Member Briefing April 24, 2023
US S&P Manufacturing PMI increases to 50.4 in April, Composite PMI improves to 53.5
U.S. business activity accelerated to an 11-month high in April, according to a survey on Friday, which was at odds with growing signs that the economy was in danger of slipping into recession as higher interest rates cool demand. S&P Global said its flash U.S. Composite PMI Output Index, which tracks the manufacturing and services sectors, increased to 53.5 this month. That was the highest level since last May and followed a final reading of 52.3 in March.
It was the third straight month that the PMI remained above 50, indicating growth in the private sector. The survey's measure of new orders received by private businesses surged to 53.2 this month, also the highest reading since last May, from 50.8 in March. The increase, which was across the services and manufacturing sectors, meant inflation pressures picked up this month. The survey's measure of prices paid by businesses for inputs rose to 61.2 from 59.8 in March.
War in Ukraine Headlines
- Ukraine and Russia: The Latest News – The Guardian
- Paris, Kyiv, Baltic States Dismayed After China Envoy Questions Ukraine Sovereignty - Reuters
- Spain Ships 10 Leopard Tanks to Ukraine – Politico
- Denmark and Netherlands Join Forces to Send More Leopard Tanks to Ukraine – Euro News
- What the Battle in Bakhmut Has Done for Ukraine – The Atlantic
- Russia’s Air Force Accidentally Bombs Own City of Belgorod – Military Times
- Russia Downbeat on Black Sea Grain Deal as Kyiv Tries to Unblock Exports - Reuters
- Russian Army Launches Campaign Encouraging Men to Join - BBC
- Ukraine Pilots Stretch Soviet-Era Helicopters to Their Limits in Daring Assaults – WSJ
- Moscow Expels German Diplomats – Reuters
- Interactive Map: Assessed Control of Terrain in Ukraine - Institute for the Study of War
- Map – Tracking Russia’s Invasion of Ukraine – Live Universal Awareness Map
Even Chinese Companies are Moving Supply Chains Out China to Avoid Geopolitical Risks
While Western countries have already been doing moving production out of China since 2018 after then-President Donald Trump launched a trade war against China, homegrown companies from the manufacturing giant are now following in their footsteps. To be sure, Chinese manufacturers aren't moving all their production out of the mainland. But a combination of geopolitical risks — such as tensions with the US — and rising costs are pushing them to look for alternatives.
While India — which is set to overtake China as the most populous nation by mid-2023 — is likely to be a key beneficiary of the shift, much of the shuffle is headed to nearby Southeast Asia countries such as Vietnam, Thailand, Malaysia, and Indonesia. Further away, lower-cost havens nearer key consuming markets — such as Mexico for the US market and Eastern Europe — are also proving popular.
Julie Su Faces Senate Fight as Labor Nominee
Opposition to Julie Su as President Joe Biden's pick to be his next labor secretary, and the reluctance of a few moderate Democrats to back her, has put her nomination in doubt as she faced a confirmation hearing Thursday. While Democrats defended Su, as was widely expected, Republican senators grilled her, questioning her previous remarks about corporations, systemic racism and her oversight of the disbursement of unemployment benefits across the state during the pandemic -- a process they say was marked by fraud.
Many Democrats defended Su, with Sen. John Hickenlooper, D-Colo., saying he's "made no secret of [his] admiration and appreciation for Julie Su" and noting her "celebrity status" among the lawmakers present for the hearing. The White House said on Thursday after Su's hearing that administration officials were "working hard for every vote" and feel "confident" about her confirmation.
COVID News – Down, Down, Down
The US CDC is reporting*:
- 3 million cumulative cases
- 13 million deaths
- 101,437 cases week of April 12 (down from previous week)
- 1,327 deaths week of April 12 (down from previous week)
- 1% weekly decrease in new hospital admissions
- 4% weekly decrease in current hospitalizations
The Omicron sublineages XBB.1.5 (78%), XBB.1.16 (7.2%), XBB.1.9.1 (6.5%), XBB.1.9.2 (2.5%), XBB.1.5.1 (2.4%), and FD.2 (1.7%) currently account for a majority of all new sequenced specimens, with various other Omicron subvariants accounting for the remainder of cases.
NYS COVID Update – (Now Reporting Weekly)
The Governor updated COVID data for the week ending April 21.
- Weekly: 59
- Total Reported to CDC: 79,407
- Average Daily Patients in Hospital statewide: 820
- Average Daily Patients in ICU Statewide: 103
7 Day Average Cases per 100K population
- 88 positive cases per 100,00 population, Statewide
- 06 positive cases per 100,00 population, Mid-Hudson
Major Climate and Energy Policies Being Decided in Albany State Budget Negotiations
Already about three weeks late, there is unresolved debate about many important topics, including climate and energy policies. The governor, two houses of the Legislature, and advocates have expressed various priorities, some of which may be accomplished in a grand budget deal with other issues that could wait for the post-budget legislative session.
In her executive budget, Hochul proposed several major climate policy items including, chiefly, a “cap-and-invest” program that sets declining caps on greenhouse gas emissions and requires major greenhouse gas emitters and fuel distributors to purchase allowances for their emissions. About $1 billion of the revenue raised by the program would go to providing a Climate Action Rebate to New Yorkers to cover higher energy costs. The cap would be reduced every year, in order to meet the state’s overarching emissions goals set by the CLCPA. The act requires a 40% reduction in statewide emissions by 2030 and an 85% reduction by 2050 compared to 1990 emissions levels. It mandates that 70% of the state’s electricity should come from renewable sources by 2030 and that 100% of the state’s electricity should be emissions free by 2040.
S&P Global: World Economy Gets Boost From US & EU, But Inflation Worries Linger
U.S. and European business activity rose in April at the fastest pace in about a year, a boost for the global economy but a potentially complicating factor for central banks working to reduce high inflation. Demand for services drove the growth, according to surveys by data firm S&P Global covering U.S., eurozone and U.K. businesses. That kept pressure on price increases in regions where inflation last year reached its highest level in decades.
The U.S. surveys of purchasing managers indicated both manufacturing and services output accelerated in April. Job growth picked up, and average prices charged for goods and services rose at the fastest pace since September. JPMorgan economists estimate the U.S. economy grew at a 3.3% annual rate in the first quarter. Europe’s economy also kept growing in April, the S&P Global surveys indicated, suggesting the European Central Bank is on course to raise its key interest rate in May. The Bank of England is also expected to raise its key rate for the U.K. later that month.
Americans Escaping Pricey Cities Bring Higher Housing Costs, Inflation With Them
Rising housing costs and elevated inflation in growing, warm-weather metros such as Tampa, Phoenix and Atlanta reflect people migrating out of the Northeast and Midwest to the Sunbelt, said Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University. “People follow jobs and people follow opportunities and people follow weather,” he said.
The Tampa metro area, which includes cities such as Clearwater and St. Petersburg, had overall inflation well above the national rate of 5% and the highest of any region the Labor Department measured in March. It trailed only Phoenix among places that the department regularly surveys. The largest Arizona metro registered a whopping 8.9% increase in prices in February over the prior year. By comparison, the Twin Cities area’s overall inflation rate was a more subdued 3.4% in March.
Private Sector Jobs in the Hudson Valley Increased by 10,500 Year on Year in March
Private sector jobs in the Hudson Valley increased by 10,500 or 1.4 percent, to 787,000 in the 12 months ending March 2023. Job growth was centered in natural resources, mining and construction (+4,500), private educational and health services (+4,300), leisure and hospitality (+3,900) and financial activities (+200). Job losses were greatest in trade, transportation and utilities (-1,400) and information (-800). Manufacturing employment in the region fell by 100 from February to March and is unchanged year on year at 42,200.
Within the region, Sullivan County’s private employment sector grew the fastest year-over-year, up 3.6 percent. The second fastest growth was recorded in the Kingston MSA (+3.4 percent), followed by the Orange-Rockland-Westchester labor market area (+1.8 percent). The Dutchess-Putnam Metropolitan Division declined by 2.0 percent over the period.
Download the March Labor Market Profile
Jobless Claims Rise Higher Than Expected as Layoffs Continue to Mount
The number of Americans filing for unemployment benefits rose more than expected last week, evidence the labor market is continuing to soften in the face of higher borrowing costs. Figures released Thursday by the Labor Department show initial claims for the week ended April 15 rose by 5,000 to 245,000. That is above the 2019 pre-pandemic average of 218,000 claims. Continuing claims, filed by Americans who are consecutively receiving unemployment benefits, also rose to 1.86 million for the week ended April 8, an increase of 61,000 from the previous week.
There has also been a wave of notable layoffs over the past few months, and the list grows longer by the day. Amazon, Apple, Meta Platforms, Lyft, Facebook, Google, IBM and Twitter are among the companies letting workers go.
Earnings: P&G Powered by Higher Prices, Again
Consumers continue to absorb higher prices for Pampers diapers and Tide detergent, boosting quarterly sales and profit at Procter & Gamble Co. The company raised prices by about 10% across its various brands in the March quarter from a year earlier. It was the second straight quarter with a 10% year-over-year increase as the global company passed along higher costs and widened its profit margins.
P&G, whose premium brands are often the costliest on store shelves, has been raising prices and largely outpaced competitors during the pandemic. It is encountering some pushback to its premium-product strategy. Sales volume fell 3% in the March quarter, after slipping 6% in the December quarter. P&G is among the first consumer-product companies to shed light on the consumer mood at the start of the year, with U.S. inflation moderating and recession concerns looming.
Progress in West Coast Port Talks
There are finally signs of significant progress in the long-running West Coast port labor talks. The dockworkers union says it has reached a tentative agreement with employers on “certain key issues.” The deal reportedly concerns terms for automation at cargo terminals. Details haven’t been disclosed, but automation has been a critical fault line in the negotiations to replace a multiyear contract that expired last year.
The International Longshore and Warehouse Union is against any expansion of existing automation, arguing it would cost jobs without helping efficiency, while shipping companies and terminal operators want to build on existing robotics operations. An agreement on the issue would leave wages as the major dividing line. A broader deal may still be far off, but any movement will ease shipper concerns that the talks aren’t going anywhere after nearly a year of negotiations.
Cutting Tool Purchases Rise, But Suppliers are Cautious
During February U.S. machine shops and other manufacturers purchased $196.9 million worth of cutting tools, a slight (+0.2%) rise from the January total, but it is 17.5% higher than the $167.6 million total consumption for February 2022. The two-month combined total consumption for 2023 is $393.4 million, or 20.1% higher than the total for January-February 2022.
The figures are drawn from the most recent Cutting Tool Market Report, a collaborative release by the U.S. Cutting Tool Institute and AMT – the Assn. for Manufacturing Technology. Data in the monthly release are based on totals reported by participating companies and represent the majority of the U.S. market for cutting tools. Because cutting tools are consumable products, the purchases of which are sensitive to demand across a range of manufacturing market segments served by machining operations, cutting-tool consumption offers an index to overall manufacturing activity.
SUNY New Paltz Annual Engineering Senior Design EXPO May 5th
Please join the faculty, staff and students of the School of Science and Engineering at SUNY New Paltz for this exciting annual event as our Senior Design students present their final prototypes and projects.
- Friday, May 5, 2023
- Networking Reception: 2:30 - 3:00 p.m.
- Project Presentations: 3:00 - 5:00 p.m.
- Science Hall Lobby, SUNY New Paltz
Can't make it in person? You can click the link below on May 5 to view the project videos and download a copy of the abstract book.
Chile Plans to Nationalize its Vast Lithium Industry
Chile's President Gabriel Boric said on Thursday he would nationalize the country's lithium industry, the world's second largest producer of the metal essential in electric vehicle batteries, to boost its economy and protect its environment. The shock move in the country with the world's largest lithium reserves would in time transfer control of Chile's vast lithium operations from industry giants SQM and Albemarle to a separate state-owned company.
It poses a fresh challenge to electric vehicle (EV) manufacturers scrambling to secure battery materials, as more countries look to protect their natural resources. Mexico nationalized its lithium deposits last year, and Indonesia banned exports of nickel ore, a key battery material, in 2020. "This is the best chance we have at transitioning to a sustainable and developed economy. We can't afford to waste it," Boric said in an address televised nationwide.
Bear Mountain Bridge Celebrates 100th Anniversary
One hundred years ago construction began on the Bear Mountain Bridge before it opened to traffic in autumn of 1924. The project of building the Bear Mountain Bridge marked the beginning of a golden age of long span bridge building along the Hudson River and throughout the New York metropolitan area. The success of the inventive methods used broke new ground and paved the way for the building of other suspension bridges, such as the George Washington and the Golden Gate.
The popularity of nearby Bear Mountain State Park, which opened in the 1910s, led to the need for a span across the river to replace the ferryboats which could no longer accommodate the crowds and their automobiles. In February 1922, the Bear Mountain Hudson River Bridge Company, a privately financed entity, was created through a bill passed by the New York State Legislature, allowing for a vehicular bridge to be built across the Hudson at Bear Mountain. The Bear Mountain Hudson River Bridge Company would then operate the bridge for a 35-year period, after which, New York State would assume responsibility for the bridge. The state, however, did have the option to take over the bridge at an earlier time for a price specified by law.
SpaceX Rocket Explosion Illustrates Elon Musk's 'Successful Failure' Formula
The spectacular explosion of SpaceX's new Starship rocket minutes after it soared off its launch pad on a first flight test is the latest vivid illustration of a "successful failure" business formula that serves Elon Musk's company well, experts said on Thursday. Rather than seeing the fiery disintegration of Musk's colossal, next-generation Starship system as a setback, experts said the dramatic loss of the rocket ship would help accelerate development of the vehicle.
SpaceX executives including Musk - the founder, CEO and chief engineer of the California-based rocket company - hailed the test flight for achieving the major objective of getting the vehicle off the ground while providing a wealth of data that will advance Starship's development. At least two experts in aerospace engineering and planetary science who spoke with Reuters agreed that the test flight delivered benefits. "This is a classical SpaceX successful failure," said Garrett Reisman, an astronautical engineering professor at the University of Southern California who is a former NASA astronaut and is also a senior adviser to SpaceX.