Member Briefing April 4, 2022

April 4, 2022

Posted By: Harold King in Daily Briefing,

BLS Jobs Report – Manufacturing Employment is Now Just 1% Shy of its Pre-COVID Levels

The Department of Labor’s employment situation report showed gains in employment in the private economy, which added 431,000 jobs in March. The monthly jobs report for March, released April 1 by the Bureau of Labor Statistics, showed that manufacturing hired approximately 38,000 new workers last month, including 11,000 in transportation equipment. Roughly 8% of new hires last month were in manufacturing, on par with how many jobs are manufacturing jobs.

Jobs for building planes, trains and automobiles grew by 10,800, of which 6,400 were in motor vehicles and parts production. Fabricated metal added 3,700 new employees. Those gains were offset by a loss in wood products production of 4,500 people and smaller losses in primary metals and electronics. Nondurable goods added 16,000 new jobs last month. Chemicals grew by 7,200 employees, plastics and rubber companies hired 3,300, and the largest nondurable division, food manufacturing, hired 2,400.

Invasion of Ukraine Headlines

ISM Report Shows March Growth in Manufacturing

The ISM Manufacturing Index registered 57.1 points in March, 1.5 percentage points lower than the February reading of 58.6%. This figure indicates expansion in the overall economy for the 22nd month in a row. “In March, progress was made to solve the labor shortage problems at all tiers of the supply chain, which will result in improved factory throughput and supplier deliveries … Amid signs of staffing and supplier delivery improvements, production expanded at disappointing levels, likely due to timing issues,” said Timothy Fiore, Chair of the Institute for Supply Management Manufacturing Business Survey Committee.

The Employment Index registered 56.3% in March; 3.4 percentage points higher than the February reading of 52.9%.
The New Orders Index registered 53.8% in March, down 7.9 percentage points from the February reading of 61.7%.
The New Export Orders Index was 53.2%, down 3.9 percentage points compared to the February reading of 57.1%.
The Inventories Index registered 55.5% in March, 1.9 percentage points higher than the 53.6% reported for February.

Euro Zone Inflation Hits Another Record High of 7.5%

Headline inflation came in at 7.5% for March on an annual basis, according to preliminary data from Europe’s statistics office Eurostat released on Friday. Headline inflation had reached 5.9% in February. The numbers come at a time when Russia’s invasion of Ukraine has brought renewed economic uncertainty, with some economists wondering whether the euro zone will enter a recession in 2022.

This economic backdrop is leading consumers to be more pessimistic about their prospects going forward, too. “Households are becoming more pessimistic and could cut back on spending,” ECb President Christine Lagarde said in a speech in Cyprus on Wednesday. Lower spending could bring even further economic headaches, as businesses would be selling less, have less room to pay employees and would be less likely to invest.

US COVID – Experts are Split on Who Should Get a Second Covid-19 Booster Shot

The U.S. Food and Drug Administration this week authorized a second Covid-19 booster for anyone 50 years and older who had their first booster four or more months ago. The broad population cutoff age of 50 surprised some scientists. Most of the data on second boosters comes out of Israel and suggests that for people aged 60 and over, two boosters provide stronger protection against infection, deaths and hospitalizations than one does. But a New England Journal of Medicine study looking at healthcare workers who are not elderly found a second booster “may have only marginal benefits.”

Experts are split on how important it is to get a second booster in light of the low Covid-19 rates in the U.S. and evidence of high protection against death and hospitalization following the first booster. But other countries are experiencing a surge in cases from the Omicron subvariant BA.2, and there are signs that rates are increasing in some parts of the Northeast.

NYS Vaccine and COVID Update –

Vaccine Stats as of April 2:

One Vaccine Dose

89.6% of all New Yorkers – 16,481,404 (plus 2,939 from a day earlier).
In the Hudson Valley 1,714,562 (plus 343).

Fully Vaccinated

76.2% of all New Yorkers – 14,765,091 (plus 3,889).
In the Hudson Valley – 1,505,325 (plus 408).

Boosters Given

All New Yorkers – 7,355,830
In the Hudson Valley – 875,852

The Governor updated COVID data through April 2. There were 12 COVID related deaths for a total reported of 70,251

Hospitalizations:

Patients Currently in Hospital statewide: 833.
Patients Currently in ICU Statewide: 127

7 Day Average Positivity Rate – Cases per 100K population

Statewide 2.65% – 15.63 positive cases per 100,00 population
Mid-Hudson: 2.74% – 14.35 positive cases per 100,00 population

Useful Websites:

Late – State Lawmakers Sent Home Thursday Without a Budget Deal

New York’s fiscal year 2023 budget deadline passed Friday without an agreement. In fact there is no sign that lawmakers are close to reaching a deal. Multiple issues are holding up the passage of budget bills, including a last-minute proposal by Gov. Kathy Hochul to give the Buffalo Bills the largest U.S. pro sports subsidy of all time for a new NFL stadium, and perhaps the most hot-button issue in New York politics right now: bail reform.

Lawmakers were sent home on Thursday, with a vote possibly coming on Today. This means that Hochul could need to request that the state Legislature approve an extension to avoid a variety of fiscal consequences. She could also have to issue a “message of necessity” that allows bills to be passed before the three-day aging period required after introduction. If the budget is not signed into law before 4 p.m. on Monday, April 4, the state comptroller’s office is prohibited from distributing paychecks to state workers, Comptroller Thomas DiNapoli’s office warned in a memo sent to state agencies earlier this month. There are some exceptions. The implications would not affect the State University of New York, the City University of New York or the State Insurance Fund, because their fiscal years begin at the end of June, the comptroller stated.

Judge Rejects New York Legislative Maps, Orders New Districts Drawn, Dems Appeal

A state judge on Thursday rejected the maps drawn by the Democratic-led state Legislature in New York for the state’s U.S. House of Representatives districts as well as those in the state Senate and Assembly. The 18-page ruling ordered lawmakers to draw maps with “sufficient bipartisan support” by April 11 or have a neutral party draw the lines. The ruling is expected to be appealed.

New York Attorney General Letitia James and Gov. Kathy Hochul issued a one-sentence statement in response to the ruling, stating, “We intend to appeal this decision.” The state’s top court, the Court of Appeals, has been appointed entirely by Democratic governors. Democrats have argued the districts are fairly drawn and reflect the Democratic domination of the state’s electorate. But critics of the Democratic-drawn districts have called the maps “a master class in gerrymandering” for New York.

Survey: CFOs Less Optimistic About Economic Conditions

Deloitte’s latest quarterly survey of Fortune 500 chief financial officers found the executives have a gloomier outlook on the economy than last quarter, with respondents citing inflation, geopolitical risks and the regulatory environment as their top external concerns.

The biggest worry CFOs expressed to the consulting firm was rising inflation including material and wage costs. In the poll that concluded the day after Russia’s invasion of Ukraine, the second most-mentioned fear was political unrest. Respondents not only cited the ongoing conflict in the region, but some pointed to the potential for escalating tensions with China. The third theme of external threats keeping CFOs up at night involves potential government actions, including fiscal policy, regulations and taxation. Additional external risks that emerged included supply chain woes, fears of a potential economic downturn and rising interest rates.

How the War in Ukraine Is Further Disrupting Global Supply Chains

Supply chain disruptions are prompting more manufacturers to shift or consider shifting to local supply chain strategies, Reducing reliance on foreign countries will take time and require infrastructure investments.

The invasion of Ukraine by Russia and sanctions imposed on it for doing so and new pandemic-related shutdowns in China are the latest events to rock global supply chains. Combined with the China-U.S. trade war and other pandemic- and climate-related disruptions, it is certain to accelerate the movement by Western companies to reduce their dependency on China for components and finished goods and on Russia for transportation and raw materials and to lead to more localized, or regional, sourcing strategies. If China decides to back Russia in the Ukraine conflict, it would only fuel that movement.

Caixin PMI: China March Factory Activity Contracts at Sharpest Rate in 2 Years

China’s factory activity slumped at the fastest pace in two years in March due to a local COVID-19 resurgence and economic fallout from the Ukraine war, a survey showed on Friday, strengthening the case of more policy support for the economy. The Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) fell to 48.1 in March, indicating the steepest rate of contraction since February 2020, from 50.4 in the previous month.

“The average of the two (PMIs) is now under 50, and apart from the initial pandemic hit in 2020, is now at its lowest since February 2016,” said Sheana Yue, China economist at Capital Economics.

Workforce Drug Test Positivity Climbs to Highest Level in Two Decades

The rate of positive drug test results among the U.S. workforce reached its highest rate last year since 2001. This number increased more than 30% in the combined U.S. workforce from an all-time low in 2010-2012, according to a new analysis released on March 30 by Quest Diagnostics. The study is based on more than 11 million deidentified urine, hair and oral fluid drug test results collected between January and December 2021. The overall positivity rate was up in 2021 to 4.6% compared to 4.4% in 2020 and up 31.4% from the all-time low of 3.5% just 10 years ago (2010-2012).

Overall positivity in the federally mandated, safety-sensitive workforce based on nearly 2.7 million urine drug tests stayed even year over year (2.2% in 2020 and 2021) and was 4.8% higher than 2017 (2.1% in 2017 versus 2.2% in 2021). In the general U.S. workforce, positivity increased 1.8% (5.5% in 2020 versus 5.6% in 2021) and was 12% higher than in 2017 (5.0% in 2017 versus 5.6% in 2021) and up each of the last five years.

Hochul Says Union Jobs Will Drive Climate Projects

The projects to strengthen New York’s infrastructure from the worst effects of climate change while also building out projects for renewable energies like wind will be done with labor union jobs, Gov. Kathy Hochul last week said. Hochul was in Florida for the New York Building Trades annual winter conference, pledging to prioritize jobs for labor in projects like the construction of wind turbines in the Albany area for construction off the shore of Long Island.

New York state is set to spend billions of dollars in the coming years as part of a transition to renewable and cleaner forms of fuel, while at the same time protecting against extreme weather events like major floods. New York voters are also expected to consider a $3 billion bond act meant to shore up and improve environmental infrastructure in the state. If past is prologue, union jobs will do nothing to lower these costs.

Senate Passes Ocean Shipping Bill

The U.S. Senate unanimously passed the Ocean Shipping Reform Act (S. 3580)—a bill designed to improve the supply chain by granting regulators more oversight. The bill will increase regulators’ ability to oversee ocean shipping practices, prevent carriers from refusing U.S. exports and prohibit the unreasonable assessment of excess shipping fees. Senators hope the bill will improve the supply chain by diminishing backlogs at U.S. ports, streamline overall container exchange and movement and help U.S. exporters more easily and affordably ship their goods to international buyers.

“Manufacturers have been working with Congress for months to advance policy that will decrease shipping costs and clear port backlogs,” said NAM Director of Infrastructure, Innovation and Human Resources Policy Ben Siegrist. “Today’s Senate vote is a great step forward in addressing the problems ailing the shipping supply chain, and we’re grateful for the bipartisan leadership in the House and Senate on this bill.

Amazon Workers Reject union in Alabama, Approve One in Staten Island

Amazon workers in Alabama appear to have rejected a union bid in a tight race, according to early results on Thursday. But outstanding challenged votes could change the outcome. Warehouse workers in Bessemer, Alabama, voted 993 to 875 against forming a union. The National Labor Relations Board, which oversees the election, said that 416 challenged votes could potentially overturn that result. A hearing to go through the challenged ballots will occur in the next few days.

In New York, union supporters have the edge in a count that will continue Friday morning. Meanwhile, in a separate union election in Staten Island, New York, the nascent Amazon Labor Union is leading by more than 350 votes out of about 2,670 tallied.

How High Energy Prices Could Help Both the Climate and the U.S.

Higher prices, if sustained, could reduce global fossil-fuel consumption and encourage the shift to zero-emission energy. At the same time, sanctions and boycotts on Russia pave the way for U.S. oil-and-gas producers to expand market share. The US has committed to slash emissions of carbon dioxide and other planet-warming greenhouse gases by 2050. To achieve this the Biden administration has relied on regulatory and executive actions, such as cracking down on methane leaks from wells and pipelines and restricting leasing and drilling on federal land. Climate activists, meanwhile, have sought to pressure investors, banks and major oil companies to divest from fossil fuels.

The problem with such efforts is that they do little to alter global demand for fossil fuels, the ultimate driver of climate warming, but will reduce how much of that demand is met by U.S. suppliers, as opposed to Russia and OPEC. That’s one of the reasons Mr. Biden’s agenda has encountered stiff opposition from the domestic industry, Republicans, courts and Sen. Joe Manchin (D., W.Va.), who holds a de facto veto over Mr. Biden’s legislative agenda in the evenly split Senate.