<Show: NIGHTLY BUSINESS REPORT> <Date: July 3, 2013> <Time: 18:30:00> <Tran: 070301cb.

118> <Type: SHOW> <Head: NIGHTLY BUSINESS REPORT for July 3, 2013, PBS> <Sect: News; International> <Byline: Susie Gharib, Tyler Mathisen, Yousef Gamal El-Din, Bertha Coombs, Jon Fortt, Steve Liesman, Jane Wells> <Guest: Bruce Kasman, Neil Trautwein> <Spec: Economy; Employment and Unemployment; Labor; Affordable Care Act; Business; Government; Insurance; Policies; Egypt; Consumers; Energy; Trade; World Affairs> <Time: 18:30>

ANNOUNCER: This is NIGHTLY BUSINESS REPORT with Tyler Mathisen and Susie Gharib, brought to you by --

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TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR: Jobs in America. Attention turns to Friday`s employment report, and what a strong or weak number could mean for the economy, the policy and your investments.

SUSIE GHARIB, NIGHTLY BUSINESS REPORT ANCHOR: Mandate delayed. The business community, from restaurants to retailers, react to the delay of a key provision in the new healthcare law.

MATHISEN: And turmoil in Egypt. The unrest there is impacting oil markets here. We`ve got a report here from the center of it all, Cairo.

All that and more tonight on NIGHTLY BUSINESS REPORT for Wednesday, July 3rd.

GHARIB: Good evening everyone.

The job market is looking better tonight, just the kind of encouraging news Americans like to hear as they gear up for barbecues and fireworks.

American businesses hired 188,000 workers in June. That was more than expected, according to payroll firm ADP. Now, most of the new hiring came from construction and small businesses. This could be a good sign for the Labor Department`s employment report that comes out on Friday. It`s an important number investors will be watching closely. If it`s strong, it could impact changes in the Federal Reserve policy, growth in the U.S. economy and the stock market.

MATHISEN: And joining us now to talk more about jobs and what he expects from the jobs report, Bruce Kasman, chief economist at JPMorgan (NYSE:JPM).

Mr. Kasman, welcome. Great of you to have joined us today.

What is the kind of number that you`re looking for? We had the ADP report that was a little higher than some people thought it might come in. What are you looking for Friday?

BRUCE KASMAN, JPMORGAN CHIEF ECONOMIST: We`re looking at 150,000 on the payroll count, and I think that would solidify the message that jobs are continuing to grow here but it`s growing at a slower pace. I think that`s also consistent with an economy that really hasn`t shaken out of that 2 percent pace of growth overall. So, we think the economy is sluggish, jobs are OK and it`s going to make the Fed`s decision as it moves towards the September, I think, point at which it will think about tapering pretty tough.

GHARIB: Bruce, besides the headline number, what else is important in this report? We know that each of these employment reports are so critical to Fed policy and to investors, but is there a key element that you`re going to be looking for?

KASMAN: Well, there`s always a lot of stuff. I think, first and foremost, beyond the job count is unemployment rate and looking at the unemployment rate from the point of view of jobs versus labor supply. We are certainly hoping that there is better news again after last month`s report on labor supply that keeps stealing their work and entering the work force.

I think after that you want to look at the composition. We had a weak service sector survey from the ISM today. We want to see that service sector jobs, which have a been a bright spot this year continue to hold up that would be a concern if it didn`t. And then I think you look at the income side, which is important, see how the labor income, has to do with the workweek, it has to do with wage number alongside the job gains.

MATHISEN: You know, Bruce, a moment ago, you said that your prediction was 150,000 payroll jobs added in the most recent month and that that would make it very difficult for the Fed to begin pulling back from the stimulus in September. I don`t mean to put words in your mouth, I`m of then accused of doing that better than anything else I do, but I assume that`s a kind of Goldilocks number then -- not too hot, not too cold, that would be good news for the stock market.

KASMAN: I think, generally speaking, yes, although I don`t try to be too precise in understanding where the market is going. You know, I think 150,000 is an OK number. It`s not where we want to be. It`s not where the Fed wants us to be, but it`s certainly not the slipping we saw in both the spring of 2011 and 2012, where it did look like business was pulling back.

So, I think -- you`re right. It`s somewhere in the middle. I think, certainly, for the economy point of view, over time, I think we`d like to see stronger job growth, stronger growth overall and we`d like to see a Fed tapering in response to that strength.

So, I think, overall, strength would be good here, but certainly, the response people would expect from the Fed has and will continue to put jitters through the market.

GHARIB: You just said you want to see stronger job growth. Everybody wants to see more people getting jobs. It`s good for the economy. What`s taking so long?

We report every night about how auto sales are doing better, housing, construction, retail. How much more do we need to get really companies hiring again?

KASMAN: Well, I think you`re making an interesting point. We`re seeing pretty strong news in the auto industry. We`re seeing pretty strong news in housing and construction. But I think we`re being held back here by a fiscal drag that is still pretty intense.

I think we`re being held back by a global economy that is still pretty weak and the balance of this is giving us something which is -- I guess I call it lackluster, nothing terrible but nothing exciting. We`d like to see things move better and there is hope that the drags, at least on the fiscal side will fade, but that`s still a forecast. It doesn`t look like where we are now.

MATHISEN: Bruce, thanks for joining us on this holiday shortened trading day and have a good Fourth of July.

KASMAN: Thank you.

GHARIB: And that was Bruce Kasman, economist at JPMorgan (NYSE:JPM).

And still ahead on the program, why do American businesses complain about a shortage of skilled workers, even though so many people are looking for work? We`ll look at what is being done about that.

MATHISEN: Well, traders worked a short day on Wall Street today with the markets closing early ahead of the Fourth of July holiday. And today`s session proved one thing: jobs matter more than just about anything else.

Those encouraging data about jobs we told you about at the top of the program were enough to lift stocks today. The ADP numbers counter acted a trade deficit that soured by $5 billion in May to $45 billion. The market also push past a measure of services that was the weakest since February of 2010 and the turmoil in Portugal and Egypt which sent oil prices higher. We will get to Egypt and those rising crude prices in just a moment.

Meantime, as for stocks, the Dow added 56 points, the NASDAQ was up 10 and the S&P 500 gained a point.

GHARIB: More now on oil prices that Tyler was just talking about. They are now at the highest level in 14 months, $101.24 a barrel, up $1.64 today. Investors and traders bid up prices on growing worries about a disruption of crude supplies from the Middle East because of the political uncertainty in Egypt.

The issue here, Egypt controls the Suez Canal, one of the region`s busiest shipping lanes. For the latest out of Egypt, at mid-evening in Cairo, Yousef Gamal El-Din filed this report.

(BEGIN VIDEOTAPE)

YOUSEF GAMAL EL-DIN, NIGHTLY BUSINESS REPORT CORRESPONDENT: Another day of protest calling on President Mohamed Morsi to step down after just one year in power. The deadline set by the military, 48 hours, expired earlier today for the government to

figure things out, and that would have included a power sharing deal with the opposition. That didn`t materialize.

What happened then, the military is sitting down with leaders from the political team, from the religious team, national leaders to come up with a road map. In the meantime, the government put out a statement on President Mohamed Morsi`s Facebook (NASDAQ:FB) page saying it`s dangerous to undermine the legitimacy of a freely elected government, and that progress has to be made in terms of reconciling with the opposition.

But that shows you again how the military moves further and further apart from the incumbent government, raising the risk and stakes for Egypt and for everybody else watching around the world. Of course, there is a heightened state of alert for the army. Tanks have been moving into various parts of the city, not necessarily in large scale, but selectively. And we`ll just have to see how it all plays out.

For NIGHTLY BUSINESS REPORT, I`m Yousef Gamal El-Din in Cairo.

(END VIDEOTAPE)

GHARIB: And that report from Yousef is his latest filing and just a reminder that the situation in Egypt is fluid, things are changing minute by minute.

MATHISEN: The administration decision announced late yesterday to delay key provisions of the Affordable Care Act known formally as Obamacare hit with a force of a thunder clap in political and business circles.

Bertha Coombs explains what the delay means for employers, employees and the future of the law.

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BERTHA COOMBS, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over): Groups like the National Retail Federation have been raising the red flag for months about employer mandate regulations under the Affordable Care Act. But the Obama administration`s decision to delay took NRF`s Neil Trautwein by surprise. Still, he calls it a realistic move.

NEIL TRAUTWEIN, NRF VP & EMPLOYEE BENEFITS POLICY COUNSEL: I think it was evident, the administration wasn`t ready, we weren`t ready and weren`t going to be ready in type for this to take off in October when the exchanges start enrolling people and then January, when the exchanges are supposed to open their door.

COOMBS: Restaurants and retailers with more than 50 full-time employees are the businesses that have been feeling the most pressure to comply with the mandate or face fines starting at $2,000 per worker for failing to do so. Some haven`t offered insurance in the past but the NRF believes many will continue with coverage plans already on the books for 2014, though some may opt to offer plans with fewer rich benefits than mandated under ACA.

Insurers should see little impact on enrollment, says Poliwogg`s Les Funtleyder.

LES FUNTLEYDER, POLIWOGG HEALTH CARE FUND MANAGER: What it does, though, is brings back to the front the uncertainty that we have around Obamacare and Affordable Care Act.

COOMBS: It`s the second time the Obama administration has relented on a key part of its signature health reform measure, coming months after pushing back part of the small business insurance marketplace on the federal health exchanges for one year, as well.

CHRIS RIGG, SUSQUEHANNA: You`ve seen two small changes here and the next step is to come to the conclusion by the Obama administration that they`re not ready to operate the federal exchanges on the individual side.

COOMBS: Susquehanna`s Chris Riggs says the implications would be very negative if the administration were to delay the individual mandate requiring Americans to be insured.

RIGG: That would be a major problem or concern for the insurance industry because then you`d be subject to adverse selection where only the sickest people get the insurance through the exchanges next year but those that are healthy will probably opt out.

COOMBS (on camera): Because stakes are so high, analysts don`t see the administration putting the individual mandate on hold, but the clock is ticking. With ACA open enrollment set to begin in less than three months.

For NIGHTLY BUSINESS REPORT, I`m Bertha Coombs.

(END VIDEOTAPE)

GHARIB: Let`s hear more now from Neil Trautwein of the National Retail Federation about the impact of this delay on American businesses.

Neil, what did you hear from your membership today? I mean, what are they going to do next now that they have this extension?

TRAUTWEIN: Well, I think, first, they`re going to take a deep breathe and reevaluate where they are. This announcement last night both surprised and pleased us. I think there is a sense that we were careering towards a deadline and I think there was some danger that we were going to get sideways on this.

So, I think we`re very encouraged.

MATHISEN: Put into perspective for me, if you would, Neil, the number of businesses that would be affected by this employer mandate and now won`t be. As I understand it, something like 97 percent of all businesses in the country have fewer than 50 employees anyhow, and most of the businesses above 50 employees, full-time employees that is already provide insurance.

So what number of businesses are we talking about?

TRAUTWEIN: Well, it`s actually a large percentage of the employees are in those larger than 50 employee groups. We have a lot of members that are in that small mom and pop range, as well, but they still had to report to the exchange all the information that was so troublesome in today`s announcement or yesterday`s announcement.

But, really, the challenge is not -- it`s the sufficiency of coverage, even though many firms have offered coverage before, it`s often not as comprehensive as the Affordable Care Act would require, and there is a real question about the relative size of employer contribution to individual employee income. There`s a second penalty under the ACA that penalizes when it passes a certain income threshold.

So I think this is a broad concern to a wide swath of the business community, certainly the retail industry and chain restaurant industries that I represent have been very worried about this, and it`s introduced an element of uncertainty and to expansion plans.

GHARIB: And when you talk about uncertainty, it goes beyond the businesses that have to deal with this new legislation. We hear that individuals are still very confused. A lot of these exchanges are not setup yet. Bertha was just saying in that package, talking about whether or not this individual mandate might have to be postponed. You`re very much in touch with everything going on in this bill.

What do you think? Is that the next extension that we`re going to be hearing about?

TRAUTWEIN: I kind of doubt it. I think the admin -- this was a big step for administration to take, to postpone the employer responsibility, mandate regime. I think to go that extra mile, not to open up the exchanges for individuals, you might see a compliance light sort of an approach still on the individual side, but I think they will try to enroll individuals and they have already encouraged employers to continue to provide and expand offering to employees.

GHARIB: All right. Neil, thank you so much for coming on and sharing this information with us.

TRAUTWEIN: Well, thank you.

GHARIB: Appreciate it.

Neil Trautwein, vice president of the National Retail Federation.

MATHISEN: And coming up, back to the future. Can Google`s Motorola Mobility, the first brand of the cell phone era, shake up the smartphone market now?

But, first, a look at how some of the most widely held stocks closed today.

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MATHISEN: As we mentioned earlier, events in Egypt are very fluid and now Egypt`s military chief says the president has been replaced by the chief justice of the constitutional court. He also says the constitution has been suspended, the Islamist-backed constitution, and says a new cabinet will soon be formed.

There is a new or more accurately a newly rejuvenated player in the smartphone wars and it`s got a familiar name, Motorola, or more precisely Motorola Mobility, the original phone maker is owned by Google (NASDAQ:GOOG). And the search giant has just fired the opening salvo aimed at luring customers away from Apple (NASDAQ:AAPL) and Samsung devices.

Jon Fortt has more now.

(BEGIN VIDEOTAPE)

JON FORTT, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over): Call it a shot across the bow of a smartphone industry -- Google (NASDAQ:GOOG) through its

subsidiary Motorola putting America on notice that a ground- breaking new phone is coming. The full page ad ran in this morning`s "New York Times (NYSE:NYT)", "USA Today," "Wall Street Journal", "Washington Post (NYSE:WPO)", it takes full advantage to the holiday.

(on camera): It`s a tease, we don`t see the phone, which the company hinted we`ll come next month or next.

What we do see?

(voice-over): The biggest brand of the Internet era trying to resurrect the first brand of the cell phone era.

OSCAR YUAN, MILLWARD BROWN OPTIMOR VP: So, if you`re Google (NASDAQ:GOOG) or Motorola, I think the first most important thing is you need a fantastic product out the door.

Consumers are unforgiving with technology. You have one shot to get it right.

UNIDENTIFIED MALE: It started with Motorola.

FORTT: At a conference in May, Motorola CEO Dennis Woodside said the new phone will be more self-aware than other phones. It will know when it`s in your pocket, maybe when you want to take a picture. It will face tough competition from two of the most dominant companies in tech, Samsung and Apple (NASDAQ:AAPL). Apple`s next iPhone, maybe multiple models, expected within three months with new software.

AD NARRATOR: This is what matters.

FORTT: There`s a bit of a marketing face off here, too. Apple

(NASDAQ:AAPL) last month put out an add touting its "Designed in California" signature. Not everyone is impressed. The commercial mostly features people in everyday situations using Apple (NASDAQ:AAPL) products in slow motion.

In a way, the ad harkens back to the "Think Different" campaign that signaled Apple`s rebirth when Apple (NASDAQ:AAPL) tried to reintroduce itself to the world.

ROBERT THOMPSON, SYRACUSE UNIVERSITY PROFESSOR OF TV AND POP CULTURE: Here`s to the crazy ones, the "Think Different" campaign, that`s something we think of as typically Apple (NASDAQ:AAPL). I mean, the celebration of the crazy ones, for example, the whole different drummer kind of theme.

I don`t see anything in this new campaign. There are a bunch of people who seem to be enjoying Apple (NASDAQ:AAPL) products in a number of contexts, and pretty cliched context at that.

FORTT: This time, it`s Google (NASDAQ:GOOG) and Motorola who are trying to get people to think different since in the smartphone era, thinking the same probably means they`ll buy from Apple (NASDAQ:AAPL) or Samsung.

For NIGHTLY BUSINESS REPORT, I`m Jon Fortt, in San Jose.

(END VIDEOTAPE)

GHARIB: Employees at Facebook (NASDAQ:FB) apparently made so much money from the company`s initial public stock offering last year that San Mateo County where they live and work is now the richest in America. The Labor Department says residents in the California county made an average of $3,240 a week during the fourth quarter of last year. That rounds out to $168,000 a year, more than residents in Manhattan, which is the nation`s second highest paid county.

MATHISEN: Well, the market focus now on a short trading day. Alcoa (NYSE:AA) lead the Dow losers as JPMorgan (NYSE:JPM) cut its rating on that company to neutral from overweight, because of weak prices for aluminum. Shares touched a four-year low. Alcoa (NYSE:AA) launches the second quarter earning season on Monday and we will speak with the CEO after those numbers are released.

Now, at the close, Alcoa (NYSE:AA) was down more than 1 percent at $7.71.

MATHISEN: Mead Johnson, the children`s nutrition firm, lead the S&P 500 losers today as China probes whether baby formula companies conspired to fix prices. Other companies involved, Abbott Labs, Nestles and Denon. But Mead Johnson down the most on the report, losing more than 8 percent. It closed at $68.85.

GHARIB: AutoNation (NYSE:AN), a big gainer today, thanks to revved up car sales. It reported new vehicle sales up 5 percent in June, and 7 percent for the second quarter. AutoNation (NYSE:AN) is the country`s largest seller of new and used cars. The stock rose more than 1 1/2percent today to close at $45.27. So far this year, shares are up 14 percent.

And Chipotle Mexican Grill (NYSE:CMG) was the biggest gainer in the S&P 500, after Argus Research increased its target price to $430 a share. Chipotle was up nearly 3 1/2 percent today, closing at $384 and change.

MATHISEN: Creating jobs has been an ongoing challenge in the U.S. to put it mildly, especially in the manufacturing sector. But Steve Liesman tell us, there`s a company in North Carolina that`s trying to change all that and, in the process, it`s challenging the economics of a traditional education.

(BEGIN VIDEOTAPE)

STEVE LIESMAN, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over): Charlotte is best known as a fast growing Southern (NYSE:SO) city that is home to NASCAR and some of the nation`s biggest banks. What it`s probably not known at all for is the 200 German companies, including Siemens, who call the city home and are on the cutting edge of helping solve an American economic problem. Why with the unemployment rate so high? The nation suffers from a lack skilled workers.

(on camera): This little known connection between Germany, Charlotte and the rest of the Carolinas mixed together government, business, education and technology, and it`s helping spark a resurgence in manufacturing in this country.

(voice-over): With more than 1 million square feet on their roof, this is Siemens biggest manufacturing plant in North America, building steam and gas turbines use to generate electricity. At a time when manufacturing employment is challenged in the U.S., this plant has doubled the number of jobs in the past two years, up to 1,550. But that`s easier said than done.

MARK PRINGLE, SIEMENS CHARLOTTE ENERGY HUB VP: There is plenty good people that have basic skills. It`s just that we don`t have them trained in the modern advance manufacturing skills that we need for today.

LIESMAN: That`s where the German connection comes in. These companies brought over with them from Germany their apprenticeship program and connected with local community colleges like Central Piedmont to train workers, old style.

DR. TONY ZEISS, PIEDMONT COMMUNITY COLLEGE PRESIDENT: They have a proven system for over a couple thousand years called an apprenticeship system and they were focused on helping students determine what it is they want to do in their career early on.

UNIDENTIFIED FEMALE: I`m learning how to run machines.

LIESMAN: Eighteen-year-old Rebecca Espenal (ph) joins the three-year program as a senior in high school. After two years in the program that includes working with mentors, she`ll have an associate degree and a guaranteed job. It cost about $170,000 to train workers like Espenal. She`s one of about 15 in the program, including three veterans.

Public funds pay part of the cost, Siemens pays the rest. At the end, the company gets a skilled worker and Espenal gets a job, which can be tough for graduates in today`s economy.

For NIGHTLY BUSINESS REPORT, I`m Steve Liesman.

(END VIDEOTAPE)

GHARIB: And coming up on the program, after a rough few years, a demand for private planes is taking off, but is the industry about to hit some turbulence?

But, first, here`s a check on how commodities, treasuries, and currencies fared today.

(MUSIC)

GHARIB: The planned merger of American Airlines and U.S. Airways which could create the world`s biggest carrier is now facing an antitrust suit. The lawsuit was filed in San Francisco on behalf of 40 consumers. It claims that the combined airline would lead to fewer lights, reduced service to smaller cities, a lower overall quality of services and higher ticket prices. It also says the merger means four airlines, United, Delta, Southwest, and the new American Airlines, would control 90 percent of all domestic flights.

MATHISEN: Well, if traveling onboard commercial airlines is not exactly your taste, it`s expensive, it`s not so attractive, you can always do what tens of thousands of other Americans do and that is fly their own planes.

And as Jane Wells shows us, the business of private airplane ownership is taking off fast.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: We only need a 40-foot hanger to put this airplane in.

JANE WELLS, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over): The private airplane business appears to be taking off.

JEREMY CRANE, CUSTOMER: I`ve been looking at planes for a year and I have my pilot license, so I want to get the plane that I`m going to fly.

KEN GOBLE, CIRRUS AIRCRAFT REG. SALES DIR: We actually have our biggest backlog that we`ve had since 2007.

WELLS: General Aviation can run from 130 grand to $65 million. But the industry says global sales fell during the recession from nearly $25 billion to less than $19 billion.

GOBLE: Now, we went through pretty difficult years, but Cirrus has been a very innovative company. We`ve not sat on our laurels continuing to build the airplane the same way we did just five or six years ago.

WELLS: But two years ago, Minnesota-based Cirrus was bought by a Chinese governmentowned aviation company which infused it with cash. Cirrus began hiring and innovating.

UNIDENTIFIED MALE: You don`t get claustrophobic.

WELLS: Cirrus` new plane has a 65-foot diameter parachute which can be deployed for emergency landings and has been credited with saving 70 lives. A new seven to eight-passengerlight jet is scheduled for later this year.

(on camera): Overall, sales of general aviation aircraft globally, in the first quarter, showed a market improvement, according to the industry. The number of planes shipped jumped 10 percent from a year ago, and billings took off 42 percent to $4.6 billion.

(voice-over): Cessna is the current global leader and a number of general aviation plane sold, while Bombardier brings in the most dollars.

But aviation consultant Michael Boyd says it`s not all clear skies. Buying a plane is one thing, keeping it is another.

MICHAEL BOYD, THE BOYD GROUP CHMN: We see about 30,000 recreational airplanes from small jets, on down to Piper Cubs, coming out of the system over the next five years simply because of cost and fuel and other things.

WELLS: Add to that, hopes by the president to reduce tax breaks for private plane`s use for business and the flight plan for growth could hit turbulence, just as it was starting to regain altitude.

For NIGHTLY BUSINESS REPORT, I`m Jane Wells.

(END VIDEOTAPE)

GHARIB: And finally tonight, the Statute of Liberty closed since super storm Sandy flooded Liberty Island back in October will reopen to the public tomorrow, just in time to celebrate the 4th of July. Officials are bracing for big crowds to visit the monument, that`s because it had been closed for more than a year to make repairs and reopen just a day before that storm hit.

And for a woman who`s nearly 127 years old, Lady Liberty looks pretty good, doesn`t she, Tyler?

MATHISEN: Always does, always does.

GHARIB: And that`s NIGHTLY BUSINESS REPORT for tonight, I`m Susie Gharib, thanks for watching.

MATHISEN: And I`m Tyler Mathisen. Thanks from me as well.

We will be here tomorrow night for a special July 4th edition of NIGHTLY BUSINESS REPORT. We hope you`ll join us.

Have a great evening, everybody.

END

Nightly Business Report transcripts and video are available on-line post broadcast at http://nbr.com. The program is transcribed by CQRC Transcriptions, LLC. Updates may be posted at a later date. The views of our guests and commentators are their own and do not necessarily represent the views of Nightly Business Report, or CNBC, Inc. Information presented on Nightly Business Report is not and should not be considered as investment advice. (c) 2013 CNBC, Inc.

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