Member Briefing February 7, 2023
JOLTS Report: Manufacturing Job Openings Rise Slightly, Hires Steady, Separations Fall
The number of job openings increased to 11.0 million on the last business day of December, the U.S. Bureau of Labor Statistics reported last week. Over the month, the number of hires and total separations changed little at 6.2 million and 5.9 million, respectively. Within separations, quits (4.1 million) and layoffs and discharges (1.5 million) changed little as well.
There were 764,000 manufacturing job openings in December lower that the 12 month average of more than 840,000. Manufacturer hired 405,000 workers in December the same number as November and 55,000 fewer than December 2021. There were 386,000 separations in December, 14,000 fewer than November and 48,000 fewer than a year earlier. The numbers indicate that workers are staying put in their current positions.
War in Ukraine Headlines
- Ukraine and Russia: The Latest News – The Guardian
- Moscow, Tehran Advance Plans for Iranian-Designed Drone Facility in Russia - WSJ
- UN Sec-Gen warns Russia-Ukraine conflict is leading world into 'wider war' – Fox News
- The Delayed Impact of the EU’s Wartime Sanctions on Russia – Politico
- US Support for Ukraine Reclaiming Territory Stable at 65 Percent One Year Into War: Gallup – The Hill
- Ukraine's Defence Ministry in Turmoil as Russia Readies Offensive - Reuters
- Russia Budget Deficit Soars as Energy Revenues Slump by Almost Half - FT
- Russia’s Technocrats Keep Funds Flowing for Vladimir Putin’s War – The Economist
- Ukraine Warns Russia Is Planning Major Offensive as Kyiv Shakes Up Military Leadership - WSJ
- Ukraine Army Discipline Crackdown Sparks Fear and Fury on the Front – Politico
- Russia Applies More Pressure, Fierce Fighting in Donetsk, Zelenskiy Says – Reuters
- Map – Tracking Russia’s Invasion of Ukraine – Live Universal Awareness Map
CBS News Poll: Views of U.S. Economy Improve But Remain Low
Views of the nation's economy have ticked back up — though they remain a long way from good. And amid mixed economic messages and reports, there's little consensus among Americans on which way the economy is headed from here. The uptick in economic views puts them back a bit above where they started 2023, varying a bit perhaps in another sign of collective uncertainty.
If a lot of economists have differing views on the nation's economic prospects, it may be no surprise to find mixed views among the general public either. There are a few who see growth or stability, but a majority still are pessimistic, expecting either a slowdown or outright recession. Lowering inflation remains the top priority of a long list of potential problems the nation has to tackle.
Ranks of Republicans Refusing a ‘Clean’ Debt Ceiling Hike Grows
Republican pragmatists in the House of Representatives have a message for President Joe Biden: We don’t support a clean debt ceiling increase, either. Rep. Dusty Johnson says that the group of pragmatic conservatives he leads in the House would oppose legislation raising the federal borrowing limit absent an accompanying deal with Biden and Senate Democrats to rein in government spending and reduce Washington’s $31.4 trillion debt.
Inside the Beltway, the “Will they or won’t they?” chatter about Republicans and a debt ceiling increase typically revolves around the House Freedom Caucus. But now the Main Street Caucus seems to be drawing a hard line too as House Speaker Kevin McCarthy prods Biden. That’s significant—this is the Republican caucus in the House that prefers governing over brinksmanship and is not particularly aligned with Trump. “We don’t like fiscal cliffs,” Rep. Dusty Johnson said. “We don’t like dumpster fires.”
U.S. COVID – This Winter's U.S. COVID Surge is Fading Fast, Likely Thanks to a 'Wall' of Immunity
No one expected this winter's surge to be as bad as the last two. But both the flu and RSV came roaring back really early this fall. At the same time, the most contagious omicron subvariant yet took off just as the holidays arrived in late 2022. And most people were acting like the pandemic was over, which allowed all three viruses to spread quickly. So there were big fears of hospitals getting completely overwhelmed again, with many people getting seriously ill and dying.
But that's not what happened. "This virus continues to throw 210-mile-per-hour curve balls at us. And it seems to defy gravity or logic sometimes," says Michael Osterholm, who heads the Center for Infectious Disease Research and Policy at the University of Minnesota. "People all assumed we would see major transmission. Well, every time we think we have some reason to believe we know what it's going to do, it doesn't do that," Osterholm says.
Millions of New Yorkers Will Feel Health Care Change as COVID Emergency Ends
Some federal pandemic-era policies that were put in place to make it easier to get health care and to minimize the spread of COVID-19 will get rolled back in the coming months. That will affect how New Yorkers access COVID-19 tests, health insurance, telehealth services and much more. Most notably, millions of New Yorkers who were allowed to remain on Medicaid without scrutiny during the pandemic will be re-evaluated for eligibility starting in April.
When the public health emergency ends in May, private health plans and Medicare will no longer be required to cover the full cost of in-person or at-home COVID tests. Vaccines will still be free for everyone, regardless of insurance status, as long as federal supplies last, according to KFF. Once the federal supply runs out, COVID vaccines will likely still be free under most health plans because of rules put in place under the Affordable Care Act
Europe Risks New Age of Protectionism in Joining US Subsidy Race
Joe Biden’s clean technology law has dragged the European Union into a subsidy fight that may trigger a transatlantic trade war. The EU has always defended the global rules-based order, even as the US has grown increasingly hostile toward the constraints it adopted as a member of the World Trade Organization. But Biden’s $500 billion in new spending and tax breaks to boost domestic green industries over the next decade may prove to be the final straw.
The EU unveiled its Green Deal Industrial Plan this past week in an effort to accelerate the development of its clean technology sector through massive investment aid and tax credits. The European legislation is still being negotiated, but if it follows in the US footsteps it could make the WTO even less relevant. With the US Inflation Reduction Act appearing to run afoul of international subsidy rules forbidding domestic content requirements, how the EU proceeds may leave the WTO, and the post-World War II system it represents, on the sidelines as the world’s economic superpowers embark on new era of confrontation with no holds barred.
Manufacturers Added 19,000 jobs in January – Here’s Which Sectors Did Best
The Bureau of Labor Statistics Employment Situation, released February 3, showed strong growth in nondurable goods manufacturing compared to durable goods companies. Nondurable industries added an estimated total of 15,000 employees. The food manufacturing and beverage, tobacco, leather and similar products manufacturing sectors took in the lion’s share with 6,900 and 5,000 new hires respectively, followed by broad gains across the other nondurable goods areas. Those widespread games were offset only by a loss of 3,500 employees in chemical manufacturing.
The larger durable goods sector of manufacturing added a comparatively tepid net 4,000 jobs in January. Despite decent gains across most durable goods sectors, a steep loss of 8,400 workers in transportation equipment manufacturing (including 6,500 in motor vehicles and parts production) offset gains of more than a thousand jobs in nonmetallic mineral products, fabricated metal products, machinery, electrical equipment, and miscellaneous manufacturing.
Manufacturing Wages Increased Faster Than the Rest of the Economy
Last week’s Commerce Department report also found that the average manufacturing workweek in January increased, as did average overtime: During the survey period, the average manufacturing workweek length increased by about 24 minutes to 40.5 hours, while mean overtime increased by 6 minutes to 3.1 hours.
Possibly reflecting the historically tight labor market, wages increased faster in manufacturing than in the rest of the economy, and, as in hiring, grew faster in nondurable goods. Average private hourly wages increased by about 7 cents to $28.26 an hour between December 2022 and January 2023. In the same time frame, average wages in manufacturing rose by 20 cents to $25.84. Average earnings in durable products companies rose by 16 cents an hour to $26.94, while earnings in the smaller nondurable goods portion rose a remarkable 29 cents to $24.05 an hour on average
CLIVE Data Services Says Global Airfreight Demand Fell in January While Capacity Expanded
Industry analyst CLIVE Data Services has said that global air cargo demand continued to fall in January, down 8% year on year, partly the result of an earlier than normal Chinese New Year and partly due to global economic headwinds. The 8% year on year fall in global airfreight demand in January also represented a fall of 10% on the same month of pre-Covid 2019.
There was a 37% decline in the global airfreight spot rate to $2.89 per kg, narrowing the gap to the pre-pandemic level to an increase of 55%. Global air cargo capacity rose a noticeable 11% year on year, but available capacity was still 2% below its 2019 level. The global average dynamic load factor, which Xeneta-owned CLIVE uses to measure cargo load factors by considering both the volume and weight perspectives of cargo flown and capacity available, reached 54% in the first month of this year.
Pfizer Eyes Big Drop in Covid-Related Revenues in 2023
After two straight years of surging sales due to Covid-19 products, Pfizer projected a steep decline in 2023 revenues as demand for vaccines and therapeutics ebbs. The pharma giant expects about a 30% drop in company revenues this year as governments work off excess inventories of Pfizer's coronavirus-related products and consumer demand wanes in some markets.
Sales for the vaccine Comirnaty and the Covid-19 therapeutic Paxlovid will reach a "low point" this year before rebounding somewhat in 2024, the company said. Pfizer's revenues rose by nearly a quarter between 2021 and 2022 after almost doubling in the prior stretch. Pfizer expects 2024 sales of Covid products to stabilize, said Chief Executive Albert Bourla. "Then starting in 2025 and continuing in 2026 and beyond, we expect to see an increase in Covid-19 vaccination rates, assuming the successful development and approval of a Covid-flu combination product," Bourla said in prepared remarks.
Industry Earnings : Chipmaker Onsemi Beats Fourth-Quarter Targets
Chipmaker Onsemi (ON) on Monday beat Wall Street's targets for the fourth quarter but guided lower for the current period. The Phoenix-based company with a location in East Fishkill, Dutchess County, also known as ON Semiconductor, earned an adjusted $1.32 a share on sales of $2.1 billion in the December quarter. Analysts polled by FactSet had expected earnings of $1.26 a share on sales of $2.08 billion. On a year-over-year basis, Onsemi earnings rose 21% while sales climbed 14%.
For the current quarter, Onsemi predicted earnings of an adjusted $1.08 a share on sales of $1.92 billion. That's based on the midpoint of its guidance. Wall Street had forecast earnings of $1.14 a share on sales of $2 billion for the first quarter. The company also announced a new $3 billion stock buyback plan.
Industry Earnings: Tyson Foods
Tyson Foods Inc widely missed Wall Street estimates for quarterly profit on Monday and cut its expectations for operating margins this year in the face of falling beef prices and easing demand for pork. A year earlier Tyson's profits had climbed due to soaring meat prices and strong demand.
Facing high inflation, some consumers have since reduced their spending and switched to cheaper types of meat, such as buying hamburger instead of steaks. Sales rose 2.5% to $13.26 billion in the three months ended Dec. 31. Adjusted earnings of 85 cents per share were much lower than expectations of $1.34 per share. In Tyson's beef business, its largest segment, operating margins shrank to 3.5% from 19.1% a year earlier. Average beef prices fell by 8.5%, compared to a surge of nearly 32% a year earlier, according to the company.
Dell to Cut 5% of Workforce
Dell Technologies Inc. said it is cutting about 5% of its workforce, the latest technology company adding to a wave of layoffs as interest rates rise and financial conditions tighten. The cuts would amount to some 6,600 jobs, based on the 133,000 total workers that the company reported having in early 2022, its most recent disclosed figure. Dell is taking steps to reorganize its sales, customer-support, product-development and engineering teams.
Dell is the latest large U.S. employer to trim its staff as companies respond to widespread inflation, rising interest rates and the normalization of pandemic trends. Various companies have laid off thousands of employees in a round that was led by large technology companies, including Microsoft Corp. and Amazon.com Inc. Large companies from other sectors have made similar moves recently, with FedEx Corp., 3M Co. and Dow Inc. all announcing layoffs in recent weeks.
Mortgage Rates Drop to the 5% Range for the First Time Since September
The average rate on the 30-year fixed rate mortgage has fallen to 5.99%, according to Mortgage News Daily. The housing market hasn’t seen the rate with a five handle since a brief blip in early September. Before that, it was in early August. The rate started last week at 6.21% and fell sharply Wednesday after Federal Reserve Chairman Jerome Powell said inflation “has eased somewhat but remains elevated,” which was a shift from previous language.
Mortgage rates peaked in October with the 30-year fixed at 7.37% and have been sliding since then. For potential homebuyers that means savings. For a consumer purchasing a $400,000 home today with a 20% down payment, the monthly payment is $293 less than it would have been in October.