Job seekers stand in line to meet with prospective employers at a career fair in New York City, October 24, 2012.

WASHINGTON | Thu Jan 17, 2013 4:58pm EST

WASHINGTON (Reuters) - The number of Americans filing new claims for unemployment aid hit a five-year low last week and residential construction surged in December, the latest signs that the U.S. economic recovery remains on track.

The reports on Thursday showed the economy was weathering an uncertain fiscal environment surprisingly well. Still, growth in the fourth quarter was likely subdued with only a modest pick-up expected in the first three months of this year.

"While growth has been slow, the damage done from the uncertainty surrounding the fiscal cliff was not sufficient to topple the recovery," said Millan Mulraine, a senior economist at TD Securities in New York.

The fiscal cliff refers to a wave of deep government spending cuts and tax increases, part of which was avoided after a last-minute agreement by U.S. lawmakers. A fight over raising the government's borrowing limit looms.

Initial claims for state unemployment benefits fell 37,000 to a seasonally adjusted 335,000, the lowest level since January 2008, the Labor Department said. It was the largest weekly drop since February 2010 and ended four straight weeks of increases.

While problems adjusting the data for seasonal fluctuations might have exaggerated the decline, economists said the report still suggested an improvement in sluggish labor market conditions and the economy as a whole.

"Having taken a pinch of salt, however, we would suggest that the trend in claims generally show no pickup in layoff activity around the turn of the year," said John Ryding, chief economist at RDQ Economics in New York.

A separate report from the Commerce Department showed housing starts jumped 12.1 percent last month to their highest level since June 2008. Permits for future home construction were also the highest in about 4-1/2 years.

Stocks on Wall Street ended higher on the fairly upbeat jobs and housing data, with the broad Standard & Poor's 500 index hitting a five-year high. Commodity prices also firmed, but U.S. government bond prices slumped.

The dollar rallied to a 2-1/2-year high against the yen.

HOUSING GAINING TRACTION

Though warm weather likely helped, the data was confirmation of the improving housing market tone, and home building made gains across all four regions. Groundbreaking also increased for both single-family homes and multi-family units.

Builders started 780,000 houses in 2012. While still low by historical standards, it was the third straight year of gains in home construction. Housing is no longer a drag on the economy and residential construction is expected to have contributed to growth last year for the first time since 2005.

"The housing recovery has steam. Interest rates are rock-bottom low, inventories of new and existing homes are lean, and the economy is creating jobs," said Patrick Newport, an economist at IHS Global Insight in Lexington, Massachusetts.

Newport said they expected starts to rise to 970,000 this year. The reports came on the heels of data this week showing solid retail sales and manufacturing growth in December.

But weak exports, a slow pace of inventory accumulation and the reversal of a surge in defense spending probably slowed growth to below a 2 percent annual pace in the fourth quarter.

In a reminder that the outlook for the economy remained shaky, a third report showed factory activity in the U.S. mid-Atlantic region contracted this month as new orders tumbled.

The Philadelphia Federal Reserve Bank said its business activity index fell to -5.8 from 4.6 in December. A reading below zero indicates contraction in manufacturing in eastern Pennsylvania, southern New Jersey and Delaware.

"Manufacturing has slowed but it's still growing. I'm not going to read too much into this until I see other regional surveys," said Gus Faucher, a senior economist at PNC Financial Services in Pittsburgh.

The claims data covered the survey week for the January data for the closely watched nonfarm payrolls report. The four-week moving average of new jobless claims, a better measure of labor market trends, fell 6,750 to 359,250, suggesting some improvement in labor market conditions.

Job growth has been gradual, with employers adding 155,000 new positions in December. The unemployment rate held steady at 7.8 percent last month. High jobless is likely to keep the Federal Reserve on an expansionary monetary policy path.

Atlanta Fed President Dennis Lockhart said on Thursday the Federal Reserve will very likely need to continue its large-scale asset purchases into the second half of this year.

(Additional reporting by Jason Lange in Washington and Richard Leong in New York, editing by Chizu Nomiyama)

View the original article here

A Hewlett-Packard logo is seen at the company's Executive Briefing Center in Palo Alto, California January 16, 2013.

NEW YORK | Fri Jan 18, 2013 4:10pm EST

NEW YORK (Reuters) - A U.S. investor activist group affiliated with large labor unions is asking Hewlett-Packard Co to replace its auditor, Ernst & Young, over the technology giant's troubled acquisition of UK software company Autonomy.

Change to Win Investment Group (CtW), based in Washington, D.C., also is seeking a revamp of HP's audit committee, which is responsible for overseeing Ernst & Young's long-standing relationship as the auditor that reviews HP's books.

Spokesmen for HP and Ernst & Young declined to comment.

Labor union pension funds own large stakes in many U.S. companies and often use them as platforms to push for changes in how those corporations are managed. Union pension funds tied to CtW invest more than $200 billion in stocks, including shares in HP, said CtW in a letter to an HP board member on Thursday.

CtW questioned why Ernst & Young did not spot problems at Autonomy. "HP is clearly a company facing serious challenges," CtW said in its letter. "Unfortunately, the highly conflicted, decade-long relationship between Ernst & Young and HP cannot provide shareholders with the reassurance they need."

Auditors are outside accounting firms retained by corporations to vet their books regularly and offer an opinion on the validity of financial results. The four firms that dominate auditing worldwide - Ernst & Young, KPMG, Deloitte and PricewaterhouseCoopers - are faced with ever-rising scrutiny of their role in investor losses and accounting lapses.

The CtW letter was addressed to Rajiv Gupta, chairman of the corporate governance committee of HP's board. It was signed by William Patterson, executive director of CtW Investment Group.

Gupta could not be reached for comment.

HP, AUTONOMY CLASH

HP said in November that it overpaid for Autonomy in 2011. HP accused Autonomy of serious accounting improprieties. Autonomy has rejected the allegations and said HP was looking for "scapegoats."

CtW urged HP to name an independent special master to investigate and report to shareholders on the Autonomy deal, as well as on an earlier acquisition of Electronic Data Systems Corp (EDS), which CtW said was "equally disastrous."

HP has said it is deferring to U.S. and UK regulators to investigate the allegations it has made against Autonomy.

HP in August swung to an $8.9 billion quarterly loss as it swallowed a write-down linked to its $13.9 billion purchase of EDS. That was followed in November by an $8.8 billion writedown on Autonomy's value, which HP blamed largely on improper accounting at the software company.

Ernst & Young was not Autonomy's auditor. But according to CtW, the accounting firm had an opportunity to spot Autonomy's problems when it reviewed the goodwill, or intangible value, that HP recorded for its acquisition of Autonomy.

However, one risk expert said CtW was putting the blame in the wrong place. A separate due diligence team, not the auditor, was responsible for determining the value of Autonomy, said Peter Bible, chief risk officer at EisnerAmper, an accounting and consulting firm.

"The auditors didn't buy the company, HP did. And the people inside HP ought to be the ones held accountable for the purchase price that was paid," Bible said.

CtW questioned whether Ernst & Young was independent enough to audit HP because of the large amount of non-audit services Ernst provided to HP, including tax consulting and lobbying.

Washington Council, a tax lobbying firm acquired by Ernst in 2000, lobbied for HP from 2000 to 2004, CtW said.

AUDITING, LOBBYING EYED

Government lobbying records and U.S. Securities and Exchange Commission filings show that Ernst & Young was HP's auditor while Washington Council was registered as a lobbyist for HP.

Reuters reported last week that the SEC was investigating whether Ernst violated auditor rules by letting its lobbying unit perform work for some major audit clients.

Ernst has said all of its services for audit clients undergo considerable scrutiny to be sure they are within the rules.

U.S. independence rules bar auditors from serving in an "advocacy role" for audit clients. The goal of this rule is to ensure that auditors are objective regarding companies they audit so that they can serve as watchdogs for investors.

It is not clear what type of lobbying activities would be barred under the prohibition against advocacy.

The 2002 Sarbanes-Oxley Act restricted the type of non-audit services that audit firms can provide, but broad exceptions were granted for tax consulting services.

CtW said that HP was out of step with its peers in using Ernst for significant services other than audit work. The other fees paid to Ernst are much higher than those paid by Dell Inc and Apple Inc to their audit firms, CtW said.

CtW also questioned the HP audit committee's willingness to allow Ernst to perform "multiple and conflicting roles" for HP.

Board audit committees hire and oversee outside auditors, while also governing non-audit services.

(Additional reporting by Sarah Lynch and David Ingram in Washington; Editing by Kevin Drawbaugh)

View the original article here

IKANINI, South Africa | Sun Oct 7, 2012 8:42am EDT

IKANINI, South Africa (Reuters) - The rules of the game in South Africa's labour market have changed and the new players are workers such as Tshepo Modise and Thulani Soko, wildcat strikers at mining giant Anglo American Platinum (Amplats) (AMSJ.J).

They feel underpaid, stretched to the limit financially and betrayed by established unions they say are more concerned about ties with politicians and management than workers in the shafts.

But to a few global mining firms, they are part of an overpaid workforce breaking their contracts and in the crosshairs for sacking as costs are cut at marginal shafts in South Africa.

"We no longer want to sit at the table with unions. We've been sabotaged," said Modise, a 30-year-old machine operator at Ikanini, a slum settlement next to an Amplats mine 120 kilometers (75 miles) northwest of Johannesburg.

Since the end of apartheid in 1994, workers have won steady wage increases, but millions of jobless South Africans have missed out on the gains, becoming reliant on the state or relatives for help.

Income inequality in South Africa, already among the world's highest, has grown worse since the former liberation movement African National Congress took over after the end of white-minority rule.

Modise and his 33-year-old colleague Soko speak bitterly about living conditions in Ikanini, where there is no running water or electricity, compared with the prosperity of mine managers who live nearby.

The unrest has also led to job losses; Amplats on Friday sacked 12,000 wildcat strikers, and the next day Atlatsa Resources (ATL.V) dismissed some of the 2,500 workers who went on strike this week at its Bokoni platinum mine.

Each miner supports on average eight to 10 people, often living in abject poverty, according to industry data, so the sackings could cut off income to more than 100,000 people.

Strikers said at the weekend they would stay off the job to press the mining giant Amplats to take the workers back.

The head of the National Union of Mineworkers warned of renewed violence. The labour strife has already led to the death of 49 people since August, including 34 shot dead by police at Lonmin's Marikana platinum on August 16 - the worst security incident in ANC rule.

HELD FOR RANSOM

In terms of lost working days, the strikes this year are relatively mild, but the unrest is by far the most violent since the end of apartheid.

In 2011, 6.2 million working days were lost to strikes. The number so far this year is less than 2 million working days, according to the Andrew Levy Employment, a labour consultancy.

President Jacob Zuma's ruling ANC and its governing alliance partner, the COSATU labour federation, have kept a lid on strikes by pushing deals for incremental wage raises, thereby guaranteeing a steady labour supply.

The strikes are now beyond the control of the government and COSATU, as fed-up workers hold out for big pay rises, in some cases double or triple their salaries.

In one of the largest blows to the ANC-COSATU labour alliance forged in the struggle to end apartheid, wildcat strikers at Lonmin's Marikana mine reached a deal in September for yearly wage increases as high as 22 percent.

Within hours, workers at nearby platinum mines called for similar deals. In the days that followed, wildcat strikes hit sectors including gold, iron and car manufacturing.

"Marikana is the future of labour relations in South Africa," said Loane Sharp, a labour economist at staffing firm Adcorp.

"The labour strikes are so much more damaging and dangerous, but they still do not seem to be enough for government to learn the lesson that the labour market is in a shambles," he said.

JOB LOSSES

The strikes pushed the rand to 3-1/2 year lows last week and prompted Moody's last month to cut South Africa's government bond rating, citing the government's difficulty in keeping up with economic challenges and widening strikes.

"The South African government has not implemented the kinds of policies to deal with these structural pressures. They are boiling over to the loss of legitimacy for the main, post-apartheid institutions, including the unions and the ANC," said Mark Rosenberg, an Africa analyst at Eurasia Group.

To appease its allies in COSATU, whose 2 million members have been a powerful vote-gathering machine, the ANC has passed a raft of union-friendly labour laws that economists said have eroded competitiveness and driven up costs for employers.

As a result, South Africa ranks worst among 144 countries in terms of employer-labour relations and next to worst in terms of overpaying unproductive workers, according to the World Economic Forum's Global Competitiveness Report.

Nor is anything likely to change this year, with ANC leaders more preoccupied with an internal leadership election at the end of the year than the labour strife, which JP Morgan said is likely to put a dent in 2012 growth.

"South Africa is experiencing a perfect storm as weakening domestic demand coincides with large drags from strikes in mining, downward momentum in manufacturing and political news flow ahead of ANC elections at year-end," it said in a research note.

(Writing by Jon Herskovitz; Editing by Will Waterman)

View the original article here