By Lucia Mutikani

WASHINGTON (Reuters) – The U.S. services sector maintained a steady pace of growth in April as new orders increased amid a surge in exports, but businesses continued to face higher prices for inputs, indicating that inflation could remain elevated.

Despite darkening clouds gathering over the economy as the lagged effects of higher interest rates start to have an impact, services businesses in the Institute for Supply Management (ISM) survey on Wednesday were fairly upbeat.

That bolsters economists’ expectations that any recession this year will likely be mild and short.

“The majority of respondents are mostly positive about business conditions,” said Anthony Nieves, Chair of the ISM Services Business Survey Committee. “However, some respondents are wary of potential headwinds associated with inflation and an economic slowdown.”

The ISM’s non-manufacturing PMI edged up to a reading of 51.9 last month from 51.2 in March. A reading above 50 indicates growth in the services industry, which accounts for more than two-thirds of the economy. Economists polled by Reuters had forecast the non-manufacturing PMI ticking up to 51.8.

The PMI remains above the 49.9 level, which the ISM says over time indicates growth in the overall economy.

Fourteen services industries reported growth, including accommodation and food services, utilities, public administration as well as transportation and warehousing. The three industries reporting a contraction were mining, agriculture, forestry, fishing and hunting, and wholesale trade.

Finance and insurance companies described business conditions as “steady,” adding that they were “preparing for planned expansion in the third quarter.”

Businesses in the professional, scientific and technical services industry reported that they were “well on track to still see significant growth in production through calendar year 2023, as well as 2024 and 2025.”

Retailers described business trends as “stable year to date,” noting that “inventory levels are coming more in line to match the new lower demand trends.”

Businesses running down inventories contributed to curbing economic growth in the first quarter. Economists believe that businesses facing a recession with lean stocks put them in a better position to rebuild inventories should the need arise.

The Federal Reserve raised its benchmark overnight interest rate by another 25 basis points to the 5.00%-5.25% range on Wednesday, and signaled it might pause the U.S. central bank’s fastest monetary policy tightening campaign since the 1980s.

Stocks on Wall Street were trading higher. The dollar fell against a basket of currencies. U.S. Treasury prices rose.

TIGHTER CREDIT CONDITIONS

In addition to higher borrowing costs, banks have tightened lending, which could make credit inaccessible to households and small businesses. A standoff to raise the federal government’s $31.4 trillion borrowing cap also poses a grave risk to the economy. Treasury Secretary Janet Yellen warned on Monday that the government could run out of money within a month.

The services sector is being supported by consumers shifting spending from goods, which are typically bought on credit.

The ISM reported on Monday that its measure of national manufacturing contracted for a sixth straight month in April, though at a slower pace.

A gauge of new orders received by services businesses increased to 56.1 from 52.2 in March. Comments from companies included “demand outpacing forecasts” to “new requests for services from customers.” A measure of export orders jumped to 60.9 from 43.7 in March.

With demand solid, services inflation persisted. A measure of prices paid by services businesses for inputs nudged up to 59.6 from 59.5 in March. Services prices tend to be stickier and less responsive to rate hikes.

Some economists view the ISM services prices paid gauge as a good predictor of personal consumption expenditures (PCE) inflation. The Fed, which has a 2% inflation target, tracks the PCE price indexes for monetary policy.

But services sector employment growth slowed further, more evidence that the labor market was softening. The government reported on Tuesday that there were 9.6 million job openings at the end of March, the lowest level since May 2021.

The labor market is, however, not slowing fast enough to tame inflation. The ADP National Employment Report showed on Wednesday that private payrolls increased by 296,000 jobs in April after rising 142,000 in March. The surge was driven by a 154,000 increase in leisure and hospitality employment.

The government’s closely watched employment report on Friday is likely to show nonfarm payrolls increased by 180,000 jobs in April after rising 236,000 in March, according to a Reuters survey of economists. The unemployment rate is seen climbing to 3.6% from 3.5% in March.

“We expect payrolls to remain positive for now,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics in White Plains, New York. “But the pace should moderate as the lagged and cumulative effects of monetary policy spread more broadly through the economy.”

(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Paul Simao)

By Alvise Armellini

ROME (Reuters) – Italy’s state-controlled defence and aerospace group Leonardo on Wednesday posted lower first-quarter profits and earnings, but reported a jump in orders and backlog, and confirmed financial targets for 2023.

CEO Alessandro Profumo also said Germany’s Hensoldt, in which Leonardo has a 25% stake, would not be buying his company’s defence electronics business, as was suggested last month by Hensoldt CEO Thomas Mueller.

Profumo said there might be a “combination” in the sector but this would be “conceptually different from an acquisition,” and he called Mueller’s comments “an unfortunate misunderstanding”.

Leonardo’s Q1 profit stood at 40 million euros ($44.2 million) compared to 72 million euros 12 months earlier, while earnings before interest, taxes and amortisation (EBITA) fell year-on-year by 20.5% to 105 million euros.

Revenues were broadly flat at around 3 billion euros, while new orders rose by 28.5% year-on-year to almost 4.9 billion euros “in particular thanks to the excellent performance of helicopters,” the company said in a statement.

Order backlog rose in the same period by 7.9% to 39.1 billion euros, equal to more than 2.5 years of production, while net debt fell to 3.7 billion euros as of end-March, down by 1.1 billion year-on-year, thanks to stronger cash generation.

Nevertheless, results were below analysts’ expectations.

In a company-provided consensus forecast, they had expected a quarterly net profit of 48 million euros and EBITA of 120 million euros, but revenues were correctly predicted at around the 3-billion-euro mark.

Profumo said the company remained “solid” and well positioned to capture growth opportunities at a time of rising European defence spending due to the Ukraine war.

Leonardo confirmed its 2023 targets including new orders at around 17 billion euros, revenues in the 15 billion-15.6 billion euro range, EBITA at 1.26-1.31 billion euros and group net debt of about 2.6 billion euros.

Profumo used the call with analysts to bid farewell after six years as CEO. He is expected to be replaced by Italian government nominee Roberto Cingolani, a former energy minister, at a shareholders’ meeting on May 9.

The outgoing boss also hailed Leonardo’s ratings upgrade from Moody’s, one notch to investment grade, from Ba1 to Baa3, due to credible debt reduction, stable dividends policy and solid growth prospects for the defence industry as a whole.($1 = 0.9052 euros)

(Reporting by Alvise Armellini, editing by Gianluca Semeraro and Keith Weir)

By Andrea Shalal and David Lawder

WASHINGTON (Reuters) -The World Bank’s board of governors on Wednesday elected former Mastercard CEO Ajay Banga to a five-year term as president, ushering in an Indian-born finance and development expert to revamp the lender to tackle climate change and other global crises.

Banga, 63, was nominated for the post by U.S. President Joe Biden in late February and was the sole contender to replace departing World Bank chief David Malpass, an economist and former U.S. Treasury official who served in the Trump administration. He starts the new job on June 2.

The election came after World Bank board members interviewed Banga for four hours on Monday. Malpass’ last day at the bank will be June 1. The decision came in a vote by 24 of the board’s members, with Russia abstaining, instead of the usual consensus-based process, a source familiar with the process said.

Biden congratulated Banga on his “resounding approval” to run the World Bank, which he described as “one of humanity’s most critical institutions to reduce poverty and expand prosperity around the globe.”

“Ajay Banga will be a transformative leader, bringing expertise, experience, and innovation to the position of World Bank President,” Biden said. “He will help steer the institution as it evolves and expands to address global challenges that directly affect its core mission of poverty reduction — including climate change.”

Treasury Secretary Janet Yellen said Banga brought the “right leadership and management skills” to the job, and would play a critical role in pushing forward with additional reforms, including by forging partnerships between the public and private sectors and nonprofit groups.

“Ajay understands that the challenges we face – from combatting climate change, pandemics, and fragility to eliminating extreme poverty and promoting shared prosperity – are deeply intertwined. He has effectively built a broad global coalition around his vision for the Bank over the course of his candidacy,” Yellen said in a statement.

Katie Malouf-Bous, interim head of Oxfam International’s Washington office, said the bank needed “serious reform” to tackle the widening gap between rich and poor, but that would require huge new public investments and “guardrails around private finance that has run riot for too long.”

One senior U.S. official said Banga’s election came at a critical moment marked by emerging debt distress in lower- and middle-income countries and ongoing problems in food and energy markets as a result of Russia’s war in Ukraine.

“It is a challenging moment, but it’s a moment where the World Bank remains more vital than ever, and where getting the evolution of the World Bank is absolutely critical,” the official said.

The bank already loans out hundreds of billions of dollars to developing countries but is working to increase its lending to help them address overlapping global challenges such as climate change, conflict and brace for future pandemics.

“The Board looks forward to working with Mr. Banga on the World Bank Group Evolution process … on all the World Bank Group’s ambitions and efforts aimed at tackling the toughest development challenges facing developing countries,” the bank said.

The World Bank has been led by an American since its founding at the end of World War Two, while the International Monetary Fund has been led by a European.

Banga, who was born in India and spent his early career there, has been a U.S. citizen since 2007.

Banga has met with officials from 96 governments since his nomination, the source said. He visited eight countries during a three-week world tour to meet with government officials, business leaders and civil society groups, flying a total of 39,546 miles (63,643 km).

(Reporting by Andrea Shalal and David Lawder; Editing by Jonathan Oatis and Mark Potter)

By David Shepardson

WASHINGTON (Reuters) -United Auto Workers (UAW) President Shawn Fain said the Detroit-based union is not yet endorsing President Joe Biden for a second term, citing concerns about electric vehicle policies.

In a letter to members seen by Reuters on Wednesday, Fain noted several national unions were quick to endorse Biden but the UAW is not yet doing so.

“The federal government is pouring billions into the electric vehicle transition, with no strings attached and no commitment to workers. The EV transition is at serious risk of becoming a race to the bottom. We want to see national leadership have our back on this before we make any commitments,” Fain said.

Biden’s campaign did not immediately comment.

The new UAW president was in Washington last week and met with White House Chief of Staff Jeff Zients and many lawmakers.

Fain and U.S. Senator Bernie Sanders on Thursday criticized a General Motors joint venture battery plant for paying workers much less than assembly plant employees even though it benefits from hefty U.S. government tax credits.

Workers at the Warren, Ohio, joint venture Ultium Cells plant near Lordstown start at $16.50 an hour rising to $20 an hour after seven years while union workers at a nearby Ohio GM assembly plant that closed in 2019 made $32 an hour or more.

“The situation at Lordstown, and the current state of the EV transition, is unacceptable. We expect action from

the people in power to make it right,” Fain said.

Fain said the Ultium plant at full production will receive more than $1.2 billion a year in U.S. battery production tax credits.

The letter noted that the UAW will enter contract talks on behalf of 150,000 workers at General Motors, Ford Motor and Chrysler-parent Stellantis. Fain said the Detroit Three “are making record profits while workers get left behind. We’ll stand with whoever stands with our members in that fight.”

Fain said the union will be “ready to talk politics once we secure a future for this industry and the workers who make it run.” He said “another Donald Trump presidency would be a disaster. But our members need to see an alternative that delivers real results.”

GM opened with partner LG Energy Solution the Ultium battery manufacturing plant in August 2022 in Ohio; the pair are building two other JV battery plants in Michigan and Tennessee.

(Reporting by David Shepardson; Editing by Aurora Ellis)

By Chris Prentice

(Reuters) -Massachusetts’ highest court on Wednesday heard arguments on whether to revive a state fiduciary duty rule that was central to an enforcement action securities regulators filed against the online brokerage Robinhood.

Lawyers for a Robinhood Markets Inc subsidiary and Massachusetts Secretary of State Bill Galvin argued before the state’s Supreme Judicial Court over the legality of a 2020 state regulation, which Robinhood has said oversteps Galvin’s authority.

Last year, a Superior Court judge sided with Robinhood in a lawsuit the firm filed after Galvin in December 2020 accused it of encouraging inexperienced investors to place risky trades. He argued that Robinhood violated the rule he adopted that raised the investment-advice standard for brokers and that its broker-dealer license in the state should be revoked.

The judge’s decision to invalidate the rule knocked out a main part of the case against Robinhood, which is on hold pending the outcome of Galvin’s appeal.

Galvin’s regulation overstepped existing laws when it imposed a standard that brokers avoid or mitigate conflicts of interest when giving investment advice, according to a lawyer for Robinhood.

Massachusetts law “does not give the Secretary the power to make conduct that is ethical under existing federal and state law unethical simply by announcing it to be so,” Amy Saharia said in court on Wednesday.

But a lawyer for the Secretary of State disagreed and said the regulation is also consistent with the investor protections aims of federal law.

Galvin has said Robinhood had a duty to protect its customers and their money, but instead gave its inexperienced customers the ability to make an unlimited number of trades without first screening them.

Robinhood has faced scrutiny for so-called “gamification” of investing and for its role at the center of a 2021 retail trading frenzy.

“Secretary Galvin feels strongly in the need to apply fiduciary duty standards to financial professionals,” a spokesperson said. “The Robinhood case is the perfect example of the need for such a rule in Massachusetts.”

(Additional reporting by Nate Raymond; editing by Grant McCool and Mark Potter)

By Fergal Smith

TORONTO (Reuters) – Greater Toronto Area (GTA) home prices increased in April from March as new listings posted a steep annual decline, adding to evidence that the housing market has turned a corner after being buffeted by sharply higher borrowing costs.

The average price of a GTA home rose to C$1.153 million ($846,425) in April, up 4% from March, Toronto Regional Real Estate Board (TRREB) data showed on Wednesday. It was the third straight month of gains.

On a year-over-year basis, the average price remained lower, but the pace of decline slowed to 7.8% from 14.6% in March. The average price was 13.6% below the February 2022 peak.

“Many buyers have come to terms with higher borrowing costs and are taking advantage of lower selling prices compared to this time last year,” TRREB President Paul Baron said in a statement.

The Bank of Canada has paused its interest rate hiking campaign since January after lifting its benchmark rate to a 15-year high of 4.50%.

Sales also rose in April from March, while they were down 5.2% from April last year. New listings dropped at a steeper annual rate than sales, down 38.3%, increasing competition between buyers.

“The issue moving forward will not be the demand for ownership housing, but rather the ability to meet this demand with adequate supply,” Baron said.

($1 = 1.3622 Canadian dollars)

(Reporting by Fergal Smith; Editing by David Gregorio)

(This May 2 story has been refiled to say Marriott gets a ‘big portion,’ not ‘bulk’ of its revenue from outside the US, in paragraph 6)

By Priyamvada C and Doyinsola Oladipo

(Reuters) – Marriott International Inc reported better-than-expected first-quarter results on Tuesday as the U.S. hotel operator benefited from a global rise in occupancy and room revenue led by domestic travel in China, sending its shares up by 3%.

U.S. hotel operators who have been grappling over the past year with an uneven recovery in Chinese demand are now benefiting from pent-up-demand throughout Asia Pacific, particularly in Greater China.

That has boosted operators just as a worsening economic outlook in the U.S. threatens to dampen consumer spending in the second half of the year.

“While macroeconomic uncertainty persists, it has not weighed on travel demand to date. In fact, demand continued to rise across all customer segments in the quarter,” Marriott CEO Anthony Capuano said on a call with investors.

Shares of Hyatt and Hilton increased 1.4% and 1.2% respectively.

Marriott, which receives a big portion of its revenue from outside the United States, said a faster than expected recovery in international markets and continued solid booking trends boosted its full-year guidance for RevPAR, revenue per available room.

In the Greater China region RevPAR rebounded to 95% of pre-pandemic levels during the quarter while Mainland China RevPar fully recovered to 2019 levels. The company said it is seeing business and leisure segments in China recover in line with each other in contrast to the U.S where recovery has been staggered.

“First quarter hotel performance came in a bit better than expected and will likely be the high-water mark for the year,” said CoStar Group National Director of Hospitality Analytics Jan Freitag. He said he expects slower growth, but growth nonetheless, despite the risk of a recession.

For the first quarter ended March, Marriott reported an adjusted profit of $2.09 per share, compared with the average analyst estimate of $1.84 per share, as per Refinitiv data.

Revenue rose 34% to $5.62 billion, ahead of analysts’ average estimate of $5.41 billion.

(Reporting by Priyamvada C in Bengaluru and Doyinsola Oladipo in New York City; Editing by Shinjini Ganguli and Conor Humphries)

By Tiyashi Datta

(Reuters) -Investors dumped shares of Advanced Micro Devices Inc on Wednesday after its earnings report indicated that it was struggling with a PC slump and had failed to gain market share from larger rival Intel Corp in the latest quarter.

The stock fell nearly 9%, wiping out more than $12 billion from the company’s market value. Intel, whose shares rose last week on a more upbeat PC market outlook, gained about 3%.

“Even if Intel didn’t gain share this quarter, it seems unlikely that they lost any either,” Bernstein analyst Stacy Rasgon said in a client note.

“While we will see if Intel’s 2024 roadmap holds water or not, the competitive environment next year is likely to get tougher for AMD.”

The PC market has been in a slump for the past few quarters after a demand surge during the pandemic, while data center spending has also slowed as the economic outlook worsens.

AMD, whose smaller and more efficient data center chips had helped it take market share from Intel last year, missed estimates for both PC and data center chip sales in the first quarter.

Its sales forecast for the current quarter was also below market expectations, though the company was optimistic that the chip market would start to recover in the second half of 2023.

“AMD results were more vulnerable (to the PC slump) than Intel’s because most AMD-based PC customers were consumers. In contrast, Intel had a significant share in the business PC segment,” Gartner analyst Mikako Kitagawa said.

Still, some analysts said that the buzz around artificial intelligence and a recovery in China were positive signs that could help the company.

“AMD is obviously not immune to the overall fluctuations of the macro spending environment, in our view, the share gains the company has earned through its roadmap execution and product performance will sustain through the choppy 1H23 before giving way to strong momentum in 2H23,” brokerage TD Cowen said.

(Reporting by Tiyashi Datta in Bengaluru; Editing by Anil D’Silva)

NEW YORK (Reuters) -Nvidia Corp short sellers have lost $5.09 billion so far this year as the stock has jumped more than 90%, according to financial data firm S3 Partners.

The stock is the No. 1 losing equity short so far in 2023, followed by Apple and Tesla, the firm wrote Wednesday.

Apple short sellers have lost $4.47 billion so far in 2023, it said, while the stock has risen about 30% in that period. Tesla short sellers have lost $3.65 billion for the year to date, it added, as the stock has gained about 33%.

Short interest in Nvidia is down by 7.04 million shares, or 18%, for the year to date. Short interest is currently 1.32% of the float, the lowest level since October 2022, the firm wrote.

Nvidia shares were down 1.1% in midday trading Wednesday amid declines in chip makers after a disappointing outlook from Advanced Micro Devices Inc. late Tuesday.

Investors who sell securities ‘short’ borrow shares and then sell them, expecting the stock to fall so they can buy the shares back at the lower price, return them to the lender and pocket the difference.

(Reporting by Caroline Valetkevitch; Editing by Lance Tupper and Jan Harvey)

By Divya Rajagopal

TORONTO (Reuters) -Barrick Gold Corp is not interested in bidding for the copper assets of Teck Resources Ltd as there are few synergies between the companies, CEO Mark Bristow said in an interview with Reuters on Wednesday.

Bristow’s comments come at a time when Canadian mining company Teck has rebuffed a $22.5 billion unsolicited bid from Swiss mining company Glencore Plc and said it is exploring its own simplified diversification that includes opening its metals and coal business to a competitive bidding process.

“We don’t think we bring any synergies to that party,” Bristow told Reuters, adding that even if Teck does a clean split of its copper and coal business, its debt is a problem.

“We would just have to take over the debt and we still get the assets that don’t bring synergies.”

Barrick has been building its copper business organically and said it is exploring copper drilling opportunities in countries such as Chile and Argentina. In the first quarter of 2023 it produced 88 million pounds of copper, down from 101 million pounds a year ago.

“We have always said that if you want to be relevant as a gold miner you have to be in copper business,” Bristow added.

Gold is often a byproduct of copper, a critical metal required for electrification and the transition to a greener economy. That has pushed many global miners to hunt for more production assets. Canada’s Lundin Mining Corp in March bought a 51% stake in a copper mine in Chile for $950 million.

With limited copper mines available, large mining companies have been looking at separating their base metals and coal businesses to unlock potentially high value from the former.

Earlier on Wednesday, Barrick beat Wall Street expectations for first-quarter profit, as higher gold prices outweighed a decline in production. Barrick shares were up 1.2% by late morning, in a flat broader market.

Teck last month withdrew its plan to split its coal and metals business after it failed to secure shareholders’ approval. The company’s board rejected the offer from Glencore and said it would come up with a new simplified plan of separation.

Bristow said Glencore’s proposal made a “lot of sense” as Glencore could handle Teck’s debt and had offered a clean split of Teck’s business.

Glencore has offered to sweeten its offer to Teck and has said it will take its offer directly to shareholders if Teck’s board does not engage.

(Reporting by Divya Rajagopal; Editing by Sharon Singleton and Mark Potter)

(Reuters) -Tesla Inc has resumed taking orders for its Model 3 long-range vehicle in the United States, the company’s website showed late on Tuesday, after a temporary halt last year due to delivery backlogs.

The long-range version of the entry-level Model 3 is priced at $47,240 currently, about 18.5% less than the $57,990 it was priced at last August when Tesla halted taking orders in the United States and Canada.

“Waitlist is too long. Will enable again as we ramp production,” Chief Executive Officer Elon Musk tweeted at that time in response to a user’s inquiry about the discontinuation of orders.

Model 3 Long Range has a range of “325+” miles per charge, down from 358 miles. It is eligible for a $3,750 government subsidy, compared with a full $7,500 subsidy for a Model 3 Performance version.

Tesla expects to resume delivery of the long-range Model 3 electric sedan in June, according to the website. However, it is still not accepting orders in Canada, the website showed.

The long-range version of the entry-level Model 3 has a range of more than 325 miles (523 kilometers) on a single charge.

To boost sales, Tesla has been regularly modifying the prices of its vehicles since the start of this year. After reducing prices earlier, the company slightly increased them on Tuesday in Canada, China, Japan, and the United States.

Musk has said Tesla is willing to sacrifice margin for sales volume in the face of a weak economy, but is also looking to move prices back higher, where it can, to match deliveries with output.

(Reporting by Gokul Pisharody and Akriti Sharma in Bengaluru and Hyunjoo Jin in San Francisco; Editing by Savio D’Souza and Aurora Ellis)