WASHINGTON (AP) ? U.S. manufacturing shrank in June for the first time in nearly three years, adding to signs that economic growth is weakening.
Production and exports declined, and the number of new orders plunged, according to a monthly report released Monday by the Institute for Supply Management.
The slowdown comes as U.S. employers have scaled back hiring, consumers have turned more cautious, Europe faces a recession and manufacturing has slowed in big countries like China.
"This is not good," said Dan Greenhaus, chief economic strategist at BTIG, an institutional brokerage. Though the report "does not mean recession for the broader economy, it is still a terribly weak number."
The trade group of purchasing managers said its index of manufacturing activity fell to 49.7. That's down from 53.5 in May. And it's the lowest reading since July 2009, a month after the Great Recession officially ended. Readings below 50 indicate contraction.
Economists said the manufacturing figures were consistent with growth at an annual rate of 1.5 percent or less. That would be down from the January-March quarter's already tepid annual pace of 1.9 percent.
"Our forecast that the U.S. will grow by around 2 percent this year is now looking a bit optimistic," said Paul Dales, an economist at Capital Economics.
Stocks fell sharply after the report was released at 10 a.m. But investors appeared to shake off the bad manufacturing news by the end of the day. The Dow Jones industrial average recovered most of its early losses to close down just 8.7 points at 12,871. And broader indexes ended the day up.
Most economists aren't yet predicting another recession. Though the ISM report suggests manufacturing is contracting, it typically takes a sustained reading below 43 to signal the economy isn't growing.
Still, U.S. manufacturing, which has helped drive growth since the recession ended, is faltering at a precarious time.
Americans have pulled back on spending, which drives roughly 70 percent of growth. Europe's economy is likely in recession, which has hurt U.S. exports.
And China's manufacturing sector grew in June at its slowest pace in seven months, according to a survey released Sunday by the state-affiliated China Federation of Logistics and Purchasing.
Manufacturing will likely stay weak for the next few months. The ISM's gauge of new orders, a measure of future activity, plunged from 60.1 to 47.8. That's the first time it has fallen below 50 since April 2009, when the economy was still in recession.
Fewer new orders reflect growing concerns of businesses. In addition to slower global growth and less spending by U.S. consumers, many companies worry that U.S. lawmakers won't extend a package of tax cuts at the end of the year.
Bricklin Dwyer, an economist at BNP Paribas, said the uncertainty "has left businesses unwilling to invest."
A gauge of production in the ISM's survey fell to its lowest level in more than three years.
U.S. factories are also reporting less overseas demand. A measure of exports dropped to 47.5, its lowest level since April 2009.
A gauge of employment edged down but remained at a healthy level of 56.6. That suggests factories may still be adding jobs. Manufacturers have reported job gains for eight straight months.
Overall hiring has slowed sharply this spring. Employers added an average of only 73,000 jobs per month in April and May. That's much lower than the average of 226,000 added in the first three months of this year. The unemployment rate rose in May to 8.2 percent from 8.1 percent, the first increase in a year.
Worries about slowing job growth are outweighing the benefits of lower gas prices. A measure of consumer confidence fell in June for the fourth straight month.
Slower job growth and falling confidence are weighing on consumers' willingness to spend. Americans cut back on purchases of autos and other long-lasting factory goods in May, the government said Friday.
The sharp drop in U.S. factory activity overshadowed more positive news on housing.
Construction spending rose 0.9 percent in May from April, the Commerce Department said in a separate report Monday. It was the second straight monthly increase, even though the level of spending still isn't healthy.
The increase was driven by a surge in residential construction. Home sales are up from the same month last year. Mortgage rates are at the lowest levels in history. And prices have begun to stabilize in most markets.
The economy could also get a boost this summer from lower gas prices, which have tumbled more than 60 cents per gallon since peaking in April. The result is that consumers have more money to spend on other goods, from autos and furniture to electronics and vacations, that fuel economic growth.
MEXICO CITY?? The party that ruled Mexico for most of the past century looked set for a comeback on Sunday as voters chose a new president, seeking an end to a brutal drug war and weak economic growth that have worn down the ruling conservatives.
Twelve years after the Institutional Revolutionary Party (PRI) lost power, its candidate, Enrique Pena Nieto, led by between 8 and 11 percentage points in exit polls released by three of Mexico's main television networks after voting ended on Sunday night.
Tainted by corruption, electoral fraud and occasional bouts of brutal authoritarianism during its 71 years in power, the PRI was voted out in 2000. It has bounced back, helped by the economic malaise and a tide of lawlessness that have plagued Mexico under the conservative National Action Party, or PAN.
Pena Nieto, a youthful-looking former governor of the State of Mexico, has established himself as the new face of the PRI with the aid of favorable media coverage led by Mexico's most powerful broadcaster, Televisa.
Leftist rival Andres Manuel Lopez Obrador was in second place with Josefina Vazquez Mota of PAN, trailing in third.
Vazquez Mota said she recognized that voting trends in Sunday's election did not favor her, but stopped short of conceding defeat.
Preliminary official results were due in the next few hours.
Long lines of voters snaked around city blocks in the capital. The first national exit polls were expected when voting ends in the westernmost part of the country at 8 p.m.
"It's time for the PRI to return. They're the only ones who know how to govern," said Candelaria Puc, 70, preparing to vote in Cancun with the help of a friend because she cannot read or write.
"The PRI is tough, but they won't let the drug violence get out of control," she added, speaking in a mix of Mayan and Spanish.
After ending the PRI's rule in 2000, the PAN raised hopes high. But years of weak growth and the death of more than 55,000 people in drug-related killings since 2007 have eroded its popularity.
Violence continued in the days before Sunday's vote.
In the Pacific beach resort of Acapulco, one of the cities most affected by the drug war, four people were killed on Saturday, two of them tortured and beheaded, a hallmark of drug-related killings, Guerrero state police said.
The PRI mayoral candidate in the city of Marquelia, about 40 miles from Acapulco, was kidnapped by an armed group, prompting a protest of his supporters that closed a highway for five hours, a party leader said.
Pena Nieto's closest challenger in pre-election polling was former Mexico City Mayor Andres Manuel Lopez Obrador, the front-runner for much of the 2006 race. Lopez Obrador ultimately lost by half a point to President Felipe Calderon of PAN and refused to accept defeat.
Claiming fraud, he led massive protests in the capital for weeks, bringing much of Mexico City to a standstill and alienating even some of his supporters.
Though his campaign bid surged late on when a wave student-led opposition to the PRI boosted his ratings, polls suggest Lopez Obrador will fall short of the 35 percent of votes he won in 2006.
"This is no time for the country to go in reverse," a relaxed Lopez Obrador said of the PRI before voting.
Final polls showed Pena Nieto winning 40 percent to 45 percent of the vote, Lopez Obrador close to 30 percent with Vazquez Mota not far behind. Gabriel Quadri, a fourth candidate competing for a smaller party, is expected to pick up a few percent. The one with the most votes wins, with no need for a second round.
Pena Nieto has seized on Calderon's failure to tame cartels with a military-led offensive, arguing the PRI's experience in power means it best understands how to restore peace to Mexico and reinvigorate the economy.
FEAR OF FRAUD
Lopez Obrador has in recent weeks sounded alarms about possible vote fraud, raising concerns he might call new street protests if he loses again.
His belligerence after 2006 exposed tensions within the main leftist grouping, the Party of the Democratic Revolution (PRD), although it has rallied behind him again for this campaign.
Though it has effective and popular control in Mexico City, the PRD's record outside the capital has been tainted by allegations of corruption and incompetence.
"It is important to stop the PRI coming back to power," said 22-year-old Rafael Peralta, a first-time voter. "They brutally repress protests and give handouts with conditions."
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The PRI laid the foundations of the modern state with a nimble blend of politics and patronage that allowed it to appeal to labor unions and captains of industry at the same time.
The party that nationalized the oil industry in 1938 also made sweeping free-market reforms in the 1990s and signed the North American Free Trade Agreement with the United States and Canada, upholding a populist image while a small cadre of well-connected capitalists grew rich through effective oligopolies.
Mexicans eventually tired of the one-party rule that stifled dissent, rewarded loyalists and allowed widespread corruption.
The era of old-time PRI bosses known as "dinosaurs" gave way to a more democratic era under the 1994-2000 presidency of Ernesto Zedillo, who instituted reforms that allowed opposition parties to compete in a fair vote and oust the PRI.
On Sunday voters will also decide on six state governors and both houses of Congress, with gains expected for the PRI.
The legislative results will help determine whether Pena Nieto will be able to push through his plans to liberalize antiquated labor laws, improve the tax take and open up state oil giant Pemex to more private investment.
Financial investors are encouraged by Pena Nieto's reform agenda, which would be more friendly toward foreigners, and hold out hope he would promote well-educated technocrats like those who oversaw the economy during the PRI's later years in power.
(c) Copyright Thomson Reuters 2012. Check for restrictions at: http://about.reuters.com/fulllegal.asp
An error-eliminating fix overcomes big problem in '3rd-gen' genome sequencingPublic release date: 1-Jul-2012 [ | E-mail | Share ]
Contact: Peter Tarr tarr@cshl.edu 917-435-5068 Cold Spring Harbor Laboratory
Hybrid error-correction approach boosts accuracy of 'long reads' to 99.9 percent
Cold Spring Harbor, NY The next "next-gen" technology in genome sequencing has gotten a major boost.
A quantitative biologist at Cold Spring Harbor Laboratory (CSHL) and collaborators today published results of experiments that demonstrate the power of so-called single-molecule sequencing, which was recently introduced but whose use has so far been limited by technical issues.
The team, led by CSHL Assistant Professor Michael Schatz and Adam Phillippy and Sergey Koren of the National Biodefense Analysis and Countermeasures Center and the University of Maryland (UMD), has developed a software package that corrects a serious problem inherent in the new sequencing technology: the fact that every fifth or sixth DNA "letter" it generates is incorrect. The high error rate is the flip side of the new method's chief virtue: it generates much longer genome "reads" than other technologies currently used, up to 100 times longer, and thus can provide a much more complete picture of genome structure than can be obtained with current, "2nd-gen" sequencing technology.
Using mathematical algorithms, Schatz and the team have preserved the great advantage of the "3rd-gen" method while all but eliminating its chief flaw. They have reduced the error rate from about 15% or greater to less than one-tenth of one percent. This mathematical "fix" which has been published in open-source code to the World Wide Web greatly increases the practical utility of 3rd-gen sequencing for the entire biomedical research community.
The team demonstrates the breadth of potential applications of single-molecule sequencing by applying their fix to sequencing tasks ranging from the tiny bacteriophage virus at one end of the difficulty scale to the large and vastly more complex genome of the parrot, at the other. The parrot genome is more than a third the size of the human genome and is published online today with the team's paper in Nature Biotechnology. The parrot sequence is "far superior to that of any previously sequenced bird genome," Schatz says.
To understand why it is better is to appreciate the advantages of 3rd-gen sequencing. The main advantage has to do with the average length of each "read" (i.e., genome segments read by a sequencer). The individual sequences are assembled into "contigs" -- shorthand for contiguous sequences -- much the way pieces in a jigsaw puzzle are assembled. In currently used 2nd-gen technology, the contigs are very small, and are massively redundant. A "consensus" version of each segment, representing the results of many layered reads, tends to be extremely accurate. But the small size of puzzle pieces prevents accurate assembly of certain genome portions, like those containing long repetitive sequences.
Obtaining superior versions of complete genomes was the objective that motivated Schatz and his collaborators, who also include HHMI Investigator Erich D. Jarvis of Duke University and CSHL Professor W. Richard McCombie, a sequencing pioneer, among others.
Combining the best of both generations
With single-molecule sequencing, the assembled contigs are much longer affording a much better picture of relatively larger genome segments, including those occupied by lengthy repeats. This is what Schatz and his team wanted to preserve, while at the same time boosting the error-free rate. They did so by effectively taking the best of both 2nd- and 3rd-gen technologies.
The team's major insight was to take advantage of the long-read data offered by a 3rd-gen machine like that used in their experiments, a Pacific Biosciences RS sequencer, and mixing in highly accurate short reads obtained from a separate 2nd-gen sequencer. The two data types were run through an open-source genome assembly program called Celera Assembler to generate a clean final assembly that has proven 99.9% error-free and composed of contigs whose median size is at least double that obtainable with 2nd-gen "short-read" sequencers. Contig sizes are expected to increase appreciably in subsequent iterations of the hybrid approach as single molecule long-read sequencing improves.
High-quality genome assemblies are especially important for genome annotation and comparative genome analyses. Many microbial genome analyses depend on finished genomes, but their cost is prohibitive using older technologies. High-quality analysis of the genomes of higher organisms depends upon continuous sequences that capture long stretches of DNA that spell out genes. Discoveries in recent years of spontaneously occurring structural changes in genomes called copy number variations -- such as those made by CSHL Professor Mike Wigler and his team in their research on schizophrenia and autism make clear the importance of being able to obtain clean and accurate pictures of the entire genomes of affected individuals.
With hybrid error correction, Schatz and his colleagues have "demonstrated that high error rates associated with long reads need not be a barrier to genome assembly," he summarizes. "High-error long reads can be efficiently assembled in combination with complementary short reads to produce assemblies not previously possible."
###
"Hybrid error correction and de novo assembly of single-molecule sequencing reads" appears online in Nature Biotechnology July 1, 2012. The authors are: Sergey Koren, Michael C. Schatz, Brian P. Walenz, Jeffrey Martin, Jason Howard, Ganeshkumar Ganapathy, Zhong Wang, David A. Rasko, W. Richard McCombie, Erich D. Davis and Adam M. Phillippy. the paper can be obtained online using doi: xxxxxxxxxxxxxxxx.
About Cold Spring Harbor Laboratory
Founded in 1890, Cold Spring Harbor Laboratory (CSHL) has shaped contemporary biomedical research and education with programs in cancer, neuroscience, plant biology and quantitative biology. CSHL is ranked number one in the world by Thomson Reuters for impact of its research in molecular biology and genetics. The Laboratory has been home to eight Nobel Prize winners. Today, CSHL's multidisciplinary scientific community is more than 360 scientists strong and its Meetings & Courses program hosts more than 12,500 scientists from around the world each year to its Long Island campus and its China center. Tens of thousands more benefit from the research, reviews, and ideas published in journals and books distributed internationally by CSHL Press. The Laboratory's education arm also includes a graduate school and programs for undergraduates as well as middle and high school students and teachers. CSHL is a private, not-for-profit institution on the north shore of Long Island. For more information, visit www.cshl.edu.
[ | E-mail | Share ]
?
AAAS and EurekAlert! are not responsible for the accuracy of news releases posted to EurekAlert! by contributing institutions or for the use of any information through the EurekAlert! system.
An error-eliminating fix overcomes big problem in '3rd-gen' genome sequencingPublic release date: 1-Jul-2012 [ | E-mail | Share ]
Contact: Peter Tarr tarr@cshl.edu 917-435-5068 Cold Spring Harbor Laboratory
Hybrid error-correction approach boosts accuracy of 'long reads' to 99.9 percent
Cold Spring Harbor, NY The next "next-gen" technology in genome sequencing has gotten a major boost.
A quantitative biologist at Cold Spring Harbor Laboratory (CSHL) and collaborators today published results of experiments that demonstrate the power of so-called single-molecule sequencing, which was recently introduced but whose use has so far been limited by technical issues.
The team, led by CSHL Assistant Professor Michael Schatz and Adam Phillippy and Sergey Koren of the National Biodefense Analysis and Countermeasures Center and the University of Maryland (UMD), has developed a software package that corrects a serious problem inherent in the new sequencing technology: the fact that every fifth or sixth DNA "letter" it generates is incorrect. The high error rate is the flip side of the new method's chief virtue: it generates much longer genome "reads" than other technologies currently used, up to 100 times longer, and thus can provide a much more complete picture of genome structure than can be obtained with current, "2nd-gen" sequencing technology.
Using mathematical algorithms, Schatz and the team have preserved the great advantage of the "3rd-gen" method while all but eliminating its chief flaw. They have reduced the error rate from about 15% or greater to less than one-tenth of one percent. This mathematical "fix" which has been published in open-source code to the World Wide Web greatly increases the practical utility of 3rd-gen sequencing for the entire biomedical research community.
The team demonstrates the breadth of potential applications of single-molecule sequencing by applying their fix to sequencing tasks ranging from the tiny bacteriophage virus at one end of the difficulty scale to the large and vastly more complex genome of the parrot, at the other. The parrot genome is more than a third the size of the human genome and is published online today with the team's paper in Nature Biotechnology. The parrot sequence is "far superior to that of any previously sequenced bird genome," Schatz says.
To understand why it is better is to appreciate the advantages of 3rd-gen sequencing. The main advantage has to do with the average length of each "read" (i.e., genome segments read by a sequencer). The individual sequences are assembled into "contigs" -- shorthand for contiguous sequences -- much the way pieces in a jigsaw puzzle are assembled. In currently used 2nd-gen technology, the contigs are very small, and are massively redundant. A "consensus" version of each segment, representing the results of many layered reads, tends to be extremely accurate. But the small size of puzzle pieces prevents accurate assembly of certain genome portions, like those containing long repetitive sequences.
Obtaining superior versions of complete genomes was the objective that motivated Schatz and his collaborators, who also include HHMI Investigator Erich D. Jarvis of Duke University and CSHL Professor W. Richard McCombie, a sequencing pioneer, among others.
Combining the best of both generations
With single-molecule sequencing, the assembled contigs are much longer affording a much better picture of relatively larger genome segments, including those occupied by lengthy repeats. This is what Schatz and his team wanted to preserve, while at the same time boosting the error-free rate. They did so by effectively taking the best of both 2nd- and 3rd-gen technologies.
The team's major insight was to take advantage of the long-read data offered by a 3rd-gen machine like that used in their experiments, a Pacific Biosciences RS sequencer, and mixing in highly accurate short reads obtained from a separate 2nd-gen sequencer. The two data types were run through an open-source genome assembly program called Celera Assembler to generate a clean final assembly that has proven 99.9% error-free and composed of contigs whose median size is at least double that obtainable with 2nd-gen "short-read" sequencers. Contig sizes are expected to increase appreciably in subsequent iterations of the hybrid approach as single molecule long-read sequencing improves.
High-quality genome assemblies are especially important for genome annotation and comparative genome analyses. Many microbial genome analyses depend on finished genomes, but their cost is prohibitive using older technologies. High-quality analysis of the genomes of higher organisms depends upon continuous sequences that capture long stretches of DNA that spell out genes. Discoveries in recent years of spontaneously occurring structural changes in genomes called copy number variations -- such as those made by CSHL Professor Mike Wigler and his team in their research on schizophrenia and autism make clear the importance of being able to obtain clean and accurate pictures of the entire genomes of affected individuals.
With hybrid error correction, Schatz and his colleagues have "demonstrated that high error rates associated with long reads need not be a barrier to genome assembly," he summarizes. "High-error long reads can be efficiently assembled in combination with complementary short reads to produce assemblies not previously possible."
###
"Hybrid error correction and de novo assembly of single-molecule sequencing reads" appears online in Nature Biotechnology July 1, 2012. The authors are: Sergey Koren, Michael C. Schatz, Brian P. Walenz, Jeffrey Martin, Jason Howard, Ganeshkumar Ganapathy, Zhong Wang, David A. Rasko, W. Richard McCombie, Erich D. Davis and Adam M. Phillippy. the paper can be obtained online using doi: xxxxxxxxxxxxxxxx.
About Cold Spring Harbor Laboratory
Founded in 1890, Cold Spring Harbor Laboratory (CSHL) has shaped contemporary biomedical research and education with programs in cancer, neuroscience, plant biology and quantitative biology. CSHL is ranked number one in the world by Thomson Reuters for impact of its research in molecular biology and genetics. The Laboratory has been home to eight Nobel Prize winners. Today, CSHL's multidisciplinary scientific community is more than 360 scientists strong and its Meetings & Courses program hosts more than 12,500 scientists from around the world each year to its Long Island campus and its China center. Tens of thousands more benefit from the research, reviews, and ideas published in journals and books distributed internationally by CSHL Press. The Laboratory's education arm also includes a graduate school and programs for undergraduates as well as middle and high school students and teachers. CSHL is a private, not-for-profit institution on the north shore of Long Island. For more information, visit www.cshl.edu.
[ | E-mail | Share ]
?
AAAS and EurekAlert! are not responsible for the accuracy of news releases posted to EurekAlert! by contributing institutions or for the use of any information through the EurekAlert! system.
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* U.S. dealers seek funding for Treasuries settlement
* Investors move back to stocks, less cash to lend
* Deferred Eurodollars fall, front months steady
By Richard Leong
NEW YORK, June 29 (Reuters) - A key borrowing cost for Wall Street banks rose on Friday as they sought funds to pay their purchases at this week's U.S. Treasury debt auctions that raised $99 billion for the federal government.
The supply of dollars in the $1.6 trillion tri-party repurchase agreement market -- where Wall Street banks pledge U.S. Treasuries and other assets as collateral in exchange for cash -- shrank as investors moved money back into the stock market and other riskier investments after European leaders took further steps to manage their region's fiscal mess.
"The market was surprised since everyone seemed to be at odds heading into the summit," said Mike Lin, director of U.S. funding at TD Securities in New York.
Euro zone leaders struck a deal on Friday to allow their rescue fund infuse cash directly into struggling banks from next year and intervene on bond markets to support troubled member states.
The interest rate on repos due on Monday was last bid at 0.24 percent, 2 basis points higher than Thursday and up 13 basis points at the end of the first quarter.
"There is just a lot of collateral around at the end of the quarter and there is less money to fund them," Lin said.
Some of the cash was channeled into stocks on Friday. The three Wall Street indexes were up nearly 2 percent in midday trading.
Primary dealers, those top Wall Street firms that do business directly with the U.S. Federal Reserve bought more than half of the two-year, five-year and seven-year debt at this week's U.S. Treasury auctions.
Dealers and other investors who bought the bonds must pay the U.S. Treasury on Monday.
During the course of reselling their purchases in the open market, primary dealers typically seek funding for their Treasuries positions.
The quarter's steady rise in repo rates stemmed from the growing supply of short-term U.S. Treasury debt in the open market due to the Fed's Operation Twist.
Under Operation Twist, these Wall Street firms must bid on the short-dated Treasuries that the Fed sells for this bond program. The Fed in turn has used the proceeds to buy long-dated Treasuries with the goal to lower mortgage rates and other longer-term borrowing costs.
In addition to a general rise in short-term interest rates, primary dealers are stuck with more short-dated debt supply.
As of June 20, they owned $96.7 billion in Treasuries, of which $60.2 billion are in coupon debt that matures in three years or less, according to the latest Fed data available.
At the start of Operation Twist which began last October, they held a combined $11.9 billion in Treasuries. Primary dealers had $4.8 billion in net short positions in coupon debt that matures in three years or less.
Last week, the Fed extended Twist, which was initially scheduled to expire on Friday, into year-end with planned purchases of $267 billion long-dated debt. This is on top of $400 billion it already bought.
MIXED SIGNALS
Other parts of the dollar funding market suggested lingering concerns about the banking system due to the sovereign debt problem in Europe and signs of slowing global economic growth, analysts said.
Eurodollar futures for delivery after 2013 fell anywhere from 1.0 to 8.5 basis points on Friday, although most front-month contracts were unchanged to up 1.5 basis points.
The steadiness in front-month Eurodollar futures helped narrow the risk premium on two-year interest rate swaps over Treasuries by 0.25 basis points to 24.25 basis points.
Two-year swap spread, which is seen as a gauge on investor confidence, ended essentially unchanged in second quarter after flirting with 38.00 basis points in early June on fears over Spain's troubled banks and Greece's possible exit from the euro zone.
In offshore dollar lending, the London interbank rate on three-month dollars was unchanged at 0.46060 percent.
This rate benchmark for $370 trillion of financial products worldwide was down from 0.46815 percent at the end of March.
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Public release date: 1-Jul-2012
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