Friday September 5, 10:10 am ET By Glenn Somerville
WASHINGTON (Reuters) - The U.S. unemployment rate unexpectedly shot up to 6.1 percent in August, the highest in nearly five years, as employers cut payrolls for an eighth straight month and a decline in labor markets accelerated.
The Labor Department said on Friday 84,000 jobs were lost in August, significantly more than the 75,000 that economists surveyed by Reuters had forecast. In addition, July's job losses were revised up to 60,000 and June's to 100,000 from a previously reported 51,000 in each month.
Analysts said the bleak hiring data showed a weakening economy that likely will oblige the Federal Reserve to keep interest rates low for an extended period.
"The economy is clearly deteriorating," said Gary Thayer, senior economist for Wachovia Securities in St. Louis. "We're also seeing weakness around the globe so there's less reason for the Fed to focus on inflation and more reason to focus on getting the economy back on its feet."
Stock indexes futures extended losses but U.S. Treasury debt prices rose as investors bet it meant interest rates will remain in hold. The dollar dipped in value against other major currencies and short-term interest rate futures began to signal that the Fed could cut interest rates by year-end.
Labor department officials said the August jobless rate was the highest since September 2003. Analysts had expected the rate to remain steady at July's 5.7 percent rate rather than to jump.
"We're running job losses that are typically seen in the early stages of an economic recession," said David Resler, chief economist for Nomura Securities in New York, adding, "we're probably in one."
There were steep cuts in hiring in nearly every major category of employment. Some 61,000 manufacturing jobs were lost in August, the most for any month since mid 2003, and 8,000 more construction jobs were cut. There were 53,000 jobs eliminated in professional and business services and 4,000 in leisure and hospitality industries.
The average hours of work remained unchanged from July at 33.7 but employers cut overtime to an average 3.7 hours per week in August from 3.8.
A few sectors added jobs. Government payrolls increased by 17,000 in August and education and health services businesses took on another 55,000 employees.
(Additional reporting by Ellen Freilich in New York, Editing by Andrea Ricci)
Friday, September 5, 2008
Stocks open lower after disappointing job data
Friday September 5, 10:02 am ET By Tim Paradis, AP Business Writer
Wall Street opens moderately lower after disappointing jobs data; unemployment hits 5-yr high
NEW YORK (AP) -- Selling swept across Wall Street for a second straight session Friday on news that the economy shed jobs for the eighth straight month in August and at a faster-than-expected pace.
The Labor Department said payrolls shrank by 84,000 last month, more than the 75,000 economists predicted, and higher than the 51,000 jobs lost in July. The unemployment rate rose to a five-year high of 6.1 percent from 5.7 percent.
The report confirmed Wall Street's fears that the economy continues to weaken. The nation has lost nearly 550,000 jobs so far this year, eroding investors' hopes for a late-year recovery.
"This was an ugly number that pretty much confirms that our economy continues to trend downward," said Jack Ablin, chief investment officer of Harris Private Bank. "I had thought things were stabilizing, and this just knocks the legs out of any hope of seeing much economic improvement right now."
Meanwhile, a downgrade of Merrill Lynch & Co. compounded the market's misery. Goldman Sachs analyst William Tanona cut the nation's largest brokerage to a "sell" rating on expectations it will incur fresh write-downs on top of the $5.7 billion it announced in late July. Merrill fell 25 cents to $25.96.
In the first hour of trading, the Dow Jones industrial average fell 34.33, or 0.31 percent, to 11,153.79.
Broader stock indicators also fell. The Standard & Poor's 500 index slid 4.97, or 0.40 percent, to 1,231.86, and the Nasdaq composite index fell 10.27, or 0.45 percent, to 2,248.77.
Stocks turned in a dismal performance on Thursday, with all three major indexes moving back into bear market territory, defined as a 20 percent drop from a recent peak. The Dow plunged more than 340 points in a sell-off underpinned by disappointing economic news and lackluster sales reports from retailers.
With concerns about the economy and more problems in the financial sector, investors again moved into the safety of government debt. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.61 percent from 3.62 percent late Thursday.
As it had earlier in the week, Wall Street found little comfort from falling oil prices. Crude at one point dropped below $107 a barrel Friday as the dollar continued to gain on the euro and investors waited to see whether OPEC moves to restrict output next week following a two-month plunge in prices. The Organization of the Petroleum Exporting Countries is scheduled to meet early next week in Vienna and has indicated it may take action to defend the $100-a-barrel level.
Light, sweet crude fell 14 cents to $107.75 a barrel in electronic trading on the New York Mercantile Exchange.
Declining issues outnumbered advancers by about 2 to 1 on the New York Stock Exchange, where volume came to 110.7 million shares.
The Russell 2000 index of smaller companies fell 3.36, or 0.47 percent, to 715.26.
And the gloom about the U.S. economy was not contained to just major American indexes. Investors overseas sent shares lower on concerns about America's effect on global growth.
Japan's Nikkei stock closed down 2.75 percent. In afternoon trading in Europe, Britain's FTSE 100 fell 0.13 percent, Germany's DAX index dropped 0.58 percent, and France's CAC-40 shed 0.52 percent.
New York Stock Exchange: http://www.nyse.com
Nasdaq Stock Market: http://www.nasdaq.com
Wall Street opens moderately lower after disappointing jobs data; unemployment hits 5-yr high
NEW YORK (AP) -- Selling swept across Wall Street for a second straight session Friday on news that the economy shed jobs for the eighth straight month in August and at a faster-than-expected pace.
The Labor Department said payrolls shrank by 84,000 last month, more than the 75,000 economists predicted, and higher than the 51,000 jobs lost in July. The unemployment rate rose to a five-year high of 6.1 percent from 5.7 percent.
The report confirmed Wall Street's fears that the economy continues to weaken. The nation has lost nearly 550,000 jobs so far this year, eroding investors' hopes for a late-year recovery.
"This was an ugly number that pretty much confirms that our economy continues to trend downward," said Jack Ablin, chief investment officer of Harris Private Bank. "I had thought things were stabilizing, and this just knocks the legs out of any hope of seeing much economic improvement right now."
Meanwhile, a downgrade of Merrill Lynch & Co. compounded the market's misery. Goldman Sachs analyst William Tanona cut the nation's largest brokerage to a "sell" rating on expectations it will incur fresh write-downs on top of the $5.7 billion it announced in late July. Merrill fell 25 cents to $25.96.
In the first hour of trading, the Dow Jones industrial average fell 34.33, or 0.31 percent, to 11,153.79.
Broader stock indicators also fell. The Standard & Poor's 500 index slid 4.97, or 0.40 percent, to 1,231.86, and the Nasdaq composite index fell 10.27, or 0.45 percent, to 2,248.77.
Stocks turned in a dismal performance on Thursday, with all three major indexes moving back into bear market territory, defined as a 20 percent drop from a recent peak. The Dow plunged more than 340 points in a sell-off underpinned by disappointing economic news and lackluster sales reports from retailers.
With concerns about the economy and more problems in the financial sector, investors again moved into the safety of government debt. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.61 percent from 3.62 percent late Thursday.
As it had earlier in the week, Wall Street found little comfort from falling oil prices. Crude at one point dropped below $107 a barrel Friday as the dollar continued to gain on the euro and investors waited to see whether OPEC moves to restrict output next week following a two-month plunge in prices. The Organization of the Petroleum Exporting Countries is scheduled to meet early next week in Vienna and has indicated it may take action to defend the $100-a-barrel level.
Light, sweet crude fell 14 cents to $107.75 a barrel in electronic trading on the New York Mercantile Exchange.
Declining issues outnumbered advancers by about 2 to 1 on the New York Stock Exchange, where volume came to 110.7 million shares.
The Russell 2000 index of smaller companies fell 3.36, or 0.47 percent, to 715.26.
And the gloom about the U.S. economy was not contained to just major American indexes. Investors overseas sent shares lower on concerns about America's effect on global growth.
Japan's Nikkei stock closed down 2.75 percent. In afternoon trading in Europe, Britain's FTSE 100 fell 0.13 percent, Germany's DAX index dropped 0.58 percent, and France's CAC-40 shed 0.52 percent.
New York Stock Exchange: http://www.nyse.com
Nasdaq Stock Market: http://www.nasdaq.com
U.S. House Price Decline Could Be Worse than Great Depression, Economist Shiller Says
Posted Sep 04, 2008 01:36pm EDT by Henry Blodget in Newsmakers, Recession
Related: ^gspc, fre, fnm
Eight years ago, Yale superstar professor and MacroMarkets chief economist Robert Shiller famously called the top of the stock market in his book Irrational Exuberance. Then, a year before the housing bubble peaked, he predicted the colossal bust we are now experiencing.If you recognize Shiller's name, it’s because the Standard & Poor's/Case-Shiller home price indexes, which he developed with Wellesley College economist Karl Case, have become the nation's most authoritative source for home price trends. In part one of my one-on-one with Shiller, we discuss the grim outlook for U.S. housing, which he tackles in-depth in his new book The Subprime Solution. Highlights of our first discussion include:
Home price declines are already approaching those in the Great Depression, when they plunged 30% during the 1930s. With prices already down almost 20%, it's not a stretch to think we might exceed that drop this time around.
There are about 10 million homeowners whose debt is higher than their home value, which has broad implications for how Americans feel about their wealth and spending habits (read: more pressure on consumer spending).
The current hopeful consensus -- that house prices will bottom soon and then begin to recover -- is most likely a dream. Housing markets don't usually have "V-shaped" recoveries. And even if house prices stabilize in nominal terms, after adjusting for inflation, most homeowners will continue to lose money.
Related: ^gspc, fre, fnm
Eight years ago, Yale superstar professor and MacroMarkets chief economist Robert Shiller famously called the top of the stock market in his book Irrational Exuberance. Then, a year before the housing bubble peaked, he predicted the colossal bust we are now experiencing.If you recognize Shiller's name, it’s because the Standard & Poor's/Case-Shiller home price indexes, which he developed with Wellesley College economist Karl Case, have become the nation's most authoritative source for home price trends. In part one of my one-on-one with Shiller, we discuss the grim outlook for U.S. housing, which he tackles in-depth in his new book The Subprime Solution. Highlights of our first discussion include:
Home price declines are already approaching those in the Great Depression, when they plunged 30% during the 1930s. With prices already down almost 20%, it's not a stretch to think we might exceed that drop this time around.
There are about 10 million homeowners whose debt is higher than their home value, which has broad implications for how Americans feel about their wealth and spending habits (read: more pressure on consumer spending).
The current hopeful consensus -- that house prices will bottom soon and then begin to recover -- is most likely a dream. Housing markets don't usually have "V-shaped" recoveries. And even if house prices stabilize in nominal terms, after adjusting for inflation, most homeowners will continue to lose money.
Asian markets plunge after Wall Street sell-off
TOKYO (AP) -- Asian stock markets plunged Friday after more bad news on the U.S. economy, a vital export market, triggered a broad sell-off on Wall Street overnight.
Disappointing reports on U.S. retail sales and jobless claims undercut hopes for a late-year recovery in the U.S. and depressed investor sentiment across Asia.
In Japan, the benchmark Nikkei 225 index closed down 2.75 percent at 12,212.23.
Hong Kong's Hang Seng index tumbled 3.1 percent to 19,752.65, dropping below the key psychological level of 20,000 to its lowest point in more than a year.
Markets in mainland China, India, Australia and Singapore were also down more than 2 percent.
Pessimism permeated markets as they nervously awaited the U.S. employment report for August later Friday. News Thursday from major U.S. retailers that shoppers curtailed their spending last month helped send the Dow Jones industrial average down 344.65 points, or 2.99 percent, to 11,188.23.
Investors bracing for weak U.S. jobs figures fueled selling in Japan, said Masaru Ohnishi, equity strategist at JP Morgan Securities in Tokyo.
But because markets have already fallen so sharply, they are "likely to rebound if results are good," Ohnishi said. "And even if the data are weak, U.S. markets are unlikely to fall that much further on Friday."
A drop in the dollar against the yen overnight contributed to the malaise, pummeling major Japanese exporters. The dollar fell to 106.59 yen Friday afternoon in Asia; on Thursday in Tokyo it was trading above 108 yen.
Toyota Motor Corp. retreated nearly 2.5 percent, and Nissan Motor Co. tumbled 3.6 percent.
Sony Corp. dived 4.2 percent to after the consumer electronics maker announced Thursday it is recalling 440,000 Vaio laptop computers worldwide due to a wiring flaw that could cause overheating. Sony said the recall involves 19 models in the Vaio TZ series manufactured between May 2007 and July 2008.
Investors in Hong Kong sent Chinese commodity producers spiraling, with Angang Steel losing 5.3 percent and Aluminum Corp. of China, or Chalco, down 3.9 percent early Friday afternoon. Telecoms such as heavyweight China Mobile, down 3.3 percent, also took a beating.
Inflation continues to be a major concern in Asia, with the Philippines reporting Friday that the August consumer price index rose 12.5 percent from a year ago, the highest in nearly 17 years. The local stock index fell 1 percent to 2,724.72.
Disappointing reports on U.S. retail sales and jobless claims undercut hopes for a late-year recovery in the U.S. and depressed investor sentiment across Asia.
In Japan, the benchmark Nikkei 225 index closed down 2.75 percent at 12,212.23.
Hong Kong's Hang Seng index tumbled 3.1 percent to 19,752.65, dropping below the key psychological level of 20,000 to its lowest point in more than a year.
Markets in mainland China, India, Australia and Singapore were also down more than 2 percent.
Pessimism permeated markets as they nervously awaited the U.S. employment report for August later Friday. News Thursday from major U.S. retailers that shoppers curtailed their spending last month helped send the Dow Jones industrial average down 344.65 points, or 2.99 percent, to 11,188.23.
Investors bracing for weak U.S. jobs figures fueled selling in Japan, said Masaru Ohnishi, equity strategist at JP Morgan Securities in Tokyo.
But because markets have already fallen so sharply, they are "likely to rebound if results are good," Ohnishi said. "And even if the data are weak, U.S. markets are unlikely to fall that much further on Friday."
A drop in the dollar against the yen overnight contributed to the malaise, pummeling major Japanese exporters. The dollar fell to 106.59 yen Friday afternoon in Asia; on Thursday in Tokyo it was trading above 108 yen.
Toyota Motor Corp. retreated nearly 2.5 percent, and Nissan Motor Co. tumbled 3.6 percent.
Sony Corp. dived 4.2 percent to after the consumer electronics maker announced Thursday it is recalling 440,000 Vaio laptop computers worldwide due to a wiring flaw that could cause overheating. Sony said the recall involves 19 models in the Vaio TZ series manufactured between May 2007 and July 2008.
Investors in Hong Kong sent Chinese commodity producers spiraling, with Angang Steel losing 5.3 percent and Aluminum Corp. of China, or Chalco, down 3.9 percent early Friday afternoon. Telecoms such as heavyweight China Mobile, down 3.3 percent, also took a beating.
Inflation continues to be a major concern in Asia, with the Philippines reporting Friday that the August consumer price index rose 12.5 percent from a year ago, the highest in nearly 17 years. The local stock index fell 1 percent to 2,724.72.
Tuesday, September 2, 2008
Currency movements main factor in deciding ranking of most expensive cities in the world
A report by Mercer Consulting
28 July 2008: Moscow is the world’s most expensive city for expatriates for the third consecutive year, according to the latest Cost of Living Survey from Mercer. Tokyo is in second position climbing two places since 2007, whereas London drops one place to rank third. Oslo climbs six places to 4th place and is followed by Seoul in 5th. Asunción in Paraguay is the least expensive city in the ranking for the sixth year running. With New York as the base city scoring 100 points, Moscow scores 142.4 and is close to three times costlier than Asunción which has an index of 52.5. Contrary to the trend observed last year, the gap between the world’s most and least expensive cities now seems to be widening.
Mercer’s survey covers 143 cities across six continents and measures the comparative cost of over 200 items in each location, including housing, transportation, food, clothing, household goods and entertainment. It is the world’s most comprehensive cost of living survey and is used to help multinational companies and governments determine compensation allowances for their expatriate employees.
Yvonne Traber, a principal and research manager at Mercer, commented, “Current market conditions have led to the further weakening of the US dollar which, coupled with the strengthening of the Euro and many other currencies, has caused significant changes in this year’s rankings. Although the traditionally expensive cities of Western Europe and Asia still feature in the top 20, cities in Eastern Europe, Brazil and India are creeping up the list. Conversely, some locations such as Stockholm and New York now appear less costly by comparison.”She added: “The research confirms the global trend in price increases for certain foodstuffs and petroleum, though the rise is not consistent in all locations. This is partly balanced by decreasing prices for certain commodities, such as electronic and electrical goods. Mercer attribute this to cheaper imports from developing countries, especially China, and to advances in technology. Keeping on top of the changes in expatriate cost of living is essential so companies can ensure their employees are compensated fairly and at competitive rates when stationed abroad.”Traber added: “In some cases, cost of living increases may be correlated to countries with a high rate of economic growth. Companies may assign high priority to expansion in these economies but may have to deal with inflationary pressures due to competition for expatriate-level housing and other services.”For example, Latvia had real GDP growth of 10.2 per cent in 2007, well above the global average growth rate of 5.2 per cent, and its capital, Riga, jumped to 46th place in the latest Mercer ranking, up from 72nd a year ago. Cities in India all rose in the cost of living ranking, with New Delhi climbing to 55th place from 68th a year ago, as India posted a real GDP growth rate of 9.2 per cent in 2007. Bogota jumped to 87th place from 112th, reflecting Colombia’s 7 per cent real GDP growth.
The Americas
The only North American city to feature in this year’s top 50 is New York in 22nd place (score 100), dropping seven places in one year. All other US cities also experienced a significant decline in the rankings. For example, Los Angeles moved from 42nd to 55th place (score 87.5), Miami from 51st to 75th place (score 82) and Washington, DC, from 85th to 107th place (score 74.6)."The decline in the ranking of all US cities is due to the weakening value of the US dollar against other major world currencies," said Mitch Barnes, principal at Mercer in the US. "The dollar has been declining steadily for the past several years, which has resulted in an overall decrease in the cost of living in 19 US cities relative to other major global cities studied. On the bright side, the US dollar's loss of value may serve to attract globally mobile executives to business centers such as New York, Chicago and Los Angeles. The difference in cost of living can be significant, particularly for those executives with families."In 54th place (score 88.1), jumping 28 places from last year, Toronto is the most expensive city for expatriates living in Canada. All other Canadian cities in the survey experienced similar rises, with Vancouver moving from 89th to 64th (score 85.8), Calgary from 92nd to 66th place (score 85.4) and Montréal from 98th to 72nd with a score of 83. This reverses last year’s trend, which saw Canadian cities decline, and places them back where they have traditionally been rated. The Canadian dollar has appreciated nearly 15 per cent against the US dollar, the main reason for these movements.The two top-ranking cities in South America are São Paulo in 25th place (score 97) and Rio de Janeiro in 31st place (score 95.2), jumping 37 and 33 places, respectively. The Brazilian real appreciated nearly 18 per cent against the US dollar last year, causing these Brazilian cities to rocket up the list. Another high-riser in this region is Caracas, jumping 40 places from 129th to 89th place (score 79.3). High inflation in Venezuela has caused a sharp increase in the price of food and household products.South America also has some of the lowest ranking cities globally. Asunción is the least expensive city in the region for the sixth consecutive year (score 52.5), followed by Quito in Ecuador in 142nd place (score 54.6), Buenos Aires in 138th place (score 62.7) and Montevideo in 136th place (score 63.2).
Europe, Middle East and Africa
Moscow is ranked the most expensive city both in Europe and globally for the third year running. The city’s score has steadily increased over the last few years and is currently at 142.4 (compared to 134.4 in 2007 and 123.9 in 2006). “Moscow’s position as the most expensive place for expatriate living has been strengthened by the appreciation of the rouble against the US dollar and the continuous rising accommodation costs,” said Ms Traber.London is the next European city in the ranking at 3rd place (score 125), down from last year, while Oslo jumped six places to rank 4th with a score of 118.3. Norwegian property prices were at an all-time high towards the end of last year after a 50 per cent increase in the last five years. Coupled with the continuous strengthening of the Norwegian krone, this has created a substantial increase in living costs for expatriates in Oslo. London’s drop can be explained by the weakness of the pound sterling against the euro and other currencies and, more importantly, to the British currency’s stability against the dollar. For example, while the euro reached a record high against the dollar in the early summer of 2008 (1.60 dollars to the euro), the pound sterling – at 1.99 dollars to the pound was well down from last year’s record high of 2.10.Other European cities in the global top 10 include Copenhagen at 7th place (117.2) and Geneva in 8th place (115.8). Both cities have dropped one place from last year. Zurich remains in 9th place (112.7), whereas Milan climbs to 10th place with a score of 111.3. Sofia in Bulgaria is again the least expensive European city for expatriates in 97th place (76.9), although the city has climbed 11 places in the overall ranking.Several European cities have experienced a significant rise in the rankings this year, mainly as a result of local currency strengthening against the US dollar. For example, Prague has jumped from 49th to 29th place (score 96) and Warsaw is up to 35th place (score 95) compared to 67th in 2007. Istanbul has climbed 15 places to rank 23 (score 99.4) reflecting the Turkish lira’s significant appreciation against the US dollar as well as general price increases, especially for accommodation.In addition to London dropping one place, two additional UK cities, Birmingham and Glasgow, have both moved down in the rankings, dropping from 41st to 66th (score 85.4) and 36th to 69th (score 84), respectively. “In contrast to the strengthening euro and other European currencies, the British pound has remained relatively stable against the US dollar. As the cost of living in the Eurozone has risen relative to the US, UK cities have declined in the rankings,” according to Ms. Traber.Tel Aviv is again the most expensive city in the Middle East at 14th place (score 105), up three places from 2007. Both Dubai and Abu Dhabi have dropped significantly this year, at positions 52 (score 89.3) and 65 (score 85.7), respectively. This is mainly due to the UAE dirham being pegged to the US dollar. Most African cities in the survey have moved down the ranking with the exception of Lagos in Nigeria, which has jumped seven places to join the top 30 at position 30 (score 95.9).
Asia
Tokyo is the costliest Asian city, in 2nd place (score 127), rising two places since last year. Seoul follows in 5th place (score 117.7) and Hong Kong closely follows after in 6th place with a score of 117.6. Singapore ranks 13th and holds a score of 109.1. Karachi continues to be the least costly city in this region in 141st place with a score of 54.7.While the five top-scoring cities in Asia remain relatively stable in the ranking, there have been significant changes further down the list. In India, Mumbai moves up four places to reach 48th (score 90.3), whereas New Delhi climbs 13 places to 55th place (score 87.5) due to the strengthening of the India rupee against the US dollar. Although India has experienced relatively high inflation, this has increased at similar pace to New York and has therefore had a reduced impact on its cities’ rise in the rankings. Manila rises a total of 27 places, ranking 110th with a score of 73.4, mainly as a result of price increases for international-standard accommodation.In contrast, certain cities in this region have experienced significant declines in the ranking. Some examples are Jakarta, falling from 55th to 82nd place (score 80.5), and Bangkok, dropping from 95th to 105th place with a score of 75.1. In Vietnam, Hanoi drops 35 places to rank 91st place (score 79) and Ho Chi Minh City drops 40 places to rank 100th place (score 76.3), mainly because the Vietnamese dong has remained stable against the US dollar and so has pushed these cities down on the list. The low level of inflation observed for goods in these Vietnamese cities compared to in New York has further widened the gap.
Australia and New Zealand
Sydney continues to be the most expensive city for expatriates in this region, moving up six places in the overall ranking to reach 15th place (score 104.1). Melbourne follows in 36th place (score 94.2), jumping 28 places and Perth climbs 31 places to reach ranking number 53rd (score 88.5).Both Australian and New Zealand cities are moving up in the rankings due to the appreciation of their local currencies against the US dollar. However, New Zealand’s cities remain the less costly option for expatriates, with Auckland in 78th place (score 81) and Wellington in 93rd place (score 77.6).
Notes:The figures for Mercer’s cost of living comparisons are based on a survey conducted in March 2008. The 2008 comparisons are based on a similar survey conducted in March 2007. The information is used by governments and major companies to protect the purchasing power of their employees when transferred abroad. The choice of cities surveyed is based on the demand for corresponding data from companies and governmental organizations.
28 July 2008: Moscow is the world’s most expensive city for expatriates for the third consecutive year, according to the latest Cost of Living Survey from Mercer. Tokyo is in second position climbing two places since 2007, whereas London drops one place to rank third. Oslo climbs six places to 4th place and is followed by Seoul in 5th. Asunción in Paraguay is the least expensive city in the ranking for the sixth year running. With New York as the base city scoring 100 points, Moscow scores 142.4 and is close to three times costlier than Asunción which has an index of 52.5. Contrary to the trend observed last year, the gap between the world’s most and least expensive cities now seems to be widening.
Mercer’s survey covers 143 cities across six continents and measures the comparative cost of over 200 items in each location, including housing, transportation, food, clothing, household goods and entertainment. It is the world’s most comprehensive cost of living survey and is used to help multinational companies and governments determine compensation allowances for their expatriate employees.
Yvonne Traber, a principal and research manager at Mercer, commented, “Current market conditions have led to the further weakening of the US dollar which, coupled with the strengthening of the Euro and many other currencies, has caused significant changes in this year’s rankings. Although the traditionally expensive cities of Western Europe and Asia still feature in the top 20, cities in Eastern Europe, Brazil and India are creeping up the list. Conversely, some locations such as Stockholm and New York now appear less costly by comparison.”She added: “The research confirms the global trend in price increases for certain foodstuffs and petroleum, though the rise is not consistent in all locations. This is partly balanced by decreasing prices for certain commodities, such as electronic and electrical goods. Mercer attribute this to cheaper imports from developing countries, especially China, and to advances in technology. Keeping on top of the changes in expatriate cost of living is essential so companies can ensure their employees are compensated fairly and at competitive rates when stationed abroad.”Traber added: “In some cases, cost of living increases may be correlated to countries with a high rate of economic growth. Companies may assign high priority to expansion in these economies but may have to deal with inflationary pressures due to competition for expatriate-level housing and other services.”For example, Latvia had real GDP growth of 10.2 per cent in 2007, well above the global average growth rate of 5.2 per cent, and its capital, Riga, jumped to 46th place in the latest Mercer ranking, up from 72nd a year ago. Cities in India all rose in the cost of living ranking, with New Delhi climbing to 55th place from 68th a year ago, as India posted a real GDP growth rate of 9.2 per cent in 2007. Bogota jumped to 87th place from 112th, reflecting Colombia’s 7 per cent real GDP growth.
The Americas
The only North American city to feature in this year’s top 50 is New York in 22nd place (score 100), dropping seven places in one year. All other US cities also experienced a significant decline in the rankings. For example, Los Angeles moved from 42nd to 55th place (score 87.5), Miami from 51st to 75th place (score 82) and Washington, DC, from 85th to 107th place (score 74.6)."The decline in the ranking of all US cities is due to the weakening value of the US dollar against other major world currencies," said Mitch Barnes, principal at Mercer in the US. "The dollar has been declining steadily for the past several years, which has resulted in an overall decrease in the cost of living in 19 US cities relative to other major global cities studied. On the bright side, the US dollar's loss of value may serve to attract globally mobile executives to business centers such as New York, Chicago and Los Angeles. The difference in cost of living can be significant, particularly for those executives with families."In 54th place (score 88.1), jumping 28 places from last year, Toronto is the most expensive city for expatriates living in Canada. All other Canadian cities in the survey experienced similar rises, with Vancouver moving from 89th to 64th (score 85.8), Calgary from 92nd to 66th place (score 85.4) and Montréal from 98th to 72nd with a score of 83. This reverses last year’s trend, which saw Canadian cities decline, and places them back where they have traditionally been rated. The Canadian dollar has appreciated nearly 15 per cent against the US dollar, the main reason for these movements.The two top-ranking cities in South America are São Paulo in 25th place (score 97) and Rio de Janeiro in 31st place (score 95.2), jumping 37 and 33 places, respectively. The Brazilian real appreciated nearly 18 per cent against the US dollar last year, causing these Brazilian cities to rocket up the list. Another high-riser in this region is Caracas, jumping 40 places from 129th to 89th place (score 79.3). High inflation in Venezuela has caused a sharp increase in the price of food and household products.South America also has some of the lowest ranking cities globally. Asunción is the least expensive city in the region for the sixth consecutive year (score 52.5), followed by Quito in Ecuador in 142nd place (score 54.6), Buenos Aires in 138th place (score 62.7) and Montevideo in 136th place (score 63.2).
Europe, Middle East and Africa
Moscow is ranked the most expensive city both in Europe and globally for the third year running. The city’s score has steadily increased over the last few years and is currently at 142.4 (compared to 134.4 in 2007 and 123.9 in 2006). “Moscow’s position as the most expensive place for expatriate living has been strengthened by the appreciation of the rouble against the US dollar and the continuous rising accommodation costs,” said Ms Traber.London is the next European city in the ranking at 3rd place (score 125), down from last year, while Oslo jumped six places to rank 4th with a score of 118.3. Norwegian property prices were at an all-time high towards the end of last year after a 50 per cent increase in the last five years. Coupled with the continuous strengthening of the Norwegian krone, this has created a substantial increase in living costs for expatriates in Oslo. London’s drop can be explained by the weakness of the pound sterling against the euro and other currencies and, more importantly, to the British currency’s stability against the dollar. For example, while the euro reached a record high against the dollar in the early summer of 2008 (1.60 dollars to the euro), the pound sterling – at 1.99 dollars to the pound was well down from last year’s record high of 2.10.Other European cities in the global top 10 include Copenhagen at 7th place (117.2) and Geneva in 8th place (115.8). Both cities have dropped one place from last year. Zurich remains in 9th place (112.7), whereas Milan climbs to 10th place with a score of 111.3. Sofia in Bulgaria is again the least expensive European city for expatriates in 97th place (76.9), although the city has climbed 11 places in the overall ranking.Several European cities have experienced a significant rise in the rankings this year, mainly as a result of local currency strengthening against the US dollar. For example, Prague has jumped from 49th to 29th place (score 96) and Warsaw is up to 35th place (score 95) compared to 67th in 2007. Istanbul has climbed 15 places to rank 23 (score 99.4) reflecting the Turkish lira’s significant appreciation against the US dollar as well as general price increases, especially for accommodation.In addition to London dropping one place, two additional UK cities, Birmingham and Glasgow, have both moved down in the rankings, dropping from 41st to 66th (score 85.4) and 36th to 69th (score 84), respectively. “In contrast to the strengthening euro and other European currencies, the British pound has remained relatively stable against the US dollar. As the cost of living in the Eurozone has risen relative to the US, UK cities have declined in the rankings,” according to Ms. Traber.Tel Aviv is again the most expensive city in the Middle East at 14th place (score 105), up three places from 2007. Both Dubai and Abu Dhabi have dropped significantly this year, at positions 52 (score 89.3) and 65 (score 85.7), respectively. This is mainly due to the UAE dirham being pegged to the US dollar. Most African cities in the survey have moved down the ranking with the exception of Lagos in Nigeria, which has jumped seven places to join the top 30 at position 30 (score 95.9).
Asia
Tokyo is the costliest Asian city, in 2nd place (score 127), rising two places since last year. Seoul follows in 5th place (score 117.7) and Hong Kong closely follows after in 6th place with a score of 117.6. Singapore ranks 13th and holds a score of 109.1. Karachi continues to be the least costly city in this region in 141st place with a score of 54.7.While the five top-scoring cities in Asia remain relatively stable in the ranking, there have been significant changes further down the list. In India, Mumbai moves up four places to reach 48th (score 90.3), whereas New Delhi climbs 13 places to 55th place (score 87.5) due to the strengthening of the India rupee against the US dollar. Although India has experienced relatively high inflation, this has increased at similar pace to New York and has therefore had a reduced impact on its cities’ rise in the rankings. Manila rises a total of 27 places, ranking 110th with a score of 73.4, mainly as a result of price increases for international-standard accommodation.In contrast, certain cities in this region have experienced significant declines in the ranking. Some examples are Jakarta, falling from 55th to 82nd place (score 80.5), and Bangkok, dropping from 95th to 105th place with a score of 75.1. In Vietnam, Hanoi drops 35 places to rank 91st place (score 79) and Ho Chi Minh City drops 40 places to rank 100th place (score 76.3), mainly because the Vietnamese dong has remained stable against the US dollar and so has pushed these cities down on the list. The low level of inflation observed for goods in these Vietnamese cities compared to in New York has further widened the gap.
Australia and New Zealand
Sydney continues to be the most expensive city for expatriates in this region, moving up six places in the overall ranking to reach 15th place (score 104.1). Melbourne follows in 36th place (score 94.2), jumping 28 places and Perth climbs 31 places to reach ranking number 53rd (score 88.5).Both Australian and New Zealand cities are moving up in the rankings due to the appreciation of their local currencies against the US dollar. However, New Zealand’s cities remain the less costly option for expatriates, with Auckland in 78th place (score 81) and Wellington in 93rd place (score 77.6).
Notes:The figures for Mercer’s cost of living comparisons are based on a survey conducted in March 2008. The 2008 comparisons are based on a similar survey conducted in March 2007. The information is used by governments and major companies to protect the purchasing power of their employees when transferred abroad. The choice of cities surveyed is based on the demand for corresponding data from companies and governmental organizations.
Oil's retreat not enough to sustain stock rally
Tuesday September 2, 5:38 pm ET By Madlen Read, AP Business Writer
Wall Street turns lower as economic, financial worries overtake relief about lower oil prices
NEW YORK (AP) -- Wall Street succumbed to its ongoing angst Tuesday, giving up a sharp advance and turning moderately lower after falling oil prices failed to calm the market's nervousness about the economy and the financial sector.
The Dow Jones industrial average initially surged by nearly 250 points as oil prices dropped as low as $105.46 a barrel on reports that the Gulf Coast and its oil facilities were spared heavy damage from Hurricane Gustav. But the positive effect of the storm's outcome on stocks was short-lived, and the blue chips ended the day down 26.
Falling commodities prices caused the stocks of oil and metals companies to sink, dragging on the broader market, and the technology sector was also weak. Furthermore, crude oil eventually lifted off its lows of the day, settling near $110 a barrel and signaling to some traders that oil has the potential to rebound as quickly as it sold off.
"We could have another storm announced tomorrow, and it'd be back up again," said Anthony Conroy, managing director and head trader for BNY ConvergEx Group.
The financial sector was stronger than usual on Tuesday, but not enough to lift the stock market. Investors remain fearful that a weak housing market and tight credit environment will keep racking up losses for the nation's major money centers.
"The one problem with financials is that maybe the Street has a good handle on subprime, but they do not have a good handle on commercial or industrial lending," said Philip S. Dow, managing director of equity strategy at RBC Wealth Management.
Due to the high level of uncertainty in the market -- not to mention low summer trading volumes, which tend to add to volatility -- investors recently have appeared to be aiming for quick, day-to-day profits as opposed to committing to a long-term strategy, Dow said.
"We've had this manic tape for some time," he said. "By and large, it's just a market that's victim to whatever the news of the day is, without a whole lot of conviction."
The Dow fell 26.63, or 0.23 percent, to 11,516.92. On Friday, the blue chip index lost 171 points. The biggest drop among the 30 Dow components came from aluminum producer Alcoa Inc., which fell $1.67, or 5.2 percent, to $30.46.
Broader stock indicators also turned lower after moving sharply higher in early trading. The Standard & Poor's 500 index fell 5.25, or 0.41 percent, to 1,277.58, and the technology-dominated Nasdaq composite index fell 18.28, or 0.77 percent, to 2,349.24.
Advancing issues outnumbered decliners, however, by about 8 to 7 on the New York Stock Exchange, where consolidated volume came to 4.67 billion shares, up from 3.14 billion on Friday.
Light, sweet crude fell $5.75 to settle at $109.71 a barrel on the New York Mercantile Exchange.
Bond prices shot higher as Wall Street gave up its gains. The yield on the benchmark 10-year Treasury note, which moves opposite its price, sank to 3.74 percent from 3.82 percent late Friday. The dollar strengthened against most other major currencies, while gold prices fell sharply.
The Institute for Supply Management, a trade group of purchasing executives, said Tuesday its index on manufacturing activity fell marginally to 49.9 in August -- as expected -- from 50 in July. A reading below 50 indicates contraction. The ISM also found that inflation lessened.
Bill Dwyer, chief investment officer at MTB Investment Advisors in Baltimore, said the reactions of the energy and stock markets Tuesday illustrate the overall uncertainty about the economy.
"It just shows you how unstable the market is based on the perception of the macro economic outlook. It changes daily. There isn't a consistent viewpoint of what is actually happening in the economy," he said.
Financials ended mostly higher Tuesday, but trading was erratic; investors remain extremely skittish about financial services companies, given the billions of dollars in risky loans and securities that remain on their books.
Lehman Brothers Holdings Inc. rose but pared larger gains after the governor of the state-owned Korea Development Bank said discussions were under way to set up a consortium with private banks to acquire Lehman. The comments follow weeks of speculation that the investment bank could be bought as it struggles amid tightness in the credit markets.
Lehman shares rose 4 cents to close at $16.13.
A few financial stocks weakened, including Merrill Lynch & Co., which fell 60 cents, or 2.1 percent, to $27.75.
The drop in oil prices sent airline stocks higher. American Airlines parent AMR Corp. jumped $1.17, or 11.3 percent, to $11.50, Delta Air Lines Inc. rose $1.04, or 12.8 percent, to $9.17, while JetBlue Airways Corp. rose 25 cents, or 4.1 percent, to $6.32.
But energy names fell. Exxon Mobil Corp., one of the 30 Dow industrials, fell $2.69, or 3.4 percent, to $77.32, while Chevron Corp., another Dow component, lost $3.03, or 3.5 percent, to $83.29.
Most technology companies declined as well. One of the most actively traded stocks in the Nasdaq composite index was Dell Inc., which on Friday reported disappointing quarterly results and set off a string of estimate cuts by analysts.
Dell shares extended their declines, falling by 90 cents, or 4.1 percent, to $20.83.
The Russell 2000 index of smaller companies fell 0.99, or 0.13 percent, to 738.51.
Overseas, Japan's Nikkei stock fell 1.75 percent. Britain's FTSE 100 rose 0.32 percent, Germany's DAX index rose 1.51 percent, and France's CAC-40 advanced 1.50 percent.
New York Stock Exchange: http://www.nyse.com
Nasdaq Stock Market: http://www.nasdaq.com
Wall Street turns lower as economic, financial worries overtake relief about lower oil prices
NEW YORK (AP) -- Wall Street succumbed to its ongoing angst Tuesday, giving up a sharp advance and turning moderately lower after falling oil prices failed to calm the market's nervousness about the economy and the financial sector.
The Dow Jones industrial average initially surged by nearly 250 points as oil prices dropped as low as $105.46 a barrel on reports that the Gulf Coast and its oil facilities were spared heavy damage from Hurricane Gustav. But the positive effect of the storm's outcome on stocks was short-lived, and the blue chips ended the day down 26.
Falling commodities prices caused the stocks of oil and metals companies to sink, dragging on the broader market, and the technology sector was also weak. Furthermore, crude oil eventually lifted off its lows of the day, settling near $110 a barrel and signaling to some traders that oil has the potential to rebound as quickly as it sold off.
"We could have another storm announced tomorrow, and it'd be back up again," said Anthony Conroy, managing director and head trader for BNY ConvergEx Group.
The financial sector was stronger than usual on Tuesday, but not enough to lift the stock market. Investors remain fearful that a weak housing market and tight credit environment will keep racking up losses for the nation's major money centers.
"The one problem with financials is that maybe the Street has a good handle on subprime, but they do not have a good handle on commercial or industrial lending," said Philip S. Dow, managing director of equity strategy at RBC Wealth Management.
Due to the high level of uncertainty in the market -- not to mention low summer trading volumes, which tend to add to volatility -- investors recently have appeared to be aiming for quick, day-to-day profits as opposed to committing to a long-term strategy, Dow said.
"We've had this manic tape for some time," he said. "By and large, it's just a market that's victim to whatever the news of the day is, without a whole lot of conviction."
The Dow fell 26.63, or 0.23 percent, to 11,516.92. On Friday, the blue chip index lost 171 points. The biggest drop among the 30 Dow components came from aluminum producer Alcoa Inc., which fell $1.67, or 5.2 percent, to $30.46.
Broader stock indicators also turned lower after moving sharply higher in early trading. The Standard & Poor's 500 index fell 5.25, or 0.41 percent, to 1,277.58, and the technology-dominated Nasdaq composite index fell 18.28, or 0.77 percent, to 2,349.24.
Advancing issues outnumbered decliners, however, by about 8 to 7 on the New York Stock Exchange, where consolidated volume came to 4.67 billion shares, up from 3.14 billion on Friday.
Light, sweet crude fell $5.75 to settle at $109.71 a barrel on the New York Mercantile Exchange.
Bond prices shot higher as Wall Street gave up its gains. The yield on the benchmark 10-year Treasury note, which moves opposite its price, sank to 3.74 percent from 3.82 percent late Friday. The dollar strengthened against most other major currencies, while gold prices fell sharply.
The Institute for Supply Management, a trade group of purchasing executives, said Tuesday its index on manufacturing activity fell marginally to 49.9 in August -- as expected -- from 50 in July. A reading below 50 indicates contraction. The ISM also found that inflation lessened.
Bill Dwyer, chief investment officer at MTB Investment Advisors in Baltimore, said the reactions of the energy and stock markets Tuesday illustrate the overall uncertainty about the economy.
"It just shows you how unstable the market is based on the perception of the macro economic outlook. It changes daily. There isn't a consistent viewpoint of what is actually happening in the economy," he said.
Financials ended mostly higher Tuesday, but trading was erratic; investors remain extremely skittish about financial services companies, given the billions of dollars in risky loans and securities that remain on their books.
Lehman Brothers Holdings Inc. rose but pared larger gains after the governor of the state-owned Korea Development Bank said discussions were under way to set up a consortium with private banks to acquire Lehman. The comments follow weeks of speculation that the investment bank could be bought as it struggles amid tightness in the credit markets.
Lehman shares rose 4 cents to close at $16.13.
A few financial stocks weakened, including Merrill Lynch & Co., which fell 60 cents, or 2.1 percent, to $27.75.
The drop in oil prices sent airline stocks higher. American Airlines parent AMR Corp. jumped $1.17, or 11.3 percent, to $11.50, Delta Air Lines Inc. rose $1.04, or 12.8 percent, to $9.17, while JetBlue Airways Corp. rose 25 cents, or 4.1 percent, to $6.32.
But energy names fell. Exxon Mobil Corp., one of the 30 Dow industrials, fell $2.69, or 3.4 percent, to $77.32, while Chevron Corp., another Dow component, lost $3.03, or 3.5 percent, to $83.29.
Most technology companies declined as well. One of the most actively traded stocks in the Nasdaq composite index was Dell Inc., which on Friday reported disappointing quarterly results and set off a string of estimate cuts by analysts.
Dell shares extended their declines, falling by 90 cents, or 4.1 percent, to $20.83.
The Russell 2000 index of smaller companies fell 0.99, or 0.13 percent, to 738.51.
Overseas, Japan's Nikkei stock fell 1.75 percent. Britain's FTSE 100 rose 0.32 percent, Germany's DAX index rose 1.51 percent, and France's CAC-40 advanced 1.50 percent.
New York Stock Exchange: http://www.nyse.com
Nasdaq Stock Market: http://www.nasdaq.com
Insurers estimate Gustav claims as high as $10B
BEAUMONT, Texas (AP) -- Residential and commercial insurance claims could total $4 billion to $10 billion. More than a million customers, including some refineries, lack electricity. And retailers are gearing up for a burst of sales once residents who fled the Gulf Coast return.
Snapshots of Hurricane Gustav's economic impact revealed Tuesday that the storm was hardly as damaging as feared -- particularly for the region's vast network of energy facilities. But it will be days, if not weeks, before business as usual returns.
While Gustav's force paled in comparison to Hurricane Katrina, which cost insurers $41 billion, oil workers, utility crews, fishermen and other business owners fanned out across the Gulf Coast Tuesday to assess damage and make preparations to restart operations.
Outside a Lowe's in Houma, La., 34-year-old sales manager Britt Coyle said there was only minor damage to the store, which he expected to be open on Wednesday to sell chainsaws, generators and other necessities to residents returning home.
For the moment, there were no customers in sight, and power outages in the area were widespread.
At the nearby Jolly Inn restaurant, the owners had a diesel generator powering their refrigerator in order to prevent thousands of dollars worth of food from spoiling. Forty-five-year-old Denise Prosperie-Fritch, whose family owns the Jolly Inn and rode out Gustav inside the restaurant, said the establishment is insured but that they only have one or two days worth of diesel fuel left to keep the food cold.
"We will be addressing our hardest-hit policyholders first," Elizabeth Stelzer, a spokeswoman for Nationwide Mutual Insurance Co., said. "Those homes with a tree through a wall, an exposed roof, or other claims in which the home has become uninhabitable are the priority."
Meanwhile, utilities started dealing with the task of restoring power. Utility giant Entergy Corp. said 826,000 customers, mostly in Louisiana, were without power. A Royal Dutch Shell-owned refinery in Convent lacked power late Tuesday, as did the company's chemical plant in Geismar. The power outages also brought down cellular and Internet service in parts of Louisiana.
Entergy did not have an estimate on when power may be restored, saying it could be weeks in some instances. "Our transmission system has had massive damage," Entergy spokesman Mike Burns said, noting damage to 191 transmission lines and 210 substations that affected 825,000 customers, mostly in Louisiana.
Gustav also created problems for the region's Gulf Coast oyster industry.
Mike Voisin, owner of an oyster processing plant in Houma and president of the Louisiana Oyster Task Force, said Louisiana won't be producing oysters for at least a week to 10 days, depending on how quickly officials can ensure oyster beds have not been contaminated by floodwaters carrying bacteria. Similar closures were announced in Alabama and Mississippi as Gustav approached.
Residential and land-based commercial losses, including costs associated with business interruption, were expected to total between $3 billion and $7 billion, Newark, Calif.-based Risk Management Solutions Inc. estimated. The firm estimated damage to oil platforms and wells, as well as production interruption caused by wind and waves, at about $1 billion to $3 billion.
Insurance industry analysts warned that computerized data on insurance losses may understate actual costs because the figure don't include damage to uninsured property or destruction caused by actions excluded from some policies, such as flooding. Total losses won't be known for months.
Still, there were signs that the region held up better than expected:
-- Preliminary indications were that Gustav caused little physical damage to the region's onshore and offshore energy-production facilities.
-- Port of New Orleans spokesman Chris Bonura said damage appeared to be light, and that the Mississippi River was already open to some traffic Tuesday morning.
-- In the Louisiana coastal fishing village of Cocodrie, where the storm made landfall Monday morning, there was little evidence of widespread destruction. There were colorful, expensive-looking second homes, fishing shacks and trailer homes built high up on stilts. Some were damaged by wind, but few appeared to have flooded. One small house had part of its roof and a wall torn away, revealing a man's clothes still hanging in a closet.
-- Crowley Maritime Corp., which operates container ships, tugs and barges, said its shipping facilities in Lake Charles, La., and Gulfport, Miss., areas remained closed Tuesday, but spokesman Mark Miller said, "We fared pretty well. We're happy about that."
-- In Mississippi, regulators say the 11 casinos along the Gulf Coast will remain closed until crews finish cleaning up from the storm and an adequate number of employees return to work. Larry Gregory, executive director of the Mississippi Gaming Commission, said Tuesday that none of the casinos suffered any structural damage from Gustav.
Insurance officials acknowledged that the first damage estimates following a hurricane can come in high.
"When you provide initial numbers there's no goal, but you do tend to error on the comfort side," said Tom Larsen, senior vice president of the Oakland, Calif.-based Eqecat Inc.
Katrina, which struck three years ago last month, was the single largest natural disaster loss in the history of the insurance industry. Insurers paid $41 billion arising from 1.7 million claims for damage to homes, businesses and vehicles to policy holders in six states. Hurricane Andrew -- the previous record holder -- produced $15.5 billion in losses in 1992 and 790,000 claims.
Associated Press Writers John Porretto in Houston, Ashley Heher in Chicago, Peter Svensson in New York, Mike Kunzelman in Houma, La., and Kevin McGill in New Orleans contributed to this report. Ieva M. Augstums reported from Charlotte, N.C.
Snapshots of Hurricane Gustav's economic impact revealed Tuesday that the storm was hardly as damaging as feared -- particularly for the region's vast network of energy facilities. But it will be days, if not weeks, before business as usual returns.
While Gustav's force paled in comparison to Hurricane Katrina, which cost insurers $41 billion, oil workers, utility crews, fishermen and other business owners fanned out across the Gulf Coast Tuesday to assess damage and make preparations to restart operations.
Outside a Lowe's in Houma, La., 34-year-old sales manager Britt Coyle said there was only minor damage to the store, which he expected to be open on Wednesday to sell chainsaws, generators and other necessities to residents returning home.
For the moment, there were no customers in sight, and power outages in the area were widespread.
At the nearby Jolly Inn restaurant, the owners had a diesel generator powering their refrigerator in order to prevent thousands of dollars worth of food from spoiling. Forty-five-year-old Denise Prosperie-Fritch, whose family owns the Jolly Inn and rode out Gustav inside the restaurant, said the establishment is insured but that they only have one or two days worth of diesel fuel left to keep the food cold.
"We will be addressing our hardest-hit policyholders first," Elizabeth Stelzer, a spokeswoman for Nationwide Mutual Insurance Co., said. "Those homes with a tree through a wall, an exposed roof, or other claims in which the home has become uninhabitable are the priority."
Meanwhile, utilities started dealing with the task of restoring power. Utility giant Entergy Corp. said 826,000 customers, mostly in Louisiana, were without power. A Royal Dutch Shell-owned refinery in Convent lacked power late Tuesday, as did the company's chemical plant in Geismar. The power outages also brought down cellular and Internet service in parts of Louisiana.
Entergy did not have an estimate on when power may be restored, saying it could be weeks in some instances. "Our transmission system has had massive damage," Entergy spokesman Mike Burns said, noting damage to 191 transmission lines and 210 substations that affected 825,000 customers, mostly in Louisiana.
Gustav also created problems for the region's Gulf Coast oyster industry.
Mike Voisin, owner of an oyster processing plant in Houma and president of the Louisiana Oyster Task Force, said Louisiana won't be producing oysters for at least a week to 10 days, depending on how quickly officials can ensure oyster beds have not been contaminated by floodwaters carrying bacteria. Similar closures were announced in Alabama and Mississippi as Gustav approached.
Residential and land-based commercial losses, including costs associated with business interruption, were expected to total between $3 billion and $7 billion, Newark, Calif.-based Risk Management Solutions Inc. estimated. The firm estimated damage to oil platforms and wells, as well as production interruption caused by wind and waves, at about $1 billion to $3 billion.
Insurance industry analysts warned that computerized data on insurance losses may understate actual costs because the figure don't include damage to uninsured property or destruction caused by actions excluded from some policies, such as flooding. Total losses won't be known for months.
Still, there were signs that the region held up better than expected:
-- Preliminary indications were that Gustav caused little physical damage to the region's onshore and offshore energy-production facilities.
-- Port of New Orleans spokesman Chris Bonura said damage appeared to be light, and that the Mississippi River was already open to some traffic Tuesday morning.
-- In the Louisiana coastal fishing village of Cocodrie, where the storm made landfall Monday morning, there was little evidence of widespread destruction. There were colorful, expensive-looking second homes, fishing shacks and trailer homes built high up on stilts. Some were damaged by wind, but few appeared to have flooded. One small house had part of its roof and a wall torn away, revealing a man's clothes still hanging in a closet.
-- Crowley Maritime Corp., which operates container ships, tugs and barges, said its shipping facilities in Lake Charles, La., and Gulfport, Miss., areas remained closed Tuesday, but spokesman Mark Miller said, "We fared pretty well. We're happy about that."
-- In Mississippi, regulators say the 11 casinos along the Gulf Coast will remain closed until crews finish cleaning up from the storm and an adequate number of employees return to work. Larry Gregory, executive director of the Mississippi Gaming Commission, said Tuesday that none of the casinos suffered any structural damage from Gustav.
Insurance officials acknowledged that the first damage estimates following a hurricane can come in high.
"When you provide initial numbers there's no goal, but you do tend to error on the comfort side," said Tom Larsen, senior vice president of the Oakland, Calif.-based Eqecat Inc.
Katrina, which struck three years ago last month, was the single largest natural disaster loss in the history of the insurance industry. Insurers paid $41 billion arising from 1.7 million claims for damage to homes, businesses and vehicles to policy holders in six states. Hurricane Andrew -- the previous record holder -- produced $15.5 billion in losses in 1992 and 790,000 claims.
Associated Press Writers John Porretto in Houston, Ashley Heher in Chicago, Peter Svensson in New York, Mike Kunzelman in Houma, La., and Kevin McGill in New Orleans contributed to this report. Ieva M. Augstums reported from Charlotte, N.C.
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