Member Briefing January 4, 2023
PMI Manufacturing Index Falls at Steeper Rate in December
US Manufacturing PMI was 46.2 in December pointing to the biggest contraction in factory activity since May of 2020, amid weak client demand. Output fell at a solid pace that was the quickest in just over two-and-a-half years and new orders fell at one of the fastest rates ever. Companies noted that weak client demand stemmed from economic uncertainty and inflationary pressures leading to lower purchasing power among customers.
Foreign client demand also contracted as dollar strength and global economic uncertainty weighed. Also, purchasing activity dropped markedly and at the fastest pace since May 2020, leading to broadly unchanged lead times for inputs, as supplier capacity constraints were less apparent than earlier in the year. Meanwhile, backlogs of work contracted at a steep pace and employment rose only slightly. On the price front, inflation slowed. Also, output expectations picked up to three-month high, but remained historically subdued.
War in Ukraine Headlines
- Ukraine and Russia: The Latest News – The Guardian
- Russian Anger Grows Over Deadly Strike - Reuters
- Ukraine Says Russia Plans to Retaliate for Deadly Strike on Military Base with "Prolonged" Drone Attack -CBS
- Reinsurance Costs Rise Up to 200% as Ukraine War and Extreme Weather Bite – Financial Times
- Victory Over Russia in Ukraine May Bring World War 3: Niall Ferguson - Bloomberg
- War Against Ukraine Has Left Russia Isolated and Struggling - NPR
- Suspected Mastermind Of Banksy Mural Theft In Ukraine Could Face 12 Years In Prison – Radio Free Europe
- Ukraine Has Digitized Its Fighting Forces on a Shoestring - WSJ
- Western Sanctions Hamper Russia's Economy, But Ukraine War Still Rages - CBC
- Russian Mercenary Leader's War Of Words With Moscow's Military Brass Deepens Amid Fighting In Bakhmut – Radio Free Europe
- Map – Tracking Russia’s Invasion of Ukraine – Live Universal Awareness Map
Kevin McCarthy Falls Short of Becoming Speaker; House Adjourns Until Noon Today
Republican leader Kevin McCarthy's bid to become speaker of the House fell short after three rounds of voting and the House adjourned until noon on Wednesday.
Mr. McCarthy needed the support of almost all Republicans due to the party’s thin majority, and the results in three rounds put him short of the majority of lawmakers present and voting – or 218 of the current 434 members – required to secure the speakership. The speaker vote hadn’t gone to a second ballot since 1923. The 20 Republican House members who voted to deny the speaker’s gavel to Rep. Kevin McCarthy on Tuesday come from heavily Republican districts and, with one exception, easily won election to Congress in November.
Where Did Americans Move in 2022? North American Van Lines Shares their Map
In 2022, Americans were on the move, but where to? Most found themselves leaving high cost of living areas in favor of warmer climates and more reasonable housing conditions. California and New York sit towards the top of the highest cost of living lists in the United States. To find affordable housing and provide a higher quality of life for their families, people are branching out of expensive states and cities or urban areas.
The chosen states for inbound moving migration predominantly reside in the south. Whether it’s a coincidence or not, many of these states were among the first to lessen Covid-19 regulations. While it’s a possibility that the surge in remote work leads people to areas with less restriction in the short term, it could also be that these locations offer a smaller tax burden in the long term as well.
U.S. COVID - Over 40% of New Cases Caused by Omicron Subvariant XBB.1.5
The CDC estimates that XBB.1.5 has more than doubled its share of the Covid-19 pie each week for the last four, rising from about 4% to 41% of new infections over the month of December. In the Northeast, the CDC estimates, XBB.1.5 is causing 75% of new cases. Experts point out that XBB.1.5 appears to have arisen in the United States. It was first detected in New York and Connecticut in late October, according to GISAID, a global effort to catalog and track variants of the coronavirus.
XBB.1.5 is the product of recombination: Two descendants of BA.2, the subvariant that drove a modest wave of cases in the US in April, swapped pieces of their genetic code, resulting in 14 new mutations to the virus’ spike proteins compared with BA.2, and a new sublineage, XBB.
The E.U. And China Are Barreling Toward a Political Standoff Over COVID-19
The European Union and China on Tuesday moved closer to a political standoff over the COVID-19 crisis, with Beijing vehemently rejecting travel restrictions some E.U. nations have started to impose that could be expanded in coming days. An E.U. offer of help, including vaccine donations, was also as good as slapped down, with Beijing insisting the situation was “under control” and medical provisions “in adequate supply,” government spokesperson Mao Ning said.
Fearful not to be caught unawares like at the outset of the global pandemic in early 2020, the E.U. Integrated Political Crisis Response group is now set on Wednesday to decide whether to impose E.U.-wide entry requirements from China.
IMF Head: A Recession is Coming for Most Developed Nations in 2023
With 2023 upon us, many bankers, economists, and business leaders have cautioned to brace for a global economic contraction that will send many countries plunging into a recession. As much as one-third of the global economy could enter recession territory this year, IMF director Kristalina Georgieva said over the weekend, warning of a “tough year” ahead for the world.
Georgieva said simultaneous contractions in three major economies—the U.S., the EU, and China—will be the driving forces behind a global recession, as wealthy nations will be unable to escape economic slowdowns.
Manufacturing Alliance 2023 Legislative Session Survey
To best guide our advocacy efforts toward some of the state legislative and policy issues that are most important to you, The Council of Industry and The Manufacturing Alliance of New York ask that you please take a few minutes to complete this brief survey--it should take about 3 minutes to complete.
Your responses will remain confidential, and we will inform you of the survey’s results within the next few weeks. Please complete the survey by January 3, 2023.
New York Legislative Session Starts Today With Democrats Holding Supermajorities in Both Houses
Today marks the start of the 2023-2024 Legislative Session, beginning a new two-year legislative cycle. The 2023 Legislative Session includes 60 total scheduled session days, beginning today and ending on June 8th. All bills introduced as part of the previous legislative cycle expired on December 31, 2022. Sponsors may re-introduce their legislation into the new 2023-2024 session, and newly introduced bills will be active for the 2023 and 2024 sessions. Legislative offices started this process in December by “prefiling” legislation that will be active starting on the first day of session.
Andrea Stewart-Cousins has been re-elected the Senate Majority Leader of the Senate, and the Democratic Conference continues to hold a supermajority. Carl Heastie has been nominated once again to remain Speaker of the Assembly and is expected to be re-elected following the start of session. Assembly Democrats will also retain their supermajority in the 2023-2024 legislative cycle. We will keep you updated on important bills and the budget as the session progresses.
Shift to EVs Triggers Biggest Auto-Factory Building Boom in Decades
The U.S. auto industry is entering one of its biggest factory-building booms in years, a surge of spending largely driven by the shift to electric vehicles and new federal subsidies aimed at boosting U.S. battery manufacturing. Through November, about $33 billion in new auto-factory investment has been pledged in the U.S., including money for the construction of new assembly plants and battery-making facilities, according to the Center for Automotive Research, a nonprofit organization based in Michigan.
About two-thirds of the new auto investment revealed over the past two years is going to sites in the U.S. South, the data shows, tilting activity farther away from the Great Lakes region, the auto industry’s stronghold for a century.
Tesla Q4: Record Deliveries of 405,278 Vehicles Still Misses Target. China Chief Tom Zhu Will Lead NA and Europe Operations
Tesla Inc. delivered 405,278 cars worldwide in the fourth quarter, eking out a record despite rising interest rates, inflation and crimped production in China. The results, posted Monday, missed expectations. In an effort to clear inventory, Tesla dangled discounts of $7,500 to U.S. consumers who took delivery in the last days of December. Tesla delivered more than 1.31 million cars for the year, falling short of the 50 percent year-over-year growth the company has aimed for. In 2022, vehicle deliveries grew 40 percent from a year earlier, while production climbed 47 percent to 1.37 million, Tesla said in a statement. The company produced 439,701 vehicles.
Tesla's China chief Tom Zhu has been promoted to take direct oversight of the electric car maker's U.S. assembly plants as well as sales operations in North America and Europe, according to an internal posting of reporting lines reviewed by Reuters.
China’s Economy Ends Year in Slump as Covid Infections Surge
China's factory activity shrank at a sharper pace in December as surging COVID-19 infections disrupted production and weighed on demand after Beijing largely removed anti-virus curbs, a private sector survey showed on Tuesday. The Caixin/Markit manufacturing purchasing managers' index (PMI) fell to 49.0 in December from 49.4 in November. The index has stayed below the 50-point that separates growth from contraction for five straight months.
Logistics snags lengthened suppliers' delivery times for the sixth month in a row, while employment in the manufacturing sector contracted for the ninth consecutive month due to muted production levels and difficulties sourcing workers amid the virus outbreaks.However, manufacturers were still somewhat upbeat with the sub-index of future output surging to the highest since February as COVID restrictions were rolled back.
Fading Supply Problems Ease Downturn in German Manufacturing -PMI
S&P Global's final Purchasing Managers' Index (PMI) for manufacturing, which accounts for about a fifth of Germany's economy, rose to 47.1 from November's 46.2. While it was the third month-on-month increase in a row, the index is still below the 50 mark, meaning activity continues to shrink, albeit at a slower pace.
"The survey signalled better availability of materials, and with it an easing of the decline in production," leading to some of the gloom around the sector lifting, said Phil Smith, Economics Associate Director at S&P Global Market Intelligence. Price pressures also lifted somewhat with the improvement in material availability. The input prices index was at its lowest since November 2020, though above the pre-pandemic average.
German Inflation Slows in December on One-Off Energy Payment
German inflation eased for a second month in a row in December due to falling energy prices and the government's one-off payment of household energy bills, coming in below expectations even as analysts warn that a continued slowdown is not a given. German consumer prices, harmonised to compare with other European Union countries, rose by 9.6% on the year in December, preliminary data from the Federal Statistics Office showed on Tuesday. Analysts polled by Reuters predicted prices would rise by 10.7% year-on year in December.
A one-off payment for household energy bills in December, part of government efforts to shield consumers, had a downward effect on prices, according to the statistics office. Compared with November, December prices fell by 1.2%.
More Bosses Order Workers Back to the Office as Job Market Shifts
Companies including investment giant Vanguard Group, workplace technology company Paycom Software Inc. and others have sent directives to employees in recent weeks, urging workers to follow existing hybrid schedules or to come into the office on additional days in 2023, according to internal memos viewed by The Wall Street Journal and interviews with employees. In some cases, bosses have told those who fail to comply that they could face termination within weeks.
Employees at some companies have challenged new directives in corporate all-hands sessions. Those pushing to remain at home say they find in-office work unproductive and commuting inefficient. Employers, meanwhile, say bringing workers back together is important because it helps with issues such as problem solving, training new hires and reinforcing corporate culture.
Stay for Pay? Companies Offer Big Raises to Retain Workers
Wages for workers who stayed at their jobs were up 5.5% in November from a year earlier, averaged over 12 months, according to the Federal Reserve Bank of Atlanta. That was up from 3.7% annual growth in January 2022 and the highest increase in 25 years of record-keeping. Employees who changed companies, job duties or occupations saw even greater wage gains of 7.7% in November from a year earlier. The prospect that employees might leave for bigger paychecks is a main reason companies are raising wages for existing employees.
Many workers aren’t feeling the pay gains, though. Wages for all private-sector workers declined by 1.9% over the 12 months that ended in November, after accounting for annual inflation of 7.1%, according to the Labor Department.