Monthly Archives: July 2015

Honeywell Buys Elster for $5.14 Billion

Honeywell International, manufacturer of automation and control solutions products, announced it will buy Britain’s Melrose Industries’ utility consumption meter business. The deal is estimated to be valued at $5.14 billion. The purchase will help Honeywell to improve its presence in several high-growth regions.

Shares of Melrose grew 6 percent in early Tuesday trading, making it the stock with the highest growth that day on the FTSE-250 midcap index.

Honeywell said that the all-cash purchase of the Elster division of Melrose will hardly impact the company’s 2016 earnings per share.

“Elster’s gas business offers products in high demand among natural gas customers and brings a strong, global distribution network and numerous cross-selling opportunities for existing Honeywell technologies,” Honeywell said.

Skilled Labor Shortage Could Lead to Rise in Wages

Data from a new survey points to a growing shortage of skilled labor in the United States, paving the way for a rise in wages in the coming months.

According to the National Association for Business Economics survey 35 percent of the 112 economists asked said that their companies had experienced a shortage of skilled labor during the most recent quarter which ended in July. The April survey showed only 25 percent of respondents reporting a similar shortage.

Back in early July the National Federation of Independent Business found that 44 percent of small business who were trying to hire for that month said that they found either none, or almost no qualified applicants for the job openings they had.

The recent uptick in employment resulting in a seven-year low in the unemployment rate, has not followed with an equivalent increase in wages.

“As an economist watching the economy, we’re somewhat surprised that wages pressures have been so muted to this point,” said NABE survey Chairman Jim Diffley. “We do expect an acceleration and in fact think it necessary to continue the recovery.”

US Considering Dumping Canada From Trade Deal

TPP Ministerial Meeting, Sydney, family photo, 26 October. (left to right: Permanent Secretary of Brunei, Hon. Dato Lim Jock Hoi; Canadian Minister of International Trade, the Hon Ed Fast; Chilean Vice Minister of Foreign Affairs, Andres Rebelledo; Japane

TPP Ministerial Meeting, Sydney,  26 October, 2014.

Lack of progress on reaching an agreement with Canada on new guidelines for agricultural trade has frustrated the US to the point that negotiators are considering moving ahead without Canada.

One observer explained that Canada is not moving forward to find a way to lower its barriers to agricultural trade in the context of creating an historic 12-nation Trans-Pacific Partnership trade agreement.

US Senators meeting with the US Trade Representative Michael Froman asked him to try  to “move forward on TPP without Canada unless a serious offer on dairy, poultry, and agriculture market access” is offered.

Froman responded that his first choice is to keep Canada in the agreement, but the US is “preparing for all contingencies.”

Max Moncaster, spokesman for the Canadian Trade Minister Ed Fast said:

“We continue to work with all TPP partners to conclude an ambitious agreement that will create jobs and prosperity for Canadians.” He added that Canada will “continue to promote and defend Canadian trade interests across all sectors of our economy, including supply management.”

President Obama is hoping that negotiations during the next few weeks will result in a huge trade deal including 40 percent of the world’s entire economy, from Japan to Chile. The deal should be ready to be agreed to and finalized when TPP trade ministers come together at an historic meeting in Hawaii on July 28-31.

Greece and the EU Economy Crucial to Health of World’s Economy

EU countries and peripheral countries. Photo courtesy Nightstallion and Wikimedia Commons

EU countries and peripheral countries. Photo courtesy Nightstallion and Wikimedia Commons

Taken as a single country, the US economy is still the world’s biggest, with China coming in a very close second. However, as a single entity, the countries comprising the European Union actually surpass the size of the US economy, making it a key player in the world’s marketplace.

One economist, Joseph P. Quinlan, the chief market strategist for US Trust, pointed out just how important the EU is to the rest of the world.

“In nominal U.S. dollar terms, the European Union (plus Norway, Switzerland, Iceland) accounted for 25.4% of world output in 2014 according to data from the International Monetary Fund.  That was greater than America’s share (22.5%) and well in excess of China’s—13.4%,” said Quinlan.

The EU consumer is also doing well. The EU and several periphery countries accounted for 28.5 percent of all consumer spending in 2014. Compare that figure with 26.6 percent spent by US consumers and 15.6 percent spent by the combined emerging economies of Russia, India, Brazil, and China. Spending like that attracts companies to the region.

“Gaining access to wealthy consumers is among the primary reasons that US companies venture overseas, and hence the continued attraction of Europe to US firms,” wrote Quinlan.

The conclusion for Quinlan, and his message to the rest of the world: Although Greece might not have a direct impact on the US or world economies, the impact Greece’s troubles have on the EU should be of great concern to the rest of the world.