Member Briefing January 3, 2023
Heat Map of Global PMI Shows Pessimism Heading Into 2023
Purchasing manager index numbers for manufacturing published on Monday showed negative readings across Europe, Turkey and in South Korea. Data published Today are set to reveal similarly dire numbers for Malaysia, Taiwan, Vietnam, the UK, Canada and the US. Data published on Saturday showed that China’s abrupt reversal of its Covid Zero policy pushed economic activity in December to the slowest pace since February 2020 as the virus swept through major cities and prompted people to stay home and businesses to shut.
Manufacturers are on the front edge of the world economy. What they are witnessing and the decisions they are making about spending and hiring can swiftly affect global growth. These heat maps will help you stay current by highlighting what purchasing managers are saying about the outlook—positive or negative.
War in Ukraine Headlines
- Ukraine and Russia: The Latest News – The Guardian
- Moscow Says Ukrainian Rocket Strike Kills 63 Russian Troops - AP
- Ukraine Downs Dozens of Russian Drones Launched Against Kyiv - Axios
- Kremlin Bans Sales of Russian Oil to Countries That Impose Price Cap - WSJ
- Putin and Xi Meet Against Backdrop of Growing Crises for Both Leaders - CNN
- Ukraine Advancing in Parts of Donbas, Zelensky Says – France 24
- US Mulls Shipping Bradley Fighting Vehicles to Boost Ukraine Ground Combat – The Hill
- Europe’s Big Question: What a Diminished Russia Will Do Next - CNN
- Zelensky Addresses Russians After New Year’s Eve Strikes: ‘No One Will Ever Forgive You’ – The Hill
- Russia Launches Fresh Missile Barrage at Targets Across Ukraine - WSJ
- Three Scenarios for How War in Ukraine Could Play Out – The Economist
- Map – Tracking Russia’s Invasion of Ukraine – Live Universal Awareness Map
Manufacturing Contributed $2.81 Trillion to the U.S. Economy in Q3
The Commerce Department reported that Manufacturing value-added output increased to a record $2.809 trillion in the third quarter. Manufacturing accounted for 10.9% of value-added output in the U.S. economy in the third quarter. After contracting in the first two quarters of 2022, the U.S. economy rebounded in the third quarter, expanding 3.2% at the annual rate. The current forecast is for real GDP to increase 2.0% in 2022 on an annual basis, with 1.1% growth in 2023.
Meanwhile, real value-added output in the manufacturing sector inched up to $2.259 trillion in the third quarter, as expressed in chained 2012 dollars. This remained lower than the record high in the fourth quarter of 2021, which was $2.325 trillion. Indeed, much of the gain in output was buoyed by higher prices.
Durable Goods Orders Slide Well Below Consensus in November
New orders for durable goods fell 2.1% from a record $276.4 billion in October to $270.6 billion in November, but excluding transportation equipment, new durable goods orders increased 0.2% from $179.0 billion to $179.3 billion. The monthly decrease in durable goods orders was $5.8 billion. The November’s drop comes after three months of consecutive gains.
Despite data that remain highly elevated, the manufacturing sector has weakened notably in recent months, with durable goods orders excluding transportation equipment off 0.3% in the past five months (or so far in the second half of 2022). With that said, new durable goods orders have increased 6.5% year-over-year, or a modest 3.4% with transportation equipment excluded.
U.S. COVID - Cases Fall
The US CDC is reporting 99.7 million cumulative cases of COVID-19 and 1.08 million deaths. Incidence for the week ending December 21 remained relatively stable over the previous week, falling to 455,466 cases from 469,240 cases for the week ending December 14. Weekly mortality fell for the week ending December 14, with 2,703 reported deaths, compared to 3,115 deaths the week ending December 7. Both new hospital admissions and current hospitalizations began falling last week, both down 10% over the previous week.
The Omicron sublineages BQ.1.1 (38%) and BQ.1 (31%) together represent the most dominant subvariants of sequenced specimens in the US. BA.5 (10%) accounts for a dwindling proportion of cases, and a growing proportion of cases are due to XBB (7.2%). A host of other Omicron sublineages—including BF.7, BN.1, BA.5.2.6, BA.4.6, BF.11, BA.2, BA.2.75, BA.2.75.2, and others—make up the remainder of cases.
NYS COVID Update
The Governor updated COVID data through December 23
- Daily: 33
- Total Reported to CDC: 76,728
- Patients Currently in Hospital statewide: 3,908
- Patients Currently in ICU Statewide: 419
7 Day Average Positivity Rate - Cases per 100K population
- Statewide 8.29% - 23.22 positive cases per 100,00 population
- Mid-Hudson: 8.50% - 26.65 positive cases per 100,00 population
Experts Estimate Long COVID Could Cost Economy $3.7 Trillion
Long COVID could end up costing the economy over $3.7 trillion dollars, and the yearly average medical costs will be around $9,000 per patient. The estimates come from David Cutler, an economist from Harvard University. He based his estimates partly on previous research on chronic fatigue syndrome, which closely mirrors COVID-19 both in symptoms and treatment options, CNBC reports. Cutler’s total $3.7 trillion estimate includes a combination of costs related to reduced quality of life, reduced earnings, and increased medical expenses for patients. Individual costs will likely vary between $3,700 and $14,000 per person, Cutler estimates, but the average would come to about $9,000 apiece.
The Motley Fool notes that other costs associated with long COVID could further inflate these numbers. For instance, in addition to losing income, workers may not be able to add to their retirement funds if they’re out of work due to long COVID, meaning they ultimately lose out on matching employer contributions and tax savings.
U.S. to Require Covid Tests for Travelers Coming from China
Beginning Jan. 5, anyone older than 2 years old arriving from China, Hong Kong or Macau will need to show a negative result from a Covid-19 test taken within two days of their flight. The requirement applies to all passengers regardless of nationality or vaccination status, those connecting through other countries, and people transferring through U.S. airports to other destinations.
The move comes after the Chinese government ended its strict Covid-zero policy — hinged to mass testing, tracing and lockdowns — on Dec. 7 following mass protests in November fueled by anger about the strategy. Since then, the Chinese government has stopped publicly releasing data about infections, narrowed the definition of what constitutes Covid deaths and has downplayed anecdotal reports of a surge in Covid fatalities.
Case-Shiller October Home Price Index +8.6% Year on Year
The S&P CoreLogic Case Shiller national home price index increased by 9.2% in October, down from 10.7% in September and notching the first single-digit gain since November 2020. On a month-over-month basis, S&P Case Shiller’s index fell for a fourth straight month, while FHFA’s gauge was unchanged. “As the Federal Reserve continues to move interest rates higher, mortgage financing continues to be a headwind for home prices,” Craig Lazzara, managing director at S&P DJI, said in a statement.
Meanwhile the Federal Housing Finance Agency, which oversees US mortgage-finance entities Fannie Mae and Freddie Mac, said annual home price growth slowed to 9.8% in October from 11.1% in September, marking that index’s first non-double-digit gain since September 2020.
“As Yogi Berra once said, making predictions is hard, especially about the future. So, looking ahead to the New Year, ITIF can offer the following predictions with only 90% confidence. The other half is prescriptive.” Among the topics in Rob Atkinson’s prognostications are US Industrial Policy (unlikely to make a comeback), Big Tech Break Up (misguided), Crypto (Calm down it was a ponzi scheme with fancy tech) and of course China-China and More China (Its more than just Tic Toc).
FuzeHub Funding Opportunities: 2023 Manufacturing Grants
As part of the Jeff Lawrence Innovation Fund, FuzeHub’s Manufacturing Grants are designed to encourage collaboration between not-for-profit organizations and small to medium-sized manufacturing companies in New York State. Individual grants will not exceed $50,000. The number of awards made may vary by funding round depending on other uses of the Fund and the quality of applications received. FuzeHub maintains the right to award less than is being requested.
At least four awards in this round will be made for projects benefiting start-up companies; of those, at least 2 awards will be made to projects that exclude the purchase of equipment (see Guidelines for details). Up to six awards will be made to projects that benefit eligible companies of any stage of maturity, and equipment costs are eligible under those awards.
US Jobless Claims Rise Slightly But Remain Near Historic Lows
Initial claims for state unemployment benefits rose 9,000 to a seasonally adjusted 225,000 for the week ended Dec. 24, the Labor Department said on Thursday, in line with the median estimate among economists polled by Reuters. Meanwhile, the number of people receiving benefits after an initial week of aid rose 41,000 to 1.710 million in the week ending Dec. 17.
After hitting the lowest level since 1969 in May, those so-called continuing claims, a proxy for hiring, have drifted higher since early October. The latest report is the first since February to show them breaching the lower end of the 1.7-1.8 million trend that prevailed in the years leading up to the coronavirus pandemic, a level seen then as emblematic of a tight labor market.
HSBC to Stop Funding New Oil and Gas Fields as Part of Policy Overhaul
HSBC (HSBA.L) will stop funding new oil and gas fields and expect more information from energy clients over their plans to cut carbon emissions, the banking giant said on Wednesday, as part of a wider update of its sector policy. Activist groups that have been critical of HSBC in recent years mostly hailed the move by one of the biggest lenders to energy companies in the world as a keenly awaited update that will drive companies towards a cleaner future.
HSBC said it would continue to finance energy companies at the corporate level to help them overhaul their businesses and drive development of cleaner energy sources, and would assess their strategic plans annually. Covering everything from biomass projects to hydrogen, nuclear and thermal coal, the policy was aimed at driving progress across regions with different energy systems, Celine Herweijer, HSBC's Chief Sustainability Officer said.
New N.Y. Laws That Went Into Effect on January 1
The gas tax holiday expired on New Year's Eve and New York's minimum wage will go up to $14.20 an hour for workers outside of New York City, Long Island and Westchester. Other state laws that will go into effect the following day, on Jan. 1 include:
- A law that expands the window for voter registration, giving until 10 days before an election for an application to be received.
- A change to election law barring "independence" and "independent" from being used in political party names, thus bringing an end to the Independence Party.
- The establishing of a task force to look into social media and violent extremism and publish an annual report on its findings.
- A law that prohibits making or selling cosmetics tested on animals.
- A law allowing New York's college athletes to make money from endorsements without fear of losing scholarships or eligibility.
Hochul Signs “Right To Repair” Electronics Law
The new law will require manufacturers to make available diagnostic manuals and equipment for making the repairs as well as tools. The measure, backed by consumer and environmental groups, is considered the first "right to repair" law in the country. The measure was proposed in order to make it cheaper for repairs to be done to digital devices, which often need to be sent to a manufacturer in order to be fixed. Instead, the law will make it easier for repair shops or the consumers themselves to access manuals and tools.
Environmental organizations cheered the approval of the law, saying it would cut down on potentially toxic electronic waste that has proliferated with the use of smartphones and other mobile devices becoming commonplace. There will be exceptions for the kind of equipment covered by the law, including home appliances, farm equipment and motor vehicles.
Vehicle Demand is Finally Slowing Down
Throughout the pandemic, vehicles have been in high demand and short supply. Automakers have struggled to secure parts, like semiconductors, causing shortages of vehicles on dealer lots and higher prices. But in recent months, we’ve seen some signs that the vehicle market is reversing course: supplies are improving and demand is slowing.
Ever since late summer, it’s been getting easier to find certain types of vehicles at dealerships, said Michelle Krebs with Cox Automotive: “We’re seeing inventory increase with the domestic automakers in particular, with full-size pickup trucks and luxury cars.” That said, Krebs expects vehicle sales to fall 8% this year. That’s because demand for new vehicles is softening, thanks in large part to rising interest rates on auto loans.Hochul’s pick.
Comparing the Electric Pickups on the Market in 2023
GM and Ford are taking their long-running pickup war into the electric era, but they're also facing new competition from Rivian, Tesla and Lordstown Motors. Here's how the various models on sale now and coming to market in 2023 stack up on price, configuration, horsepower, motor configuration, charging, range and more.