Member Briefing June 5, 2023

Posted By: Harold King Daily Briefing,

ISM: U.S. Manufacturing Slumps Further in May; Employment Ticks Up

U.S. manufacturing contracted for a seventh straight month in May as new orders continued to plummet amid higher interest rates, but factories boosted employment to a nine-month high. The Institute for Supply Management (ISM) said on Thursday that its manufacturing PMI fell to 46.9 last month from 47.1 in April. It was the seventh straight month that the PMI stayed below the 50 threshold, the longest such stretch since the Great Recession.

Manufacturing has been depressed by rate hikes worth 500 basis points from the Federal Reserve since March 2022, when the U.S. central bank embarked on its fastest monetary policy tightening campaign since the 1980s to tame inflation. The ISM survey's forward-looking new orders sub-index dropped to 42.6 last month from 45.7 in April. The survey's gauge of factory employment increased to 51.4 from 50.2 in April. That suggests further gains in manufacturing payrolls in May after they rebounded in April.

Read more at Reuters

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+339K - U.S. Job Growth Beats Expectations in May, Wage Hikes Moderate

Nonfarm payrolls increased by 339,000 jobs last month, the Labor Department said in its closely watched employment report on Friday. Data for April was revised up to show payrolls rising by 294,000 jobs instead of 253,000 as previously reported. Despite strong hiring, the unemployment rate rose to 3.7% from a 53-year low of 3.4% in April. Wage pressures are also subsiding. Average hourly earnings gained 0.3% after rising 0.4% in April. That lowered the year-on-year increase in wages to 4.3% after advancing 4.4% in April. Annual wage growth averaged about 2.8% prior to the pandemic.

Business services, healthcare, construction, and transportation and warehousing were among the sectors adding jobs. Low unemployment has put pressure on wages as employers compete for scarce workers. Manufacturing saw a decline of 2,000 jobs as higher borrowing costs continue to be a drag on the sector.

Read more at Reuters

U.S. Job Openings Rose in April, Reversing Three Months of Decline

U.S. job openings climbed in April and layoffs fell in signs that employers’ demand for workers remains strong as the economy gradually slows. Employers reported a seasonally adjusted 10.1 million job openings in April, the Labor Department said Wednesday, up from a revised 9.7 million in March. April’s increase reversed three months of declines. Layoffs fell to 1.6 million in April, from 1.8 million in March. “Businesses are clearly hoarding labor, particularly in retail and leisure and hospitality,” said Ryan Sweet, chief U.S. economist at Oxford Economics. “If you get laid off, you’re finding work very, very quickly.”

Job openings increased for positions at retailers, warehouses, healthcare businesses and transportation. Vacancies declined at factories, real-estate firms, and state and local governments. The number of times workers quit their jobs held roughly steady at 3.8 million in April, a sign that workers remain confident in their ability to find a new job.

Read more at The WSJ

COVID News: These 12 Symptoms Define Long COVID

Although the COVID-19 public health emergency has ended, employers still are dealing with the lingering effects of long COVID in the workplace. Until now, there may have been as many questions as answers about how to even define the illness. The RECOVER Initiative, funded by the National Institutes of Health, last week released results of a four-year, $1.15 billion study in JAMA. The research is expected to help standardize the definition of long COVID and have a significant impact on how the condition is diagnosed and studied, said Leora Horwitz, a physician and co-principal investigator for RECOVER.

The study, based on 9,764 participants, identified 12 symptoms of long COVID: Loss of smell or taste, Post-exertional malaise, Chronic cough, Brain fog, Thirst, Heart palpitations, Chest pain, Fatigue, Dizziness, Gastrointestinal symptoms, Issues with sexual desire or capacity, Abnormal movements (including tremors, slowed movements, rigidity or sudden, unintended and uncontrollable jerky movements)

Read more at Benefits Pro


The Governor updated COVID data for the week ending June 2.


  • Weekly: 42
  • Total Reported to CDC: 79,670


  • Average Daily Patients in Hospital statewide: 545
  • Average Daily Patients in ICU Statewide: 59

7 Day Average Cases per 100K population

  • 2.1 positive cases per 100,00 population, Statewide
  • 2.5 positive cases per 100,00 population, Mid-Hudson

Useful Websites:

Behind Rise in Unemployment, Job Market Is Really Strong

May’s jobs report (above) looked confusing, with the unemployment rate jumping to 3.7% from 3.4% yet the number of jobs soaring. But the underlying data still show surprising strength. However, the household survey, from which the unemployment rate is derived, showed employment down 310,000.

Such divergences aren’t unheard of, and often result from differences in how the two surveys define employment. For example, the number of unincorporated self-employed and workers on unpaid absences, who aren’t counted in the payroll survey, fell sharply from a year earlier, while the number of people with more than one job rose sharply. When adjusted to the payroll definition, household employment was up 394,000, a very healthy figure.

Read more at Forex Factory

NFIB Jobs Report: Small Businesses Have Record High Levels of Job Openings

According to NFIB’s monthly jobs report, 44% (seasonally adjusted) of all owners reported job openings they could not fill in the current period, down one point from April but still 20 points higher than the 49-year average reading. The percent of owners reporting labor quality as their top small business operating problem remains elevated at 24% and 10% of owners reported labor costs as their single most important problem.

Small business owners’ plans to fill open positions remain elevated with a seasonally adjusted net 19% planning to create new jobs in the next three months, up two points from April. Overall, 63% reported hiring or trying to hire in May. Of those hiring or trying to hire, 89% of owners reported few or no qualified applicants for the positions they were trying to fill. Thirty-one percent of owners reported few qualified applicants for their open positions and 24% reported none.

Read more at the NFIB

Comptroller Concerned as State Tax Collections are Far Below Projections

We are now more than a month and a half into the new NYS fiscal year, and NYS Comptroller Thomas DiNapoli has some concerns. A big part of the problem -- personal income tax collections. In April those totaled $7.5 billion, 49.4% below last year. A decline had been expected the Comptroller says, but not that big of a drop.

Earlier this month DiNapoli reported that "state tax collections in April totaled just over $10.9 billion, a $7.2 billion, or 39.9%, decrease from last April, and $4.4 billion lower than projections in the Division of the Budget’s 2024.

Read more at WRGB

The U.S. and Europe Are Entering a New Trade Era

The first pandemic in living memory has forced a rethink of global supply chains. Massive investments are now pouring into climate change efforts. New technologies like artificial intelligence and next generation 6G communication networks threaten to upend how economies and governments function. Running beneath it all: growing anxiety over competition from China and an increasing focus in both the EU and U.S. on propping up domestic industries instead of encouraging global imports.

Rather than return to the traditional give-and-take of tariff negotiations, the Biden administration has embraced a “worker-centered” trade policy. Instead of pushing trading partners to adopt digital regulations more amenable to U.S. tech companies or open their markets to more U.S. investment, it’s heavily focused on raising foreign labor and environmental standards to level the playing field for U.S. workers. That’s all happening without offering the reward of greater access to America’s lucrative consumer market for fear of political repercussions.

Read more at Politico

NY Fed: Inflation Persistence Declined Significantly in April

Multivariate Core Trend (MCT) estimates revised down the recent path for inflation persistence: from October 2022 to January 2023 the trend held steady at a level close to 4¾ percent, after exceeding 5 percent during most of 2022. Since January 2023, the trend has been on a steep decline. The sectoral decomposition shows that the decline in the trend was initially due to decline in core goods and non-housing services inflation; in the last three months, however, a substantial moderation in housing played the biggest role. The Multivariate Core Trend is a dynamic factor model estimated on monthly data for the seventeen major sectors of the PCE price index.

IThe contribution of housing inflation to the increase in the persistent component of inflation from the onset of the pandemic, at about 0.5 percentage point (ppt), is now below the cumulative contribution of services ex-housing (0.7 ppt) and above that of goods (0.3 ppt).

Read more at the NY Fed

Biden Signs Debt Ceiling Bill

Biden signed H.R. 3746, the “Fiscal Responsibility Act of 2023,” two days before Monday’s default deadline, on which the U.S. would run out of cash to pay its bills, according to a White House release. In the release, Biden thanked House Speaker Kevin McCarthy, Senate Majority Leader Chuck Schumer and Minority Leader Mitch McConnell “for their partnership.” And in his first formal Oval Office address Friday evening, Biden declared a “crisis averted.”

The Senate passed the bipartisan budget deal in a 63-36 vote Thursday. The House passed the legislation a day earlier by a vote of 314 to 117, with 149 Republicans joining 165 Democrats in favor of the agreement brokered by Biden and House Speaker Kevin McCarthy, R-Calif., after months of political warfare over government spending. The legislation caps spending for the next two years and includes measures to claw back about $28 billion in unspent Covid relief funds, as well as eliminating $1.4 billion in IRS funding and shifting roughly $20 billion of the $80 billion the IRS got through the Inflation Reduction Act to nondefense funding.

Read more at CNBC

OPEC-Plus: Production Cut Talks Come to the Fore

Signs are mounting that Opec-plus may move to cut oil output again as key producers began to gather in Vienna ahead of Sunday's closely-watched ministerial meeting that will try to find the right message for what has been a tumultuous oil market. Continued price weakness, which has seen dated Brent crude prices average just over $75 in the month of May, has left ministers mulling a number of options to inject more confidence into the market, which analysts say is tricky as fundamentals appear to be disjoined from sentiment.

Sources close to the US government told Energy Intelligence that Washington was not looking for any specific action by the group, even if that included further production cuts. This would mark a departure from October 2022, when the Opec-plus announcement of a 2 million barrel per day production cut drew howls from US officials, who interpreted it as a sign of support for Russia.

Read more at Energy Intelligence

Auto Sales Spike in May

Automakers are reporting strong May sales, with the Toyota division ending a four-month losing streak, Honda Motor Co. sales soaring, and Hyundai and Kia posting double-digit increases for the tenth consecutive month.  Industry experts speculate rising inventory and incentives, and sharply higher fleet deliveries were the reason behind the upward trends. The breakdown of sales by automaker is as follows:

  • Toyota Corp.’s sales increased by 6.4% to 187,204. Sales of light trucks for the Toyota brand increased by 11%. Total sales of Tacoma and Tundra pickups rose 35% to 31,048 units.
  • Honda Motor Co. sales increased 58%, buoyed by three core models—Accord, up 81%; Civic, up 98%; and CR-V, up 95%. 
  • Hyundai deliveries jumped 18% to 70,001, alongside an 8% increase in retail volume to 64,070.
  • Kia has one of the industry’s lowest stockpiles but still saw a 23% increase in U.S. sales to 71,497.
  • Mazda sold 33,262 vehicles, marking the eighth straight month of growth and a 117% increase in volume.

Read more at Auto Dealer Today

Ford’s Farley: EV Cost Parity Will Come After 2030

Making electric vehicles will be cost-competitive with legacy combustion-engined cars in 2030 at the earliest, Ford Motor Co. CEO Jim Farley said May 31. Farley said it will take Ford at least another product generation to simplify its EVs’ designs and wring out enough costs. That puts the cost parity target for a typical $40,000 EV between 2030 and 2035, during Ford’s transition from its second to its third cycle of EV products. By then, he added, lithium iron phosphate batteries will dominate and Ford will have “dramatically lower labor content and dramatically lower distribution costs.”

Farley has long been hammering away at the need for simpler vehicle designs—and told the Bernstein audience that the second generation of Ford EVs will have 40% fewer fasteners, for instance—but also said May 31 that “a lot more regulatory support” than the new $7,500 tax credit will be needed to get EV adoption rates to 50% of the U.S. market over time.

Read more at CNBC

Lockheed, US Army to Develop Space-Based Weapons

Defense giant Lockheed Martin and the U.S. Army have established a Cooperative Research and Development Agreement (CRADA) to improve system connectivity for better Beyond Line of Sight (BLOS) targeting, and to demonstrate “space-enabled defense systems.”  The stated objective is for Lockheed and the U.S. Army Combat Capabilities Development Command’s Aviation and Missile Center (AvMC) “to identify and develop concepts of operations for linking ground-based platforms to the space domain.”

SIL’s advanced modeling and simulation tool suite will help the team accelerate development of prototypes and align technical resources between U.S. government agencies and industry. Among the CRADA’s planned projects will be efforts at improving satellite communications (SATCOM) with defense systems; identifying overlapping capabilities that can enhance connectivity; looking for capability gaps; conducting hardware-in-the-loop tests; testing the connectivity between platforms at various speeds; and exploring ancillary use of communications systems.

Read more at American Machinist

What’s the Secret to Compelling More Women to Pursue Careers in Manufacturing?

A comprehensive new report by the national trade association Women in Manufacturing, in partnership with Xometry, finds that young women immersed in science, technology, engineering and mathematics (STEM) education are more than twice as likely as young men to choose a career in manufacturing. Thirty-eight percent of women intentionally seeking a career in industry graduated from a STEM program, compared with just 18% of men, according to the 2023 Career Advancement for Manufacturing Report.

Women are often hailed as the largest untapped talent pool in manufacturing and represent a tremendous human resource as the industry undergoes a massive digital transformation. So what more can be done to improve their representation at all levels in industry? Among the solutions are: strengthen education, change perceptions, lure and retain but most importantly increasingly encouraging girls and young women to pursue STEM educations is the impetus needed to deliver the results we all want.

Read more at Smartindustry