attributes. But there are other concerns now.
A jobs market that remains red-hot could deter the Federal Reserve from cutting interest rates this year as expected. Earlier this week, Atlanta Fed President Raphael Bostic expressed concern about potential “pent-up exuberance” that could be unleashed in the business community after the central bank starts easing.
“Once rate cuts begin, that will give a boost to certain industries that they’ve been waiting for, especially when it comes to capital investments,” Pollak said. “Many companies are still holding back and waiting. Manufacturing will be a very interesting one to watch. There has recently been a bit of an improvement in durable goods manufacturing job openings. The checks are in the mail.”
Markets expect the Fed to start cutting rates in June, though the outlook has become less certain in recent weeks as policymakers weigh the direction of inflation.
Despite the uncertainty over monetary policy, companies have forged ahead with hiring.

There have been mixed signs regarding layoffs. This was the biggest February for announced layoffs since 2009, according to Challenger, Gray & Christmas, but workers seem to be able to find other jobs quickly, as evidenced by little change in the weekly jobless claim filings with the Labor Department.
The department’s Job Openings and Labor Turnover Survey for January, released earlier this week, showed layoffs actually decreased over the month and were down nearly 16% from a year ago. Job openings were little changed on the month but decreased 15% from the same period in 2023. Vacancies outnumbered available workers 1.4 to 1, down from 1.8 to 1 on the year.
“I haven’t seen layoffs,” said Tom Gimbel, founder and CEO of LaSalle Network, a staffing and recruiting firm. “What I keep seeing is the small- and mid-market going after market share, and the hiring seems to come in that bracket. They’re hiring the people that the bigger companies, specifically Big Tech, are laying off.”

Demand still strong

Indeed, a steady procession of layoffs at tech giants has attracted headlines recently. The trend continued into February, as employment placement site Indeed reported a 28% slide in job postings for software development and a 26% plunge in information design and documentation.
But other sectors are still showing demand. Job postings surged 102% for physicians and surgeons, 83% for therapists and 82% for civil engineering.
In its most recent survey of economic conditions, the Fed found that the ultra-tight labor market has loosened somewhat, but there are still active pockets.
“Businesses generally found it easier to fill open positions and to find qualified applicants, although difficulties persisted attracting workers for highly skilled positions, including health-care professionals, engineers, and skilled trades specialists such as welders and mechanics,” the Fed said in its “Beige Book” report released Wednesday.
The report precedes each Fed meeting by two weeks and helps inform policymakers on trends across the economy. Business contacts noted that wages are continuing to rise, though at a slower pace. Wage gains are an important piece of the inflation puzzle.
Friday’s report is expected to show average hourly earnings up just 0.2% on the month, down from a 0.6% jump in January, though still increasing at a 4.4% pace. The big monthly move in January came largely from a decline in the average work week, which elevates the appearance of average hourly earnings.
Even with the hotter than expected inflation numbers, Fed Chair Jerome Powell said Thursday that the central bank is “not far” from gaining enough confidence in the trajectory of inflation to start cutting rates.
“A lot of the hourly wage increases were driven by two things primarily: more liberal municipalities, and a scarcity of workers from Covid,” Gimbel said. “I don’t see a lot of wage growth this year.” More