Member Briefing January 9, 2023
Manufacturers’ Outlook Survey: Fourth Quarter 2022
The National Association of Manufacturers Q4 2022 Manufacturers’ Outlook Survey shows manufacturers’ concerns around a challenging economic environment characterized by inflation, supply chain disruption and the workforce crisis. The NAM conducted the survey Nov. 29 – Dec. 13, 2022. Key Findings:
- 4% of manufacturing leaders believed that the U.S. economy would officially slip officially into a recession in 2023.
- 7% of manufacturing leaders listed attracting and retaining quality workforce as a primary business challenge with supply chain disruptions (65.7%) and increased raw material costs (60.7%) the next biggest impediments.
- Even in a recession, manufacturers plan to do the following: capital spending on new equipment and technological investments (65.3%), upskilling and training of existing workforce (64.1%), seeing solid demand for their company’s products (63.2%), hiring new employees (55.1%), investing in research and development (52.1%) and spending on new structures and existing facilities (38.6%).
- More than three-quarters of respondents (75.8%) said pushing back against regulatory overreach should be the top priority of the 118th Congress. Other priorities included supporting increased domestic energy production (69.3%), passing comprehensive immigration reform (65.4%), maintaining and permanently extending tax reform (63.0%), controlling rising health care costs (55.5%), addressing the skills gap facing manufacturers (50.5%) and modernizing permitting to reduce red tape (40.0%).
- 9% of respondents have a positive outlook for their company, the lowest since the third quarter of 2020.
War in Ukraine Headlines
- Ukraine and Russia: The Latest News – The Guardian
- Sliding Natural-Gas Prices Deal Surprise Reprieve to Europe – WSJ
- Ukraine Troops to Get Bradley Fighting Vehicles – Defense Department
- What is the Bradley Fighting Vehicle Being Sent to Ukraine - Insider
- How Russia's Invasion of Ukraine Changed its Standing With Other Former Soviet Republics - NPR
- How a Billion Lost Eggs Show the Challenges Facing Ukraine’s Economy - WSJ
- The Christmas Ceasefire that Wasn't - BBC
- Now Fighting for Ukraine: Volunteers Seeking Revenge Against Russia – NY Times
- Ukrainians Are Defending Their History, Thought, Art, and Culture, Too - Time
- Map – Tracking Russia’s Invasion of Ukraine – Live Universal Awareness Map
U.S. Hiring Remains Resilient as Wage Increases Cool and Participation Rate Ticks Slightly Higher
U.S. employers added 223,000 jobs in December, a sign of continued strength in the labor market. The jobless rate moved down to 3.5% from a revised 3.6% in November. For all of 2022, U.S. employers added 4.5 million jobs, the second-best year for job creation on records back to 1940 after 2021, when the labor market rebounded from the pandemic-induced shutdowns and added 6.7 million jobs.
Wage growth continued to cool. Average hourly earnings rose 0.3% in December from the previous month, down from a 0.4% increase in November. They were up 4.6% from the previous year, down from a revised 4.8% gain in November and well below a March peak. The labor participation rate, or the share of adults working or looking for work, rose slightly to 62.3% in December from 62.2% in November. Still, the participation rate remains well below prepandemic levels, one possible factor that could make it harder for employers to fill open positions.
U.S. Trade Deficit Narrowed Sharply in November as Global Demand Cooled
America’s imports fell more than exports, causing the country’s deficit in trade of goods and services to narrow in November by 21% to a seasonally adjusted $61.51 billion, the Commerce Department said Thursday, compared with a $77.85 billion gap in October. This was the steepest monthly rate drop in nearly 14 years, adding to signs of a global economic slowdown through the holiday season amid high inflation and climbing interest rates.
U.S. imports declined 6.4% to $313.37 billion, as Americans cut back sharply on holiday-related purchases, including items from abroad such as computers and autos. U.S. exports dropped 2% to $251.86 billion, reflecting weakening demand for American products, including natural gas and crude oil.
U.S. COVID – XBB.1.5 Takes Hold
The US CDC is reporting:
- 6 million cumulative cases
- 09 million deaths
- 402,525 cases reported week of December 28
- 17% decline in weekly incidence as of December 28
- 2,530 deaths reported week of December 28
- 14% decline in weekly mortality as of December 28
- 17% increase in new hospital admissions
- 6% increase in current hospitalizations
The Omicron sublineage XBB.1.5 experienced rapid growth over the past 2 weeks, accounting for an estimated 40.5% of all new sequenced specimens. BQ.1.1 (27%) and BQ.1 (18%) fall in line next, with various other Omicron subvariants accounting for the remainder of cases.
Read more at The Johns Hopkins Center for Health Security
NYS COVID Update
The Governor updated COVID data through January 6.
- Daily: 26
- Total Reported to CDC: 77,026
- Patients Currently in Hospital statewide: 4,157
- Patients Currently in ICU Statewide: 410
7 Day Average Positivity Rate - Cases per 100K population
- Statewide 8.58% - 25.18 positive cases per 100,00 population
- Mid-Hudson: 10.04% - 29.37 positive cases per 100,00 population
RSV Recedes and Flu Peaks as a New COVID Variant Shoots 'Up Like a Rocket
As the new year begins and the depths of winter approach, U.S. infectious disease experts monitoring the "tripledemic" stew of viruses that have been plaguing the country say there's good news — and bad. The good news is the worst appears to be over from the RSV surge. RSV cases have been falling steadily since the end of November, according to the Centers for Disease Control and Prevention. At the same time, the flu looks like it's finally receding in most places, according to the latest data out Friday from the CDC.
The Bad news is the rate at which the coronavirus is being detected in wastewater, which has become a bellwether for the pandemic, has tripled or quadrupled in many parts of the U.S. in recent weeks. COVID-19 hospitalizations have jumped 70%, and 300 to 400 people are dying every day from COVID-19. To make matters worse, all this is happening as yet another new, even more transmissible variant has taken over in the United States. Called XBB.1.5, this new omicron subvariant was barely on the radar in late November. But according to new estimates released Friday by the CDC, XBB.1.5 now accounts for almost a third of new infections and is the dominant variant in the Northeast.
Environmental Group Joins State Lawsuit Against Norlite, LLC Under New State Constitutional Amendment
A group opposing the Norlite aggregate plant/incinerator wants to join the Attorney General’s lawsuit against the company. The Group, “Lights Out Norlite,” is seeking an order that would essentially make the state Department of Environmental Conservation order the plant to cease operations. They are assisted by lawyers and students from the Pace University Environmental Litigation Clinic.
The DEC is currently reviewing Norlite’s application to renew its air emission permits. The Lights Out group is also pointing to the year-old Green Amendment as a reason to enforce changes or a closure of the facility. That amendment, approved by voters last year, states that all New Yorkers have a constitutional right to clean air and water as well as a “healthful environment.” It has just recently emerged as a factor in environmental lawsuits. Earlier this month, a judge in Rochester cited the Green Amendment as a reason to let a lawsuit against a landfill there proceed.
JPMorgan’s Chief U.S. Economist: ‘We Are Expecting the Economy to Slip Into a Recession’
The Federal Reserve’s ongoing attempts to stuff the inflation genie back in its bottle will slowly trickle down into the jobs market and trigger a recession before the year is out, warns JPMorgan. The Wall Street bank’s chief U.S. economist Michael Feroli expects the Fed is prepared to stifle growth and destroy demand in order to ensure expectations of continued price increases in the medium term do not take root among American businesses and consumers.
“I don’t think it’s going to be a very happy year,” he told Bloomberg. “We are expecting the economy to slip into recession by the end of the year, just due to the lag effect of the tightening in financial conditions that the Fed has engineered here as well as the additional rate hikes they’re signaling.” The JPMorgan economist forecasts U.S. consumer price rises will not return toward the Fed’s 2% target rate until probably the earlier part of next year.
Weekly Jobless Claims Fall to Lowest Level Since September
Around 204,000 people applied for first-time unemployment benefits last week, according to the latest data from the Bureau of Labor Statistics. That’s down from the previous week’s total jobless claims and only slightly below the pre-pandemic weekly average of 218,000. Continuing claims, which are filed by people who have received unemployment benefits for more than one week, decreased to 1.69 million for the week ended December 24, from 1.72 million.
Thursday’s data indicates continued resilience in the labor market despite inflation-fighting efforts by the Federal Reserve intended to cool the economy — and which would ordinarily have a negative impact on the job market, resulting in layoffs.
NFIB Jobs Report: Hiring Plans Weaken in December as Labor Shortages Challenge Small Businesses
Small business owners’ plans to add positions remain elevated, with a seasonally adjusted net 17% planning to create new jobs in the next three months, down one point from November and 15 points below its record high reading of 32% reached in August 2021. Forty-one percent (seasonally adjusted) of all owners reported job openings they could not fill in the current period, down three points from November. The share of owners with unfilled job openings continues to exceed the 49-year historical average of 23% but 10 points below its record high of 51 percent last reached in July.
Overall, 55% of owners reported hiring or trying to hire in December, down four points from November. Ninety-three percent of those hiring or trying to hire reported few or no qualified applicants for the positions they were trying to fill. Twenty-six percent of owners reported few qualified applicants for their open positions and 25% reported none. The percent of small business owners reporting labor quality as their top small business operating problem remains elevated at 23%, up two points from November.
U.S. Moves to Bar Noncompete Agreements in Labor Contracts, Sues Companies Over Issue
The Federal Trade Commission has proposed a rule that would bar companies from requiring employees to sign a noncompete agreement, which limits workers' ability to leave for a rival or to strike out on their own in the same field. The FTC says barring noncompete agreements could raise pay by almost $300 billion annually.
The FTC also announced it was suing three companies (Prudential Security, O-I Glass, and Ardagh Group—the latter two are largest manufacturers of glass food and beverage containers in the country) as well as two individuals it accused of exploiting non-compete restrictions. The order accuses the companies of driving down wages and making it difficult for new competitors to enter the market. According to the agency’s press release, this legal action marks the first time the FTC has sued to halt unlawful non-compete restrictions.
Empire Center Study: Math Proficiency Plummeted on Statewide Exams
The Empire Center issued an analysis of the recently-released results of Math and English Language Arts achievement exams taken statewide last spring by students in grades 3-8, revealing the nature and extent of learning loss during the pandemic among New York schoolchildren. The report analyzes the results of the first full administration of these annual exams to be conducted since the onset of the pandemic.
The most pronounced change in achievement occurred in math, where proficiency rates dropped sharply from 48.5 percent to 41.2 percent. The state assessment data reveals dramatic decline across grade levels. Proficiency in grades 3-5 declined from 50.4 percent to 42.5 percent, while in grades 6-8 it declined from 42.4 percent to 33.8 percent.
Read more at The Empire Center
Stellantis to Manufacture Electric Air Taxis
Stellantis NV will become a manufacturing partner to Archer Aviation for the latter’s new electric vertical take-off and landing (eVTOL) aircraft, pledging to invest up to $150 million of equity capital by 2024. The start-up aircraft business is building a manufacturing plant in Covington, Ga., which is scheduled to be in production by next year. An eVTOL, or urban air taxi, is an electric-powered aircraft able to hover, take-off, and land vertically. The Archer Midnight eVTOL is to be powered by lithium-ion battery packs, providing 142 KWh of energy and a maximum power of 1,300 KW.
Among the airframe manufacturers involved in different eVTOL projects are Airbus, Boeing, and Embraer, with propulsion systems being developed by GE Aviation, Rolls-Royce, and Pratt & Whitney, among others. Honeywell Inc. is developing avionics technology specific to eVTOL operation.
Read more at American Machinist
Regulatory Update: New Law Ends Sexual Harassment NDAs
Last December, President Biden signed into law the Speak Out Act (SOA), which prohibits employers from using nondisclosure agreements (NDA) and those addressing nondisparagement to block the victims of sexual harassment and assault from making their stories public—and all employers need to pay attention to its impact.
The law, which passed both houses of Congress with overwhelming bipartisan support, went into effect as soon as it was signed into law by Biden on Dec. 7. It applies only to pre-dispute NDAs, such as those included in employment contracts. Employers are still allowed to use these provisions as part of settlement agreements regarding disputes involving sexual harassment
NY Fed Global Supply Chain Pressure Index: The China Factor
The Global Supply Chain Pressure Index (GSCPI) is a parsimonious global measure designed to capture supply chain disruptions using a range of indicators. While supply chain disruptions have significantly diminished over the course of 2022, the reversion of the index toward a normal historical range has paused over the past three months. The analysis attributes the recent pause largely to the pandemic in China amid an easing of “Zero COVID” policies.
The initial period of decline saw it drop to 2.8 by March 2022, after which the index temporarily increased in April, primarily due to pandemic lockdowns in China and the Russia-Ukraine war. The GSCPI then experienced five consecutive months of declines, reaching a low of 0.9 in September. However, the past three months have witnessed a pause in the reversion to the historical average, with the index increasing by a total of 0.29 points in October and November before declining by 0.05 points last month, leaving the total three-month increase at about a quarter point.
The Rise of ‘Quiet Hiring’ Companies Focus On Maximizing Their Existing Talent
As organizations seek a workforce with the skills they need for the future, the potential economic slowdown and talent market squeeze are going to prompt some to turn to “quiet hiring,”. Gartner defines this strategy as “the process when organizations acquire new skills and capabilities without acquiring new full-time people.” Quiet hiring can show up as an increased emphasis on internal talent mobility, with particular focus on deploying employees based on business priorities—and with an eye toward reducing fluctuations in headcount.
Whereas previously, managers may have tried to hoard high-po talent, through quiet hiring, business leaders are now offering opportunities proactively—and directly—to employees, with the buy-in of the C-suite. Another avenue for investment in the current workforce is growth opportunities like rotational programs, apprenticeships, educational courses and more—offered during work hours to entice employees to actively pursue development.