U.S. manufacturing activity hits 13-year high; construction spending up

WASHINGTON (Reuters) - U.S. factory activity surged to a more than 13-year high in September amid strong gains in new orders and raw material prices, pointing to underlying strength in the economy even as Hurricanes Harvey and Irma are expected to dent growth in the third quarter.

The economic outlook was also bolstered by other data on Monday showing a rebound in construction spending in August. The acceleration in manufacturing activity and the accompanying increase in prices could harden expectations that the Federal Reserve will raise interest rates in December.

The Institute for Supply Management (ISM) said its index of national factory activity surged to a reading of 60.8 last month, the highest reading since May 2004, from 58.8 in August.

A reading above 50 in the ISM index indicates an expansion in manufacturing, which accounts for about 12 percent of the U.S. economy. The ISM said Harvey and Irma had caused supply chain and pricing issues in the chemical products sector. There were also concerns about the disruptive impact of the storms in the food, beverage and tobacco products industries.

The hurricanes are expected to chop off as much as six-tenths of a percentage point from gross domestic product growth in the third quarter. Harvey, which pummeled Texas at the end of August, has undercut consumer spending and weighed on industrial production, homebuilding and home sales.

Further weakness in likely after Irma struck Florida in early September, causing widespread power cuts. Manufacturing outside the areas affected by the hurricanes remained strong in September. The ISM survey’s production sub-index rose 1.2 points to a reading of 62.2 in September.

A gauge of new orders jumped to 64.6 in September from 60.3 in August. Factories reported paying more for raw materials, with the survey’s prices paid index surging 9.5 point to 71.5, the highest reading since May 2011.

The dollar rose against the euro after the data. Prices for U.S. Treasuries were trading higher as were stocks on Wall Street.

CONSTRUCTION SPENDING RISES

In separate report on Monday, the Commerce Department said construction spending rose 0.5 percent to $1.21 trillion. July’s construction outlays were revised sharply down to show a 1.2 percent plunge instead of the previously reported 0.6 percent drop. Construction spending increased 2.5 percent on a year-on-year basis.

The government said Harvey and Irma did not appear to have impacted the construction spending data as the responses from the Texas and Florida areas affected by the storms were “not significantly lower than normal.”

In August, spending on private residential projects increased 0.4 percent, rising for a fourth straight month. Spending on nonresidential structures increased 0.5 percent, snapping two straight monthly declines.

In the wake of Harvey and Irma, nonresidential construction spending could fall in September. According to the Commerce Department, Texas and Florida accounted for 22 percent of U.S. private nonresidential construction spending in 2016.

Investment in nonresidential structures such as oil and gas wells has been slowing as the boost from recovering oil prices fizzles. Private construction projects spending increased 0.4 percent in August.

Outlays on public construction projects rebounded 0.7 percent in August after slumping 3.3 percent in July. Spending on state and local government construction projects increased 1.1 percent in August. Gains in September are likely to be curbed by the hurricanes.

Texas and Florida accounted for 15 percent of U.S. state-and -locally owned construction spending in 2016, according to the Commerce Department.

Federal government construction spending tumbled 4.7 percent to its lowest level since April 2007.

Islamic State group claims Las Vegas attack: propaganda agency

The Islamic State group claimed today that the shooting massacre in Las Vegas was carried out by one of its "soldiers" who had "converted to Islam several months ago".

"The executor of the Las Vegas attack is a soldier of the Islamic State and he carried out the operation as a response" to calls to target countries engaged in military action against the jihadists, IS's propaganda outlet Amaq said in online statements.

It provided no evidence to back up its claim.

Trump says he will travel to Las Vegas on Wednesday

Trump says he will travel to Las Vegas to meet with first responders and families on Wednesday

He spoke Monday morning, hours after the shooting at a country music festival late Sunday killed at least 50 people and wounded more than 400. It is the worst mass shooting in American history.

Trump said the nation must stay unified. He said that although “feel such great anger at the senseless murder of our fellow citizens, it is our love that binds us today and always will.”

President Donald Trump is calling the mass shooting attack in Las Vegas “an act of pure evil.”

Trump says the nation is joined together today in sadness, shock and grief.

Trump is addressing the attack on a country music festival Sunday night that left at least 50 people dead and more than 400 injured.

Trump tweeted his “warmest condolences and sympathies” earlier Monday morning.

The gunman opened fire from inside the Mandalay Bay Hotel and Casino.

Authorities say 64-year-old Stephen Craig Paddock killed himself after the shooting. Police have yet to determine a motive.

The White House says President Donald Trump will speak at 10:30 a.m. Eastern time about the mass shooting in Las Vegas.

Trump’s remarks were added to his schedule Monday morning. He tweeted his “warmest condolences and sympathies” earlier in the morning.

The president was briefed on the shooting at a country music concert, which left at least 50 people dead and more than 400 injured Sunday night.

The gunman opened fire from inside the Mandalay Bay Hotel and Casino.

Authorities say 64-year-old Stephen Craig Paddock killed himself after the shooting. Police have not yet determined a motive. AP

Trump briefed on Las Vegas shooting, offers condolences

WASHINGTON (Reuters) - U.S. President Donald Trump has been briefed on the mass shooting in Las Vegas, the White House said on Monday, and Trump offered condolences to victims.

“My warmest condolences and sympathies to the victims and families of the terrible Las Vegas shooting,” Trump said in a Twitter post. Spokeswoman Sarah Sanders said the White House was monitoring the situation closely and offered full support to state and local officials.

Nissan recalls 1.2 million Japan vehicles for re-inspections

TOKYO (AP) - Nissan is recalling 1.2 million vehicles in Japan that were produced between October 2014 and September this year to re-inspect them because they had not gone through the proper final checks.

Japanese automaker Nissan Motor Co. said Monday that a team, including an independent third party, was investigating the cause of the oversight and promised to prevent a recurrence. The problem does not affect Nissan vehicles sold outside Japan.

The failure is not believed to have affected vehicle safety as they were final-stage checks, according to the Yokohama-based maker of the March subcompact, Leaf electric car and Infiniti luxury models.

Nissan Chief Executive Hiroto Saikawa told reporters the oversight occurred at all six Nissan plants in Japan. He acknowledged not enough had been done to ensure inspection staff were aware of inspection requirements.

He estimated the recalls and re-inspections would cost Nissan about 25 billion yen ($222 million), but stressed final costs were still unclear.

The inspection oversight is an embarrassment for Nissan. Nissan temporarily stopped registering new vehicles in Japan last week, after the government notified the company it had noticed inspection irregularities.

The auto industry has been hit by a series of recent scandals. Volkswagen AG of Germany acknowledged in 2015 that it had equipped its diesel cars with illegal software that enabled cheating on U.S. emissions tests. Volkswagen has agreed to more than $20 billion in fines and civil settlements over the scandal.

Americans win Nobel medicine prize for circadian rhythm work

STOCKHOLM (AP) - The Nobel Prize for Medicine was awarded to three Americans on Monday for discoveries about the body's daily rhythms.

The laureates are Jeffrey C. Hall, Michael Rosbash and Michal W. Young. Rosbash is on the faculty at Brandeis University, Young at Rockefeller University and Hall is at the University of Maine.

The citation for the 9-million-kronor ($1.1 million) prize says the researchers isolated a gene that controls the normal daily biological rhythm. They "were able to peek inside our biological clock and elucidate its inner workings."

Circadian rhythms adapt the workings of the body to different phases of the day, influencing sleep, behavior, hormone levels, body temperature and metabolism.

The winners have raised "awareness of the importance of a proper sleep hygiene" said Juleen Zierath of the Nobel academy.

Britain's Monarch Airlines Goes Bust, Stranding Thousands

Britain's Monarch Airlines collapsed on Monday, stranding more than 100,000 travellers abroad after it fell victim to intense competition for flights to holiday destinations in Spain and Portugal.

The failure of Monarch, the largest British airline to go bust, will affect nearly 900,000 passengers in total and prompted the country's biggest peacetime repatriation effort.

Its demise added to turbulence in the European airline industry after Air Berlin and Alitalia filed for insolvency this year. Ryanair has also been forced to cancel thousands of flights because of problems finding enough pilots to fly them.

Shares of Monarch's rivals, easyJet, Ryanair and Wizz Air rose on Monday on the prospect of reduced competition and the chance to acquire some of its assets.

Monarch, based at Luton Airport north of London and in business since 1968, cancelled about 750,000 future bookings and apologised to customers and staff.
"I am so sorry that thousands now face a cancelled holiday or trip, possible delays getting home and huge inconvenience as a result of our failure," Monarch Chief Executive Andrew Swaffield told employees in a message.

"I am truly sorry that it has ended like this."

Monarch's finances deteriorated in 2016, after security concerns deterred travel to Tunisia, Turkey and Egypt and brought increased capacity for routes to Iberia. The decline in the value of the pound has also compounded its problems.

The airline was bailed out by its owner Greybull Capital a year ago.

"Monarch has really been a victim of a price war in the Mediterranean," Transport Secretary Chris Grayling told Sky News.

Grayling added that he expected many of Monarch's more than 2,000 staff to get jobs elsewhere.

"Monarch's problem was it was it was neither one thing nor the other. It was not really... a package holiday airline, nor was it really a low cost airline. I think it got rather squeezed in the middle," he added.

The British government has asked the Civil Aviation Authority (CAA) to charter more than 30 aircraft to bring home about 110,000 Monarch customers currently overseas, the CAA said. http://bit.ly/2wsQ5rQ

RIVALS STAND TO GAIN

Monarch has seen market share slip in recent years with the rise of budget carriers. It was Britain's fifth largest airline, and according to Euromonitor International, held 1.7 percent of the UK airlines market in 2017, down from 2.6 percent in 2012.

The collapse of Monarch could benefit its rivals.

"While we wait to see what comes out of the administration process there is no doubt that the pace of restructuring across Europe will be beneficial to yields as surplus capacity is reduced," analysts at Goodbody said in a note to clients.

Monarch had previously said it was talking to potential partners after a report that parts of its short-haul network would be sold.

Analysts at broker Cantor Fitzgerald said that it was likely that easyJet would bid for some of Monarch's assets.

"Monarch appears to be a good potential fit and we think that EZJ needs a new source of growth," the analysts said in a note.

The collapse will be a headache for some of the world's largest leasing companies, which financed its current fleet of 36 mainly Airbus jets, and for Boeing Co, which has sold the airline 32 of its 737 MAX aircraft. None of the planes has yet been delivered.

Monarch had been a regular pawn in the global battle for market share between planemakers as it shifted its loyalties between Airbus and Boeing.

Boeing secured Monarch's agreement to revert back to its jets in 2014 following a fierce contest against Airbus and Bombardier.

"NOT A TEXT, NOT AN EMAIL"

Monarch's last flight landed in Manchester from Tel Aviv at 3:19 a.m (0219 GMT) according to flight tracking service Flightradar24.

The website also showed 25 aircraft had been lined up to start repatriating passengers by 0600 GMT on Monday, including 10 from Qatar Airways already based in Europe on behalf of British Airways. An easyJet airplane and several charter aircraft were also part of the operation.

Hungarian low-cost carrier Wizz Air said it was offering to fly stranded Monarch passengers home from Tel Aviv for 119 pounds ($159) each.

Accoutants KPMG were appointed as administrators for the airline, and said that 860,000 passengers would be affected in all. Monarch said its companies that entered into administration include Monarch Airlines, Monarch Holidays Ltd, First Aviation Ltd, Avro Ltd and Somewhere2stay Ltd.

"We are working with the joint administrators and the CAA to do everything we possibly can to help minimise disruption where we can, but are under no illusion as to the problems this will cause," Monarch's Swaffield said.

While customers are being taken back to Britain, some who were due to travel out from Luton Airport said that the communication from the airline had been poor.

"I've had nothing from Monarch at all. It's absolutely, completely disgusting. Not a message, not a text, not an email," said Mary Quist from Milton Keynes in central England.

She had been sitting at a cafe in the airport for 6 hours, having been due to fly to Portugal.

"We can't even get to duty free to get some medicinal alcohol," she added.

Reuters