NEW YORK (Reuters) – Rising gasoline and food prices lifted U.S. consumer spending in March and the increase in overall inflation from a year-ago was the largest in 10 months, government data showed on Friday.
KEY POINTS: * The Commerce Department said consumer spending increased 0.6 percent, rising for a ninth straight month, after an upwardly revised 0.9 percent advance in February. * Economists polled by Reuters had expected spending, which accounts for about 70 percent of U.S. economic activity, to rise 0.5 percent in March after a previously reported 0.7 percent rise. * When adjusted for inflation, spending edged up 0.2 percent last month after rising 0.5 percent in February.
OMER ESINER, CHIEF MARKET ANALYST, COMMONWEALTH FOREIGN EXCHANGE, WASHINGTON:
"The data is pretty positive. We're seeing a further improvement in personal spending and personal income. That's the type of news that going forward could keep consumer spending well supported and ultimately keep the overall economy on track for a modest rebound. But I don't think it's going to have a big impact on the dollar because it doesn't really change the outlook for interest rates, which is the key driver for it."
GERARD GREENBERG, VICE PRESIDENT OF INSTITUTIONAL SALES AT MERLIN SECURITIES IN NEW YORK
"Each of the numbers, for the most part, was relatively in line with expectations, so there's nothing exciting here. Earnings are still the focus, but if the data was exponentially better or worse than expected it would matter."
CHRISTOPHER LOW, CHIEF ECONOMIST, FTN FINANCIAL, NEW YORK
"Real incomes, when adjusted for inflation, are shrinking over time. What we are seeing in this monthly data is similar to what the quarterly GDP data yesterday, the story in the first quarter was higher gas prices are forcing people to spend more at the expense of other items."
"The inflation burden increased in the quarter, things were progressively worse as you moved from January to March."
"Income data also rose a bit more than expected, but it's not growth in wage and salary income that is driving the headline numbers, it's other income, things like dividends and capital gains, which were decent in March. Also we're still seeing significant transfer payments from the government, there is significant government assistance in the income numbers."
DAVID SLOAN, ECONOMIST, IFR ECONOMICS, UNIT OF THOMSON REUTERS
"March personal income and spending gains of 0.5% and 0.6% respectively both outpaced their respective consensus estimates by 0.1%, but there was not much fresh information in the data, with Q1 totals already visible in the GDP report. Personal spending saw both January and February gains revised up by 0.2%, to 0.5% and 0.9% respectively, but revisions to income were minor (January down 0.1% to 1.1%, February up 0.1% to 0.4%). The momentum going into Q2 is moderately positive in real terms, even with prices up sharply on energy, though continued job gains will be essential to sustain the recovery's momentum.
"The personal income breakdown saw wages and salaries growth slow to 0.3% after 2 straight 0.4% gains, a reflection of weakness in wage growth. The upside surprise in personal income came from an above trend rise in government transfers, something which is unlikely to be repeated in the future trend. Spending in nominal terms was led by non-durables but in real terms by services which rebounded from a weak start to the quarter. The recent volatility in service spending looks similar to the picture from utilities output, which is sensitive to weather.
"There were no surprises from the price data, with a 2nd straight 0.4% rise in the overall PCE price index and a 0.1% gain in the core, the latter a slowing from 2 straight 0.2% gains with the march rise before rounding being 0.1308%. The yr/yr core PCE pace (unchanged at 0.9%) is still very low and even the overall yr/yr pace of 1.8% versus 1.6% is still acceptably moderate, though we did see yesterday that the Q1 data was quite strong on an annualized basis.
"The savings rate was stable at 5.5% but with February revised down from 5.8%. A 0.2% rise in real personal spending is the 11th straight monthly gain while a 0.1% rise in real personal income follows a flat February which was revised up from a 0.1% decline, and a 0.5% January gain that would have been negative were it not for the introduction of a payroll tax holiday. We can be encouraged that real disposable income has been able to avoid declines despite the surges in gasoline prices, though with wages soft and gasoline prices remaining firm gains in Q2 will require continued labor market recovery. Employment data remains as crucial as ever."
STOCKS: U.S. stock index futures maintain earlier gains.
BONDS: U.S. bond prices maintain slight earlier gains.
FOREX: The dollar holds losses versus euro and yen.
BOSTON (Reuters) – Caterpillar Inc recorded a fivefold surge in profit and raised its forecast for the rest of the year, citing rising demand for its bulldozers, excavators and other heavy equipment.
The world's biggest maker of earth-moving equipment said on Friday it now looks for full-year earnings of $6.25 to $6.75 per share, up from its prior forecast of "near $6" and above analysts' expectations.
It also reported first-quarter profit of $1.84 per share, well above the $1.31 Wall Street expected.
(For a related graphic click: http://r.reuters.com/bak39r)
"It's a huge number on huge volume, that's the simplest way of describing it," said Eli Lustgarten, an analyst at Longbow Research. He noted that revenue came in more than $1 billion above forecasts.
The report comes a day after government figures showed that economic growth in the United States slowed sharply in the first quarter, with higher food and gasoline prices starting to weigh on consumer spending and sparking concern about inflation.
Commodity inflation is not necessarily bad news for companies including Caterpillar and General Electric Co that make equipment used in energy production and commodity extraction. Rising demand for and prices of metals, coal and oil are driving demand for Caterpillar's heavy equipment -- its sales to miners and other resource companies nearly doubled in the quarter, outpacing its construction equipment business.
"We expect that the pace of world economic growth will support continued recovery in the key industries we serve," said Doug Oberhelman, who took the reins as chief executive of the Peoria, Illinois-based company last June.
Caterpillar joins a string of strong earnings reports from industrials ranging from 3M Co to Komatsu Ltd.
Its shares rose 2.8 percent to $115.85 in premarket trading, above their lifetime high on the New York Stock Exchange. As of Thursday's close, they were up 63 percent over the past year, more than four times the pace of the rise in the Dow Jones industrial average, of which Caterpillar is a component.
The company reported first-quarter profit of $1.23 billion, compared with $233 million, or 36 cents per share, a year earlier.
Revenue rose 57.2 percent to $12.95 billion, above expectations of $11.69 billion, according to Thomson Reuters I/B/E/S.
Earlier this week Komatsu reported operating profit had doubled, citing demand in China and a recovery in the United States and Europe. The Japanese company said it was unclear what effect Japan's March 11 earthquake, tsunami and nuclear crisis would have on its results this year.
Caterpillar said the aftermath of the Japan quake, which has shaken supply chains around the world, would weigh on its full-year results, pulling down revenue by about $300 million and operating profit by $100 million.
The company is expected to close its $7.6 billion acquisition of mining equipment maker Bucyrus International later this year. Caterpillar officials in March said they might complete the purchase without issuing new shares because of its expected strong profit growth this year.
The company noted that it added 20,813 workers over the past year, about a third of whom work in the United States. That represented a 19.3 percent increase in headcount.
(Reporting by Scott Malone; editing by Robert MacMillan, John Wallace, Dave Zimmerman)
To say that MBA programs have undergone significant changes over the past three decades is an understatement. There have been dramatic shifts in approaches, curricula, and the overall MBA experience, all with a decidedly student-centric focus. Media rankings, such as those published by Bloomberg Businessweek, have played an influential role in this transformation by shining a light into an insular academic world, opening it up to scrutiny and increased accountability. In particular, rankings have shown business schools they must operate within a larger environment, one in which multiple stakeholders (students, businesses, society at large) have a vested interest in the educational process. To be certain, business schools now understand this message and have set a course to work on improving their MBA offerings.
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