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Member Briefing June 10, 2024

June 10, 2024

Posted By: Harold King in Daily Briefing,

Top Story

May Jobs Report: U.S. adds More Jobs Than Expected. Wages Up. Unemployment Rate Edges Higher

Data from the Bureau of Labor Statistics released Friday showed the labor market added 272,000 nonfarm payroll jobs in May, significantly more additions than the 180,000 expected by economists. Meanwhile, the unemployment rate rose to 4% from 3.9% the month prior. May's job additions came in significantly higher than the 165,000 jobs added in April. The largest job increases in Friday's report were in healthcare, which added 68,000 jobs in May. Meanwhile, government employment added 43,000 jobs, and leisure and hospitality added 42,000 jobs.

Also in Friday’s report, the labor force participation rate slipped to 62.5% from 62.7% the month prior. However, participation among prime-age workers, ages 25-54, rose to 83.6%, its highest level in 22 years. Wages, considered an important metric for inflation pressures, increased 4.1% year over year, reversing a downward trend in annual gains from the month prior. On a monthly basis, wages increased 0.4%, an increase from the previous month's 0.2% gain.

Read more at Yahoo Finance

Import Surge Leads U.S. Trade Deficit to Balloon in April

The U.S. international trade deficit widened sharply in April. The balance declined by nearly $6 billion, marking the largest one-month contraction in a year and pushing the overall balance to a deficit of $74.6 billion. Such large monthly swings in the deficit are not completely unusual, but the volatility has increased in the wake of the pandemic. Consider that the trade balance's average monthly change, in absolute value terms, was $2.4 billion in the four years leading into the pandemic. That nearly doubled in the past four years to an absolute average of $4.6 billion. The deficit now sits at its widest point since October 2022.

U.S. exports rose $2.1 billion in April, led higher by goods exports specifically, but that gain paled in comparison to imports, which rose four-times as fast as exports, surging by $8.0 billion. This outstripping of exports by imports is what caused the overall trade deficit to sharply widen. The largest dollar gain on the exports side was in capital goods, which rose $1.9 billion in April. On the Import side there was a 3.1% gain in capital goods and the 10.4% jump in automotive vehicle imports in April. Computers and accessories together accounted for 67% of the gain in capital goods imports last month.

Read more at Wells Fargo

Global Headlines

Middle East

Ukraine

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Policy and Politics

NHTSA Finalizes 50.4-mpg CAFE Standard for New Vehicles by 2031

The Biden administration on Friday backed off its proposal for a dramatic rise in fuel economy requirements for SUVs and pickup trucks, in yet another move that risks deflating the climate activists whose enthusiasm could hold the key to the president’s reelection. The new Department of Transportation rule still calls for passenger vehicles to get more miles from each gallon of gasoline — but the improvements for the industry’s popular gas-guzzlers will be significantly less than the department had proposed a year ago.

Under the rule, formally known as the Corporate Average Fuel Economy standards, all light-duty vehicles overall must meet an average of 50.4 mpg in 2031, down from 55.7 mpg in last year’s proposal. The current average is 39.1 mpg. For SUVs and pickups, the requirement will be 45 mpg. That’s up from the 35.2 mpg they average now, but it’s less than the 52.2 mpg that the agency had proposed last year.

Read more at Politico

Texas Sues to Block DOL Overtime Rule

Republican Texas Attorney General Ken Paxton in a complaint filed in Sherman, Texas, federal court on Monday said the rule violates federal wage law by basing eligibility for overtime on how much workers are paid rather than the duties they perform. The expanded rule, released by the Department of Labor in late April, violates states’ constitutional right to structure the pay of state employees and thus how to allocate their budgets, Texas said. Attorneys added that the regulation—which the department has said would make about 4 million additional workers eligible for overtime pay—will force states to “eliminate or alter employment relationships and cut or reduce services and programs.”

Also on Monday in Texas, software company Flint Avenue filed a suit saying “the rule is arbitrary and capricious, and that the DOL lacked the authority to issue the change.” Under the rule, starting in 2025, most employees making less than $58,656 will be owed time-and-a-half wages when they work more than 40 hours in a single workweek. The current threshold is about $35,500. NAM Managing Vice President of Policy Chris Netram said in April that “This … regulatory hurdle will complicate manufacturers’ efforts to fill the millions of jobs our industry is projected to create within a decade.”

Read more at Reuters

Congestion Pricing Reversal, ‘Payroll Mobility Tax’ Proposal Cause End-of-Session Roadblocks in Albany

Gov. Kathy Hochul's surprise announcement to delay the implementation of New York City's congestion pricing plan dropped a bombshell on the Legislature — upending earlier negotiations on controversial late-session priorities and legislation that was expected to pass both houses. Proposals that lawmakers thought would easily clear both houses remain up in the air after the governor's reversal of the plan, citing affordability concerns that are a top issue for New York voters.

Hochul petitioned legislative leaders Thursday to pass a Payroll Mobility Tax on New York City employers to fill the $1 billion Metropolitan Transportation Authority gap left by delaying congestion pricing. But lawmakers rejected the proposal and said one day was insufficient to negotiate a new tax — especially in an election year. Senators will work through the night into early Friday, with the Assembly expected to work through Saturday. It's unclear what impact the tension between Democrats will have on the political chess game being played at the end of session.

Read more at NY State of Politics

Health and Wellness

Lung Cancer Was a Death Sentence. Now Drugs Are Saving Lives.

There is more hope than ever for people diagnosed with the deadliest cancer. Declines in smoking and the advent of screening and newer drugs have transformed the outlook for patients with lung cancer, once considered a death sentence. Progress against the disease has propelled the drop in overall cancer deaths in the U.S. over the past three decades. And there is more to gain. More patients can fend off the disease for months or years with targeted or immune-boosting drugs, results released this weekend at a top cancer conference showed. That includes patients with forms of the disease that are notoriously tough to treat.

AstraZeneca’s drug Tagrisso can contain lung cancer nearly three years longer than chemotherapy and radiation alone for some stage-three patients, one study released Sunday showed. Another found that some patients with aggressive disease survived nearly two years longer with the company’s immunotherapy drug Imfinzi, the first advance for that lung-cancer subtype in decades.

Read more at The WSJ

NYS COVID Update

The Governor updated COVID data for the week ending May 31st.

Deaths:

Weekly: 12
Total Reported to CDC: 83,370

Hospitalizations:

Average Daily Patients in Hospital statewide: 512
Patients in ICU Beds: 51

7 Day Average Cases per 100K population

4.1 positive cases per 100,00 population, Statewide
4.4 positive cases per 100,00 population, Mid-Hudson

Useful Websites:

Election 2024

Industry News

First-Quarter US Labor Costs Revised Down on Weaker Output and Hours, Productivity Falls

US labor costs increased in the first quarter by less than previously reported, reflecting downward revisions to economic output and hours worked and consistent with other signs of moderating activity. Unit labor costs, or what a business pays employees to produce one unit of output after taking into account changes in productivity, rose at a revised 4% annual rate, down from an initially reported 4.7%, according to Bureau of Labor Statistics figures published Thursday. From a year earlier, unit labor costs were up just 0.9%, the slowest pace in three years.

Productivity, or the output per hour of nonfarm employees, barely rose in the first three months of the year, revised down slightly to a 0.2% pace. On the whole, quarterly productivity figures are volatile. That said, a sustained slowdown would represent another hurdle for the Fed’s quest to tame inflation. Many companies are undertaking efforts to improve efficiency — including through the use of artificial intelligence — but high interest rates have forced businesses to be selective about capital investments.

Read more at Bloomberg

Amid Record Heat Predictions, Focus on Employee Safety

After last year’s summer of intense—and, in many cases, life-threatening—summer heat, employers nationwide may now be thinking about what HR can do to get ahead of the ongoing impacts of “extreme weather” on employees. The record heat is one challenge; add in the ongoing threat of wildfires and predictions about a stronger-than-normal hurricane season and you have a triple threat that employers need to prepare for, along with other possible weather-related events.

According to Alana Genderson, a Washington D.C.-based partner at the Morgan Lewis law firm, and key member of the firm’s safety and health practice, persistent heat waves and other weather events bring corresponding legal obligations employers must consider. Since April 2022, OSHA has had a national emphasis program on indoor and outdoor heat-related hazards, which targets industries whose workforces are expected to have the highest exposures to heat—and resulting illnesses and deaths. OSHA does not have one single temperature where employers suddenly need to have a heat-stress program. Instead OSHA has periodically published recommendations for protecting employees from heat hazards. Among other things, the agency recommends that employers account for employees’ individual health issues when setting job expectations, along with worker/worksite-specific factors like temperature, the frequency of breaks, shade and acclimatization.

Read more at HR Executive

The Goal for China’s Chip Giant: Cut Out the U.S.

Efforts by the U.S. and its allies to erase China from semiconductor supply chains are being met by parallel moves in China itself. Beijing is undertaking an aggressive plan to build commercial chips with only domestic tools, a technological self-survival tactic that would help insulate China from U.S. sanctions. The effort is part of a broader campaign to eradicate American technology in China, dubbed “Delete A” or “Decouple From A.”

The plan is focused on sites such as a SMIC plant outside Beijing that incorporates chip-production equipment into its manufacturing line. It’s one sign of how geopolitics is recasting the global supply chains for chips that are at the center of crucial electronics and a range of manufactured goods, and shifting trade flows for the high-value goods. This year, the country will add more new semiconductor-production capacity than the rest of the world combined.

Read more at Pharma Manufacturing

Deere & Co. Cutting Production, Salaried Workforce

Deere & Co. plans to reduce its production and salaried workforce as part of efforts by the farm and construction machinery maker to meet its strategic priorities while reducing overlap and redundancy. The Moline, Ill., company disclosed the plans in a brief filing with the Securities and Exchange Commission without specifying how many jobs it plans to shed. Deere currently has roughly 83,000 employees, according to data from FactSet.

Deere last month cut its profit outlook for the current fiscal year and forecast steeper sales declines across two of its three main business segments, citing shaky demand for agricultural and turf products. The company on Wednesday said the planned job cuts don’t affect the revised guidance. Deere said it expects activities related to salaried employees will take place during the current quarter, which ends in late July.

Read more at the WSJ

GM Canada Pauses Plan To Manufacture EV Motors At St. Catharines Plant

In February 2023, GM Authority reported that the GM St. Catharines plant in Canada was scheduled to begin producing GM Ultium Drive motors alongside ICE-powered engines in 2025. However, the Detroit-based automaker may now take a step back from this timeline. “Work continues to retool the V6 engine and six-speed transmission lines at St. Catharines Propulsion Plant to make way for EV drive units, and we are assessing the timing for that transition,” GM Canada Corporate and Internal Communications Director Natalie Nankil remarked. “We will continue with our long-standing strategy of building to demand for our propulsion technologies.”

According to a report from Welland Tribune, GM Canada is reevaluating the timing of its plans to build EV motors at the propulsion facility as it continues to retool the plant. Notably, Unifor Local 199 President Jordan Lennox stated that The General has yet to officially inform the Canadian union when EV motor production would begin and claimed that approximately 300 unionized employees will be laid off during the retooling process.

Read more at GM Authority

German Manufacturing Orders Declined Unexpectedly in April

German manufacturing orders unexpectedly fell in April, reflecting the persistent difficulties in the industrial sector even as Europe’s largest economy gradually recovers. Orders were 0.2% lower than the prior month, German statistics office Destatis said Thursday, compared with the 0.6% rise expected by a consensus of economists polled by The Wall Street Journal. It came after orders fell 0.8% in March, weaker than the 0.4% originally published. Over a three-month period, new orders were down 5.4%, mainly due to major aircraft orders in December 2023.

In April, orders of aircraft, trains and ships dipped 15%, on month, with computers, electrical equipment and machinery also seeing declines. But Germany’s key car industry saw orders increase 4.1%, Destatis said. Domestic orders fell 0.3%, while foreign orders fell by just 0.1%, according to the data.

Read more at The WSJ

AP-NORC/EPIC Poll: Many Americans Are Still Shying Away from EVs

About 4 in 10 U.S. adults say they would be at least somewhat likely to buy an EV the next time they buy a car, according to the poll by The Associated Press-NORC Center for Public Affairs Research and the Energy Policy Institute at the University of Chicago, while 46% say they are not too likely or not at all likely to purchase one. The poll results, which echo an AP-NORC poll from last year, show that President Joe Biden’s election-year plan to dramatically raise EV sales is running into resistance from American drivers. Only 13% of U.S. adults say they or someone in their household owns or leases a gas-hybrid car, and just 9% own or lease an electric vehicle.

Only 21% of U.S. adults say they are “very” or “extremely” likely to buy an EV for their next car, according to the poll, and 21% call it somewhat likely. Worries about cost are widespread, as are other practical concerns. About half of U.S. adults cite worries about range as a major reason not to buy an EV. About 4 in 10 say a major strike against EVs is that they take too long to charge or they don’t know of any public charging stations nearby.

Read more at the AP

Starliner Arrives at ISS Despite Thruster Malfunction

Starliner reached the International Space Station (ISS) June 6, making contact with the orbiting lab at 1:34 p.m. EDT (1734 GMT) as the duo flew over the southern Indian Ocean. That was a bit later than originally planned. Starliner missed its first docking chance, at 12:15 p.m. EDT (1615 GMT), after five of its 28 reaction-control thrusters malfunctioned. But the mission team got four of those impacted thrusters back online, and Starliner was cleared to approach the ISS in the next window. (You can follow our Boeing Starliner live updates for the latest on the mission.

Starliner launched Wednesday (June 5) on its first-ever astronaut mission, known as Crew Flight Test. CFT is sending NASA astronauts Butch Wilmore and Suni Williams to the ISS for a roughly week-long stay.

Read more at Space.com

The History of the Jobs Report

Its technical name is the Employment Situation Summary. Business journalists call it the monthly jobs report. But it’s actually two reports, based on two different surveys. The Current Employment Statistics is a statistical sample of employers gathered by the Bureau of Labor Statistics. The Current Population Survey is a statistical sample of American households conducted by the U.S. Census Bureau for the BLS.

“If you want how many jobs there are out there, what kind of hours, what wages are being paid, geographic and industry detail, then the payroll survey’s the place you want to go,” said Cornell University economic adviser Erica Groshen, who served as BLS commissioner from 2013 to 2017. “But you can’t find out who’s unemployed by talking to businesses,” Groshen continued. “So if you want to know how many people are looking for work, who’s not looking for work and why, then you need a household survey.” So how did we get these two different datasets? Let’s go back 140 years to 1884.

Read more at Marketplace

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