Member Briefing April 5, 2023

Posted By: Harold King Daily Briefing,

JOLTS: Job Openings Fall Below 10 Million for First Time Since May 2021

There were a seasonally adjusted 9.9 million job openings in February, the Labor Department said Tuesday, down from January’s downwardly revised 10.6 million. February’s openings were below a record 12 million reached last March, according to revised 2022 data, but still well above 7 million openings in February 2020 ahead of the pandemic. Job openings in February still far outnumbered the 5.9 million unemployed people seeking work, indicating the labor market remained tight.

Hiring at restaurants, hospitals, and nursing homes drove February’s job growth. But there are signs that employers in those sectors may be reaching their limits: healthcare and social-assistance roles fell by 150,000. Openings in professional and business services, where many corporate layoffs have been announced, dropped by 278,000. Openings in arts, entertainment, and recreation rose by just 38,000 and in construction grew by 129,000.

Read more at The WSJ

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Manufacturing Job Openings, Hires and Quits all Fall In Year on Year February

The number of job openings hires and separations all fell significantly in February when compared with February 2022.  When compared to January 2023, however hires and separations increases slightly. Below are the numbers.

  • Job openings were 694,000 in February 2023, down from 732,000 in January and 826,000 in February of 2022.
  • There were 422,000 new hires in February of 2022 up from 420,000 in January but down from 504,000 in February of 2022.
  • Separations stood at 415,000 in February, up from 406,000 in January and but down from 455,000 in February of 2022.
  • The drop in job openings was greater in non-durable goods (96,000) than durable goods (36,000).

Read more at the BLS

Hochul Pushes Change to CLCPA Methane Accounting Focusing on Affordability

Changing New York’s unique accounting method for greenhouse gas emissions has become an unexpected issue in state budget talks — sparking concern among environmental groups. The proposal would likely enable more combustion of natural gas and other fuels for longer than currently envisioned under New York’s climate law in a plan approved in December.

New York is the one of only two jurisdictions to use a 20-year time horizon to account for the effects of planet-warming gasses instead of 100 years. This important distinction was a key provision pushed by supporters of the state’s CLCPA passed in 2019. It makes methane, the main component of natural gas, more potent than under the longer accounting timeline. Backers say this more accurately reflects the short-term warming impact of greenhouse gasses and the urgency around reducing emissions. Gov. Kathy Hochul is supportive of the change, which was also proposed in a bill sponsored by Energy Committee Chair Sen. Kevin Parker on Monday, and it has come up in budget negotiations. Some other Senate Democrats are not supportive of the proposal.

Read more at Politico

COVID News – A New Approach to a Covid-19 Nasal Vaccine Shows Early Promise

Scientists in Germany say they’ve been able to make a nasal vaccine that can shut down a Covid-19 infection in the nose and throat, where the virus gets its first foothold in the body.In experiments in hamsters, two doses of the vaccine – which is made with a live but weakened form of the coronavirus that causes Covid-19 – blocked the virus from copying itself in the animals’ upper airways, achieving “sterilizing immunity” and preventing illness, a long-sought goal of the pandemic.

Although this vaccine has several more hurdles to clear before it gets to a doctor’s office or drug store, other nasal vaccines are in use or are nearing the finish line in clinical trials. China and India both rolled out vaccines given through the nasal tissues last fall, though it’s not clear how well they may be working. Studies on the effectiveness of these vaccines have yet to be published, leaving much of the world to wonder whether this approach to protection really works in people

Read more at CNN

Survey: Companies Optimistic, But Supply Chain Still Posing Problems

In the recent study from BCG, "The CEO Outlook: Caution, Optimism, and Navigating the Road Ahead.”  around 80% of CEOs see a strong year, however, that is tempered by the 75% who expect supply chains to have a negative impact. In the global study, companies identified the following supply chain issues: End-to-end supplier network visibility, Proactive supplier risk management, 3-commerce and digital sales, Dynamic pricing, Change management, Cybersecurity, Risk measurement and governance.

Heading into 2023, C-suite leaders generally hold a cautiously optimistic view of their company's performance while recognizing uncertainty is still the biggest challenge. Around 75% think macro uncertainty is a key challenge, with Asian leaders being more confident than the rest of the world. In the survey, only half of the C-suite leaders are expecting additional global shocks in 2023. However, the recent failure of Silicon Valley Bank and other shows how difficult it is for executives to predict the future, even in the near term.

Read more at Material Handling & Logistics

Bail Debate 'Sucking up Most of the Oxygen' in New York's Budget Talks

New York's state budget debate has included weighty topics that will affect millions of people in the state: How to expand housing, whether the minimum wage should be increased, whether charter schools should expand and if wealthy people should get another tax increase. But all of those issues are being subsumed in the budget talks by negotiations over once again changing New York's 2019 bail law.

The budget was due on April 1. But lawmakers and Gov. Kathy Hochul have yet to reach an agreement on whether the state's bail law, first approved four years ago, should be amended to make it easier for judges to potentially issue cash bail requirements for serious criminal charges.  Hochul has said the change is necessary to address New Yorkers' concerns over crime and public safety — a debate that dominated her campaign for a full term last year. Supporters of the law as it is argue that to undermine the intent — preventing people only accused of crimes from languishing in jail — would create more inequities in the criminal justice system.

Read more at NY State of Politics

Jamie Dimon on Banking Turmoil: ‘This Wasn’t the Finest Hour for Many Players’

JPMorgan Chase & Co. Chief Executive Jamie Dimon said industry turmoil sparked by the failure of Silicon Valley Bank last month is nothing like the 2008 financial crisis, but it will nonetheless have repercussions for years. In his annual letter to shareholders released Tuesday, the head of the country’s largest bank said the current crisis “involves far fewer financial players and fewer issues that need to be resolved” than in 2008.

Still, he said, the failures of Silicon Valley Bank and Signature Bank in quick succession last month exposed issues with bank management and supervision, particularly around the risks associated with rising interest rates. “Most of the risks were hiding in plain sight,” he wrote. “This wasn’t the finest hour for many players.” Mr. Dimon used his annual letter to highlight JPMorgan’s performance and weigh in on political issues, bank regulation and the state of the economy. He repeated his mantra that the U.S. economy is strong but faces challenges. The fallout from the recent bank failures further clouds the outlook, he said.

Read more at the WSJ

Bank Failure Fallout is Far From Over, Lawmakers Say

The latest failures in the financial sector receded further in the market’s rearview mirror. But lawmakers in both parties are saying additional Congressional action on the collapse of Silicon Valley Bank — including a subpoena of former CEO Greg Becker — is necessary.

“I certainly think the CEO and the leadership of SVB should be subpoenaed. If you look at their stock transactions, these guys offloaded a lot of worthless equity,” Sen. J.D. Vance (R-Ohio) told The Hill on Thursday before lawmakers headed out for two weeks of district work. Senators said they were looking forward to the results of an investigation into the failure of SVB and why regulators failed to prevent it, a probe that is being led by Federal Reserve Vice Chair for Supervision Michael Barr.

Read more at The Hill

Companies Big and Small Lose Access to Credit Amid Bank Stress

No companies with investment-grade credit ratings sold new bonds over the six business days from March 10 through March 17, the first week in March without a new high-grade bond sale since 2013, according to PitchBook LCD. The market for new junk-bond sales has largely stalled this month, and no companies have gone public on the New York Stock Exchange in more than two weeks. March is typically busy for new corporate debt financings: Companies look to secure financing before the blackout period between the end of the first quarter and the kickoff of earnings season, when they typically refrain from bond sales.

Small businesses that rely on bank loans for capital expenditures are also facing a new reality, analysts say. As the regional banks that have come under pressure in recent weeks adjust lending standards, some of their small-business clients may find they are offered loans under stricter terms, in smaller amounts, or not at all. Many regional banks have also faced significant deposit flights in recent days, meaning they have less capital available to lend in the first place.

Read more at The WSJ

Australia's Central Bank Pauses Rate Hikes; Will Other Central Banks Follow?

The Reserve Bank of Australia is pausing its aggressive tightening cycle, holding rates on Tuesday for the first time in almost a year. Policymakers kept the official cash rate at 3.60%, taking a key timeout to size up the latest market happenings and economic developments. "The decision to hold interest rates steady this month provides the board with more time to assess the state of the economy and the outlook, in an environment of considerable uncertainty," explained Philip Lowe, Australia's central bank governor. "Some further tightening of monetary policy may well be needed."

While keeping the door open for a return to rate hikes, growth and stability concerns might soon overtake inflation threats in terms of central banks' top priority. Other global banks have also been tightening at a rapid pace, with the Federal Reserve hiking interest rates by 475 basis points in nine successive meetings. In a new Seeking Alpha article, contributor Trading Ahead highlights What The Fed Really Wants, citing a "window of opportunity this year to cure the macroeconomic problem before it gets worse."

Read more at Seeking Alpha

Made-to-Fit Boxes - Retailers Try to Tackle Cardboard Overload

Big retailers are rolling out machines in their e-commerce distribution operations that make packages sized specifically to fit the items being shipped, potentially reining in some of the big volumes of cardboard generated as online shopping has grown. Walmart Inc. said it has installed machines that churn out custom boxes at 12 of its fulfillment centers, and plans to add the technology to more facilities. The retailer said it has been able to cut down the amount of cardboard and filler material it uses per order by making individual boxes. Inc., the largest e-commerce merchant in the U.S., has been increasing its use of made-to-fit packaging to ship items from books to shoes. The company said it started using custom packaging in 2016 and is expanding its use of the technology. Amazon uses technology from Italian automation company CMC SpA to make the custom boxes. The retailer has invested in CMC through its $2 billion Climate Pledge Fund, a venture-capital fund focused on investing in sustainable technologies.

Read more The WSJ

Starbucks Fired the Employee Who Igniting the Starbucks Workers United Union Campaign

Starbucks fired Alexis Rizzo, the employee responsible for igniting the Starbucks Workers United union campaign, just days after the company’s former CEO Howard Schultz testified on Capitol Hill about the coffee chain’s alleged union-busting. Rizzo worked as a shift supervisor at Starbucks for seven years and served as a union leader at the Genesee St. store in Buffalo, New York, which was one of the first two stores in the country to win its union campaign.

Rizzo said her store managers fired her after she finished working her shift Friday. She said they told her it was because she had been late on four occasions — two of which were instances where she had been one minute late. Starbucks told CNBC Rizzo had missed more than four hours of work over the course of those instances, and that she had been repeatedly issued write-ups for being late. Starbucks spokesperson Rachel Wall said separations at the company only follow clear violations of policies. In this case, she said there were numerous attendance violations that were impacting other baristas at this store location.

Read more at CNBC

CFO: GM Buyouts Cut 5,000 Jobs

About 5,000 General Motors Co salaried workers took buyouts to leave the company, putting the company well on the way to hitting a $2 billion cost-cutting target, the automaker's chief financial officer said Tuesday. GM shares were trading down nearly 2% at midday, even though CFO Paul Jacobson said demand for GM's trucks and SUVs remains strong in the United States.

GM has been able to raise prices in the United States over the past two years as supply chain bottlenecks kept production in check. Going forward, Jacobson said the opportunity to boost prices much further "isn't there. We have to be more urgent around cost-cutting." GM will cut production to keep inventories in check, Jacobson said. The automaker earlier this year shut down a pickup truck assembly factory in Fort Wayne, Indiana, for two weeks.

Read more at Reuters

5 Ways Employers Can Attract, Retain and Engage Workforce of the Future

As Gen Z is set to comprise 31% of the U.S. workforce, by 2025, the Conference Board is offering some advice. In an article they noted that " understanding the intrinsic motivations of Gen Z employees and how to win their loyalty comes down to identifying what drives them and what influences them." Research from authors Robin Erickson, vice president of human capital and Barbara Lombardo, a program director at the Conference Board found that Gen Zers want companies to do the following:

Respect us with adequate compensation.  Give us more control. Help keep us safe and well. Provide us with opportunities to grow and recognize we have something to offer, Don’t just talk about your purpose and values – live them.

Read more at The Conference Board

Why Did OPEC Cut Oil Production? Key Reasons Explained

OPEC and its allies, including Russia, agreed on Sunday to widen crude oil production cuts to 3.66 million barrels per day (bpd) or 3.7% of global demand. The surprise announcement helped push up prices by $5 per barrel to above $85 per barrel. Here are the main reasons why OPEC+ is cutting output:

  • Concerns about weak global demand
  • Punishing speculators
  • Seeking higher prices
  • Tensions with Washington

Read more at Reuters