Storm Sandy knocks industrial output in October

WASHINGTON, Fri Nov 16, 2012 – Industrial output unexpectedly fell in October as superstorm Sandy disrupted production, but the underlying tone remained consistent with slowing manufacturing activity.

Industrial production contracted 0.4 percent last month after a 0.2 percent increase in September, the Federal Reserve said on Friday.

The Fed said the storm, which tore through the East Coast at the end of October, is estimated to have reduced the rate of change in output by nearly 1 percentage point. It cut the output of utilities, chemicals, food, transportation equipment, and computers and electronic products, the Fed said.

Economists had expected a 0.2 percent gain in industrial output last month. The storm is estimated have caused $50 billion in damage.

Aside from the storm’s impact, the trend in industrial production is biased towards weakness as fears over higher taxes and sharp cuts in government spending deter businesses from ramping up production and capital investment.

Cooling global demand is also crimping output.

The so-called fiscal cliff could drain about $600 billion from the economy early next year unless Congress agrees on an orderly plan to cut rising budget deficits.

“The big thing that stands out are the declines in business equipment, machineries and construction supplies. When you see that kind of weakness, you can’t really attribute it to the storm,” said Christopher Low, chief economist at FTN Financial in New York.

“It’s a pattern of weakness that has happened in the past three months. The most likely explanation is the weakness in capital equipment orders, which could be attributed to caution about the fiscal cliff and its possible impact on the economy.”

Moody’s sees Sandy hit to casinos, benefit to retailers

NEW YORK, Tue Nov 6, 2012 – Superstorm Sandy will slash earnings at New Jersey casinos and benefit home repair and discount retailers but have limited impact on other sectors and is unlikely to trigger credit downgrades, credit agency Moody’s Investors Service said.

While potential credit downgrades exist, no rating actions were taken after Hurricane Irene flooded parts of the U.S. Northeast last year and no ratings have been put on review for downgrade or negative ratings after Sandy, Moody’s told investors on Tuesday.

Such actions were taken after Katrina in 2005, one of the deadliest and most destructive hurricanes to ever slam the United States. To the best of Moody’s knowledge, large natural disasters do not result in payment defaults, with the exception of one non-rated transportation issue after Katrina.

“Even for the hardest hit areas (by Sandy), we don’t expect to observe any payment default by our issues barring any significant change in federal policy regarding FEMA and emergency aid,” said Gail Sussman, a managing director at Moody’s.

FEMA is the Federal Emergency Management Agency. Sandy has killed at least 113 people in the United States and Canada and knocked out power to millions of people. It has swamped seaside towns and inundated New York City’s streets and subway tunnels.

Verizon sees ‘significant’ impact from Sandy on fourth-quarter results

NEW YORK, Fri Nov 2, 2012 – Verizon Communications Inc. said it expected fourth-quarter results to be hurt significantly due to superstorm Sandy and that it could not estimate the impact at this time.

The provider of telephone, Internet and television services said it was directing its resources to restore communications services to affected customers, “which may take some time.”

Verizon may take up to two weeks to restore telecommunication services for some of its customers, a top executive told Reuters on Thursday.

U.S. airlines cancel flights, hotels book up before hurricane

NEW YORK, Mon Oct 29, 2012 –  Hurricane Sandy will likely cause financial headaches for U.S. airlines that canceled more than 7,000 flights to and from the Northeast corridor on Sunday.

Hotels in the region were busy handling cancellations for guests who could not get to destinations in the Northeast, extending stays for guests who could not leave town, and booking rooms for people who left their homes.

Airlines started cancelling flights in the U.S. Northeast region Sunday evening as cities from Washington D.C. to Boston braced for floods and high winds from the hurricane, which was expected to make landfall in the next few days.

According to, more than 7,100 flights had been canceled by 9 p.m. on Sunday due to Sandy. Airlines waived fees for people who have to change travel plans because of the grounded flights.

In New York City, the timing of flight cancellations like US Airways, was determined by the city’s decision to start shutting down its mass transit systems at 7 p.m. as passengers would have no way to get to and from the airport.

U.S. Airways said it would likely have to cancel close to 2,000 flights because of the storm, starting at 7 p.m. Sunday. The airline said it expects to resume flights on Tuesday, but noted that flooding and the storm’s duration could cause additional delays.

The airline also said it would move planes from the hurricane zone to try to avoid damage. Repositioning those planes after the weather clears could cause additional delays.

Transportation consultant George Hamlin estimated that Sandy could cost the industry hundreds of millions of dollars.