Business digest 06/01/05
Consumer confidence rebounds in May
NEW YORK -- Consumer confidence unexpectedly rebounded in May after declining in April, as worries about the economy and jobs eased, a private research group said Tuesday. But another closely watched report that tracks Midwestern manufacturing activity dropped in May, spooking Wall Street. The Conference Board said that its Consumer Confidence Index rose to 102.2 from a revised 97.5 in April. The reading was much better than the 96 that analysts had expected, which would have been a decline from the original April reading of 97.7. Still, stocks fell Tuesday as the disappointing reading of economic activity in the Midwest appeared to outweigh rebounding consumer confidence. The Purchasing Management Association of Chicago announced that its index of business activity in that area dropped to 54.1 in May from 65.6 in April and 69.2 in March. A reading above 50 indicates expansion in manufacturing, while a figure below 50 means contraction.
United, machinists announce contract deal
CHICAGO -- United Airlines and its machinists' union announced an agreement in principle on a contract Tuesday, narrowly heading off the need for a bankruptcy judge's ruling that could have triggered a strike. A formal contract agreement is to be presented in federal bankruptcy court June 17. Judge Eugene Wedoff gave the two sides until then to work out remaining details. The agreement in principle came just hours after United's mechanics ratified a five-year contract, giving the nation's No. 2 airline a pair of crucial labor victories that it needed to avoid an employee walkout and strengthen its bid to come out of bankruptcy. The tentative deal with the International Association of Machinists and Aerospace Workers, representing 20,000 baggage handlers, customer service representatives and other ground workers, was disclosed in court with Wedoff poised to rule on United's request to break the contract. The IAM had warned it would shut down the carrier with a walkout if that happened. The mechanics agreed by a 59 percent to 41 percent vote to ratify a contract containing $96 million in annual concessions, including 3.9 percent pay cuts and reduced benefits.
Europe plans counter case at WTO over Boeing
BRUSSELS, Belgium -- Digging in for a new trade war with Washington, the European Union filed a counter complaint Tuesday at the World Trade Organization claiming that U.S.-based Boeing Co. receives illegal government aid. EU trade commissioner Peter Mandelson said he had little choice but to retaliate because the United States decided to close the door on reaching an amicable solution to the standoff between Boeing and France-based Airbus. The Bush administration decided late Monday to abandon negotiations that began in January. In announcing the U.S. decision late Monday, trade representative Rob Portman said the Bush administration felt it had to act because of preparations being made by EU member nations to commit $1.7 billion to Airbus for developing a new airplane, the A350, which is seen as a direct competitor to Boeing's new 787 Dreamliner in the market for midsize, long-distance jets. Mandelson said the U.S. move was ironic because the WTO action now opens the door for EU governments to feed Airbus the aid it needs to launch the new model.