Member Briefing Julyl 19, 2023

Posted By: Harold King Daily Briefing,

U.S. Industrial Output Fell in June for Second Straight Month


U.S. industrial production fell by more than analysts expected last month, the Federal Reserve said Tuesday, with a sharp contraction in output seen in consumer durables like automotive products and carpeting. June marked the second consecutive monthly decline, reversing some of the positive figures seen earlier this year. The 0.5% dip in industrial production was driven by a steep contraction in the index for consumer durables -- like appliances, furniture and carpeting -- which fell by 2.7%, according to the Fed.


Consumer nondurables also contracted by 0.9% due to decreases in clothing, energy, as well as food and tobacco production. The only gain last month came from defense and space equipment, which rose by 1.5%. "In short, overall industrial production and manufacturing output were weaker than expected" to end the second quarter, High Frequency Economics' chief U.S. economist Rubeela Farooqi wrote in a note to clients. "Weaker demand for goods and higher borrowing costs are headwinds for manufacturers," she added.


Read more at IndustryWeek

War in Ukraine Headlines

Ukraine and Russia: The Latest News – The Guardian

Russia Targets Southern Ukraine With Drones, Missiles After Attack on Crimean Bridge – The Hill

Russia strikes Ukraine grain port after exiting export deal – Reuters

Russia Amasses 100,000 Troops as it Seeks Breakthrough in Kharkiv Region, Kyiv Warns - Politico

Ukraine Adopts Slow Approach to Counteroffensive: ‘Our Problem Everywhere Is the Sky’ - WSJ

Russia Shares Video Showing Crimea Bridge Damage - Euronews

EU Set to Approve Military Sanctions Against Belarus – Politico

Sea Drones and the Counteroffensive in Crimea - Reuters

Top Republican ‘Very Worried’ About GOP Votes Against Ukraine Aid – The Hill

No Fast Results in Offensive, Warns Ukraine's General Syrskyi -BBC

Top US Firms Supplied Equipment to Keep Russian Oil Flowing after Ukraine Invasion - AP

Interactive Map: Assessed Control of Terrain in Ukraine – Institute for the Study of War

Map – Tracking Russia’s Invasion of Ukraine – Live Universal Awareness Map

Pay Raises Are Finally Beating Inflation After Two Years of Falling Behind

Inflation-adjusted average hourly wages rose 1.2% in June from a year earlier, according to the Labor Department. That marked the second straight month of seasonally adjusted gains after two years when workers’ historically elevated raises were erased by price increases. If the trend persists, it gives Americans leeway to propel the economy through increased spending, which could help the U.S. skirt a recession. Since estimates earlier this year, economists surveyed by The Wall Street Journal have lowered the probability a recession will start in the next 12 months.

Not adjusting for inflation, private-sector workers’ hourly wages were up more than 4% in June from a year earlier. Those gains have eased over the past year, but remain enough to outpace inflation this summer. Overall consumer prices in June rose 3% from a year earlier, down sharply from a four-decade high a year prior. In addition to enjoying solid wage growth, Americans are taking comfort in slower price increases for everyday items—such as gasoline and groceries—that have the biggest influence on their perception of inflation.

Read more at The WSJ

Retail Sales Rise at Slower-Than-Expected Pace in June

Retail sales rose 0.2% in June from the previous month, lower than Wall Street's estimates for 0.5% growth. Sales excluding auto and gas increased 0.3%, in line with estimates from economists surveyed by Bloomberg. Meanwhile, May's sales were revised up to 0.5% from 0.3%. Seven of the 13 categories highlighted in the release saw increases from a month ago. Furniture and home furniture stores increased 1.4% while electronics and appliance stores gained 1.1%. Growth at non-store retailers, which includes online sales, helped keep total sales higher than the month prior with a 1.9% increase from May.

Department stores saw sales decline by 2.4%. Meanwhile, gasoline stations declined by the most of any major category, falling 1.4% from the month prior. Sales at grocery stores fell 0.7%. The monthly retail sales report does not adjust statistics for inflation.

Read more at YahooFinance

COVID Update – New Device Can Detect Covid in the Air Within Five Minutes

Researchers at Washington University in St. Louis (WUSTL) have created a new rapid SARS-CoV-2 detection device that can pick up and identify viral particles from the air within five minutes. The proof-of-concept detector could eventually be used to scan for the virus in hospitals, shopping centers, airports and other public places—and it could even help policymakers with management strategies, the team says.

Until now, devices meant to detect airborne viruses in real time struggled to suck up enough air to concentrate virus particles, reports Tina Hesman Saey for Science News. Previous attempts at the technology have only managed to take in two to eight liters of air per minute, per the publication. They also couldn’t test the air immediately—these techniques relied on additional PCR testing of the samples, which can take as long as 24 hours to give results, writes Alice Park for Time magazine.

Read more at Smithsonian

Senate to Begin Consideration of 2024 NDAA

The Senate will start debate on the 2024 National Defense Authorization Act on July 18, as lawmakers wade through 666 amendments proposed amendments filed to the bill. The proposals cover everything from the Department of State’s authorization bill to a prohibition on slaughtering horses for human consumption; many have little or no relation to defense policy. Senators vie to attach legislation to the NDAA because it’s “must-pass” legislation.

Over the course of debate, most proposed amendments will be dropped. Some may be packaged together for quick, uncontroversial votes. And some will receive their own debates and roll-call votes. The House has already passed its version of the authorization bill, and once both chambers have passed a bill, the two must be reconciled. But first, the Senate must have its day.

Read more at Air Force Magazine

Denied: Over 20% of U.S. Loans Rejected In Last Year—Hitting 5-Year High

Some 21.8% of U.S. loan applications over the last month were denied—the highest rejection rate since June 2018—according to new data from the Federal Reserve, which might suggest higher interest rates and fears from recent bank failures are making it harder for Americans to borrow for everything from cars to houses. This is the first batch of loan rejection data that’s been released since Silicon Valley Bank collapsed in March, which was quickly followed by two other regional bank failures—Signature Bank and First Republic—and sparked concerns about a potential wider banking crisis.

The rejection rate for auto loans over the previous 12 months was 14.2%, up from 9.1% in February and an all-time high since the Fed began tracking this data in 2013. For credit cards, the rejection rate was 21.5%, and for credit card limit increase requests, it was 30.7%. The rejection rate for mortgages was 13.2%, and 20.8% for mortgage refinancing applications. The rejection rate for U.S. loans increased 4.5% in the past four months.

Read more at Forbes

NY Fed Business Leaders Survey: Service Sector Activity Holds Steady in Early July

Activity held steady in the region’s service sector, according to firms responding to the Federal Reserve Bank of New York’s July 2023 Business Leaders Survey. The survey’s headline business activity index climbed five points to zero, its first non-negative reading in ten months. The business climate index rose eight points, but remained negative at -28.1, suggesting the business climate remains worse than normal.

Employment continued to increase, and wage growth moderated somewhat. The pace of price increases was little changed. Looking ahead, firms became more optimistic that conditions will improve over the next six months. The index for future business activity rose eight points to 22.3, its highest level in more than a year, pointing to growing optimism about the six-month outlook. The index for the future business climate remained negative at -7.8. Employment is expected to grow modestly in the months ahead, and capital spending plans picked up.

Read more at The NY Fed

MTA Announces Balanced Budget Through 2027 With Higher Tolls and Fares

The Metropolitan Transportation Authority Monday released its preliminary five-year financial plan that shows a balanced budget through 2027. The financial plan reflects updates since the MTA warned of a fiscal cliff heading into 2023, with a projected $600 million deficit. With the increase of the payroll mobility tax, increased New York City funding for paratransit and other dedicated taxes in the FY 2024 state budget, the MTA projects a balanced budget through 2027, the first time in more than 20 years the authority has projected a balanced budget for five consecutive years.

In addition to new dedicated revenue sources, MTA agencies have begun identifying operating efficiencies. Part of the state’s budget included the authority achieving $400 million in annual operating efficiencies to reduce expenses. With MTA Board approval, a proposed 5.5 percent toll increase and four percent fare increase for 2023 are expected to take effect by the end of August and projected to generate $117 million in 2023. The five-year plan assumes an additional four percent increase in 2025 and in 2027.

Read more at Mid-Hudson News

Chipmaker CEOs Meet Biden Officials As White House Reportedly Readies New Curbs On Chip Sales To China

CEOs of Nvidia, Intel and Qualcomm met with Secretary of State Antony Blinken, Commerce Secretary Gina Raimondo, National Economic Council Director Lael Brainard and National Security Council Director Jake Sullivan Monday to raise concerns about the Biden administration’s attempts to curb the sales of advanced chips to China, amid reports that the White House was mulling additional restrictions on exports of chips used in artificial intelligence applications.

Earlier on Monday, the Semiconductor Industry Association (SIA), which represents top chipmakers in the country, warned that “overly broad, ambiguous, and at times unilateral restrictions risk diminishing the U.S. semiconductor industry’s competitiveness.” The trade group urged the Biden administration to “refrain from further restrictions” before engaging in dialog with the industry. According to Bloomberg, the Biden administration plans to announce new restrictions on the export of AI chips “in the coming weeks.”

Read more at Forbes

Regulatory Update: Emphasis Program To Prevent Warehouse Workplace Hazards

DOL on July 13, launched a national emphasis program to prevent workplace hazards in warehouses, processing facilities distribution centers, and high-risk retail establishments. In the past 10 years, warehousing and distribution centers have experienced tremendous growth with more than 1.9 million people employed in the industry. The Bureau of Labor Statistics data shows injury and illness rates for these establishments are higher than in private industry overall and, in some sectors, more than twice the rate of private industry.

Under this three-year emphasis program, OSHA will conduct comprehensive safety inspections focused on hazards related to powered industrial vehicle operations, material handling and storage, walking and working surfaces, means of egress and fire protection. The program will also include inspections of retail establishments with high injury rates with a focus on storage and loading areas; however, OSHA may expand an inspection’s scope when evidence shows that violations may exist in other areas of the establishment. In addition, OSHA will assess heat and ergonomic hazards under the emphasis program, and health inspections may be conducted if OSHA determines these hazards are present.

Learn more at EHS

U.S. Cutting Tool Orders Climb Again

U.S. manufacturers purchased $210.6 million during May 2023, 10.8% more than during the previous month, indicating domestic manufacturing activity continues to be stable even as other indicators suggest a future economic recession. The new figures –which are supplied by the U.S. Cutting Tool Institute (USCTI) and AMT - the Assn. for Manufacturing Technology in their monthly Cutting Tool Market Report also show a 20.0% improvement over the May 2022 result, and bring the year-to-date total for cutting-tool purchases to $1 billion, 16.1% higher than January-May 2022.

“The cutting tool industry remains inconsistent after 2023 started strong, but demand seemed to decline each month through April,” observed Kyocera SGS Precision Tool president Tom Haag. “The cutting tool consumption in May indicates that metal-cutting production has not been drastically affected yet by a slowdown,” according to AMT’s Jack Burley, chairman of the Cutting Tool Product Group and Committee. “There is some hesitancy from the market for new projects, but overall we are still trending in the right direction.”.

Read more at American Machinist

How China Beat Everyone to be World Leader in Electric Vehicles

In the race to reduce carbon emissions, countries from the U.S. to New Zealand are offering out incentives to spur electric-vehicle sales — tactics China used for years as it turned into the biggest EV market on Earth. Beijing's success is breathtaking. EVs accounted for a quarter of all passenger cars sold in China last year, far ahead of the roughly one in seven in the U.S. and one in eight in Europe. And the pace is accelerating. HSBC expects the EV penetration rate in the world's second-largest economy to reach 90 percent by 2030.

Including plug-in hybrids, China's clean-car sales hit 5.67 million in 2022, more than half of all global deliveries. The country will account for about 60 percent of the world's 14.1 million new passenger EV sales this year. It's not just buyers. Manufacturing is booming too — Chinese brands account for about half of all EVs sold globally, HSBC analysts said in a recent note. Sufficient infrastructure obviously helps with EV adoption. China, which has the largest charging network in the world, added 649,000 public chargers in 2022 alone, which is more than 70 percent of all installations done globally that year.

Read more at Automotive News

UPS Strike Could Cost U.S. Economy Billions—Here’s How It Would Impact Consumers And Businesses

A potential strike against the UPS delivery service by 340,000 workers could lead to slower delivery times, supply chain disruptions and higher shipping costs if the company and the Teamsters union don't come to an agreement over pay for part-time workers and cost of living adjustments by August 1—possibly causing billions of dollars of economic damage. A 10-day UPS strike would be the most expensive strike in at least a century, costing the U.S. economy upwards of $7 billion, a study by the consulting firm Anderson Economic Group found, including $4.6 billion in losses for customers, $1 billion in lost wages and more than $800 million in direct losses at UPS.

Packages going to rural areas with fewer alternative delivery options or coming from small businesses that can’t afford to switch providers will be among the hardest hit with slower delivery times, and big retailers will likely fare better because they already use a variety of delivery services.  Supply chains for things like medical gear and car parts could also be hit hard because those sectors locally rely on business-to-business shipments from wholesalers to operate.

Read more at Forbes

Tesla Selects Orange County, NY for New Distribution Facility

Tesla, the renowned electric car manufacturer, has selected Orange County as the home of their new regional distribution facility for vehicle parts. Tesla will occupy 927,000 square feet built on spec by Matrix Development Group at 1396 Route 300 in the Town of Newburgh. The property, located directly across from the Newburgh Mall and adjacent to the I-84/I-87 interchange, is considered a strategic location for the logistics and warehouse/distribution sector.

“The Tesla signing is yet another example of the value of speculative development, and exactly why we supported the approval of this robust business park…. We welcome Tesla to Orange County with open arms” said Maureen Halahan, President, and CEO of the Orange County Partnership. “Tesla is changing the automotive industry in America and abroad. Having a relationship with Tesla in Orange County can raise income levels for our area and create good jobs. It will also increase competition for our workforce and is another major name in the American economy choosing to come to Orange County.” said Orange County Executive, Steven M. Neuhaus.

Read more at the Orange County Partnership

Dutchess BOCES/SUNY Dutchess/Council of Industry Partnership Receives P-TECH Award

Governor Kathy Hochul last week announced $31.5 million in funding for the New York State Pathways in Technology program that will prepare thousands of New York students for high-skill jobs of the future in technology, manufacturing, health care, and finance. The New York State Pathways in Technology Early College High School (NYS P-TECH) Program incorporates an integrated program between 4 and 6 years in duration that combines high school, college, and career training. The program is a public-private partnership designed to provide students with mentorship and opportunities to learn through worksite visits, speakers, and internships.

Students are eligible to receive an Associate degree in a high-tech field and are first in line for a job with participating business partners following completion of the program. Career pathways begin in grade nine and include workplace learning and high school and college coursework. The pathway provides a seamless sequence of study extending through two years of postsecondary career and technical education which culminates in an Associate degree.

Read more at SUNY

Intel Capital Backs Figure’s Humanoid Robot to the Tune of $9 Million

Bay Area-based robotics firm Figure this week announced that its humanoid officially took its first steps — a milestone it hit a few days shy of the company’s first anniversary. Figure has made a good deal of progress in a short period, due in no small part to founder and CEO Brett Adcock’s initial $100 million bootstrapping. Of course, running any robotics company is a wildly expensive endeavor, let alone one that is building hardware and software for a multipurpose humanoid — a longtime holy grail in this space.

Figure has since started looking beyond its walls for funding to help build that dream. In May, it announced a sizable $70 million Series A led by Parkway Venture Capital. Today the company tells TechCrunch that it’s adding another $9 million equity investment to its war chest courtesy of Intel Capital, which might soon prove to be a strategiIndustrial output fallsc partnership. Access to Intel through its venture arm provides a lot of potential resources for a young company like Figure — especially one that is looking to get up, running and scaling quickly.

Read More at TechCrunch