Tuesday, November 24, 2015
US growth more than expected in Q3; Rolls Royce warns of senior job cuts; India surrogates hurt by govt ban on foreign clients
1 US growth more than expected in Q3 (BBC) US economic growth for the third quarter has been revised up, helped by stronger investment and house building. The Commerce Department said gross domestic product rose at an annual pace of 2.1%, not the 1.5% rate it reported last month. Consumer spending was revised down slightly, although this was offset by growth in other economic areas.
Even with the GDP revision, growth still slowed from an annual pace of 3.9% in the second quarter. However, in the second quarter of the year the economy was rebounding from the impact of the harsh winter weather experienced at the start of the year, which slowed the US economy to a crawl.
The better third quarter growth is still likely to fuel speculation that the US Federal Reserve is ready to raise interest rates next month. The upward revision by the Commerce Department puts the US economy on course to grow at least 2% in the second half. It comes in the wake of strong jobs growth in October.
The main factor behind the upward revision to the growth figure was the discovery that businesses had restocked their inventories at a faster pace than first estimated. Growth in business investment slowed to a rate of 3.4% from 5.2% in the previous quarter. That was mainly due to a sharp drop in spending on oil and gas exploration by energy firms because of the weak oil price.
2 Rolls Royce warns of senior job cuts (Sean Farrell & Rob Davies in The Guardian) The new chief executive of Rolls-Royce has warned that senior job losses will form part of £200m in annual cost cuts. Warren East, who replaced John Rishton in July, said the company was so opaque and bloated that another in a string of profit warnings was possible, as he set out plans to revive the engine-maker.
He said Rolls-Royce was overburdened with managers, committees and processes to the point where it was hard to know what was going on. He acknowledged that the “self-help” he expected to implement would involve “streamlining senior management”. Rolls-Royce has 54,000 staff worldwide, about 2,000 of whom are deemed senior managers.
East did not go into details about potential job cuts, business disposals, or exiting certain countries, but he said large layers of cumbersome bureaucracy needed to be stripped away so the company could function properly and respond to market changes.
Over more than two decades Rolls became a beacon of British manufacturing excellence as one of the world’s top makers of engines for aircraft, ships and industrial use. But it has issued five profit warnings in the past 18 months, including two under East as he has sought greater clarity about the business.
Rolls is already shedding 3,600 jobs and East said more would go, including a swathe of top managers. “We are overmanaged,” he said. Asked how Rolls had got into such a position, East said: “If you’ve got a big business with a lot of different things happening, over the years people add complexity for good reason.”
Rolls, which makes engines for Boeing’s 787 Dreamliners and Airbus’s A380 superjumbos, has bet on demand for wide-bodied aircraft but the trend among regional airline operators has shifted towards single-aisle plane orders.East said Rolls could have reacted more quickly to the changing market if information from staff talking to customers had been reported more quickly to top managers.
3 India surrogates hurt by govt ban on foreign clients (San Francisco Chronicle) For thousands of childless couples the world over, India has been the go-to destination to fulfill their dreams of becoming parents, thanks to its well-trained doctors, well-appointed fertility clinics and vast numbers of poor women willing to serve as surrogate mothers.
Not anymore. The Indian government recently banned surrogate services for foreigners and ordered fertility clinics to stop the practice of hiring Indian women to bear children for them. It's said to be intended to protect the women from exploitation, though some who have worked as surrogates say the ban actually hurts them.
"Becoming a surrogate mother is our one chance to build a house, or get a new roof. We earn more from one surrogacy than from 10 years of working as domestic help," said Tina Rajesh Chavan, from Anand, a major hub of fertility clinics, in the western Indian state of Gujarat.
India was among the few countries in the world that allowed surrogacy — where a woman could be hired to carry the child of a couple through a process of in-vitro fertilization and embryo transfer. India's home ministry has ordered Indian embassies abroad not to grant visas to couples visiting the country for surrogacy, or "reproductive tourism" as the practice has come to be known.
Though laws governing surrogacy have yet to be passed, the government outlined its position in an affidavit placed before the Supreme Court on Oct. 28. It said India "does not support commercial surrogacy and the scope of surrogacy is limited to Indian married infertile couples only, and not to foreigners." A previous order had already barred gay and unmarried couples and single people from hiring surrogates.
Chavan said she made 500,000 rupees ($7,700) for each surrogacy. That's typical for Gujarat, where the industry is most organized, but women in other states may be paid as little as 150,000 rupees ($2,300). Some women's rights activists say India's burgeoning surrogacy business should be regulated, not outlawed. Banning it, they say, will only drive it underground.