Member Briefing June 5, 2024
JOLTS Report: Job Openings Drop in April TO Three Year Low
Job openings, a measure of labor demand, were down 296,000 to 8.059 million on the last day of April, the lowest level since February 2021, the Labor Department's Bureau of Labor Statistics said on Tuesday in its Job Openings and Labor Turnover Survey, or JOLTS report. That was 1.24 openings in April for every unemployed person, down from 1.3 in March and the lowest since June 2021. The ratio, watched closely by Fed Chair Jerome Powell as a sign of labor market tightness. Openings fell broadly across sectors; only five industries - professional services, private education, retail, finance and insurance, and transportation - had an increase in openings. The number of people quitting their jobs rose 98,000 to 3.507 million in April. The quits rate was 2.2% for the sixth straight month, and the lowest since September 2020. And layoffs, at 1.52 million, were at their lowest since December 2022.
In manufacturing there were 516,000 openings – down from 546,000 in March and 647,000 in April 2023. Total separations rose to 385,000 in April from 332,000 in March but down from 387,000 in April 2023. Total hires were 387,000 up from 319,000 in March and pretty steady with the 389,000 in April 2023.
Commerce Department: US Factory Order Rose in April, March Numbers Revised Lower
A report released by the Commerce Department on Tuesday showed new orders for U.S. manufactured goods rose by slightly more than expected in the month of April. The Commerce Department said factory orders climbed by 0.7 percent in April compared to economist estimates for an increase of 0.6 percent. The slightly bigger than expected increase in factory orders in April came as orders for durable goods rose by 0.6 percent, while orders for non-durable goods advanced by 0.8 percent.
Shipments of manufactured goods jumped by 1.0 percent in April after rising by 0.4 percent in March. Inventories of manufactured goods also crept up by 0.1 percent in April. the report also showed the jump in factory orders in March was downwardly revised to 0.7 percent from the previously reported 1.6 percent.
Global Factory Activity Shows Signs of Recovery in May
Global factory activity offered signs of recovery last month as contraction slowed in the euro zone and manufacturing activity in most of Asia's largest economies picked up, private business surveys showed on Monday. While a more solid expansion in Asia took hold, the surveys also showed signs that euro zone's manufacturing sector may have turned a corner last month after a long downturn. In Asia, manufacturing activity expanded in Japan for the first time in a year and South Korea's manufacturing grew at the fastest pace in two years, due in part to signs of a pick-up in the automobile and semiconductor sectors, the surveys showed. Manufacturing activity also expanded in Taiwan, Indonesia, Vietnam and the Philippines. In China, the private Caixin survey also showed factory activity in Asia's top economy rising at the fastest pace in about two years on strong production and new orders.
HCOB's final euro zone manufacturing Purchasing Managers' Index (PMI), compiled by S&P Global, rose to 47.3 in May from 45.7. It held below the 50 point mark that separates expansion from contraction for a 23rd month and came in just shy of a 47.4 preliminary estimate. Activity in Germany and France, the bloc's two biggest economies, showed signs of bottoming out.
Global Headlines
Middle East
- Israel and Hamas: The Latest News – The Guardian
- Netanyahu's Ultra-Orthodox Coalition Partners Back Gaza Hostage Deal – Reuters
- Israeli Government Estimates More Than a Third of the 250 Gaza Hostages Are Dead – France 24
- Israel Confirms Deaths of Four More Hostages in Gaza - BBC
- Biden: ‘Every Reason’ to Think Netanyahu Wants War With Hamas to Go On – Politico
- European Powers Submit Iran Censure Motion to IAEA Board - VOA
- Iran's Allies in Iraq Are Firing at Israel. Could that Trigger a Wider War? - Reuters
- Interactive Map- Israel’s Operation in Gaza – Institute for the Study of War
- Map – Tracking Hamas’ Attack on Israel – Live Universal Awareness Map
Ukraine
- Ukraine and Russia: The Latest News – The Guardian
- Ukraine Says Russia Missile Attack Injures 7 in Dnipro - VOA
- Kremlin Says Swiss Summit on Ukraine is Waste of Time Without Russia – Reuters
- Russia Link Suspected in Eiffel Tower Coffin Mystery - BBC
- Putin’s a Bigger Deal Than EU Election in Europe’s Frontline States - Politico
- As The Glide Bomb War Intensifies Over Ukraine, The Ukrainians Have Enough Jets—But Not Nearly Enough Bombs – Forbes
- In Message to Putin and NATO Allies, France Flexes Navy Muscles – Politico
- Ukraine's Electricity Imports Remain High Even as Power Line Undergoes Repairs - Reuters
- 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
Other Headlines
- Modi Loses Majority in Stunning Election Setback, But Is Set to Keep Power in India - WSJ
- Mid-Year 2024 Global Election Reflections – Wells Fargo
- Indian Stocks Lose $386 Billion as Polls Tighter Than Forecast – Yahoo
- Colombia Facing Budget Shortfall of Nearly $7 Billion – Reuters
- Despite South China Sea Row With China, Philippines Eyes ‘Robust, Stable’ Trade - SCMP
- Haiti's New PM Conille Says Leaders are Putting Aside Differences – Reuters
- European Parliamentary Elections: What a Right-Wing Surge Could Mean for the EU – France 24
- First Images of Hawaii's Kilauea Volcano Erupting - BBC
- Japan's Yen Intervention Was Effective to an Extent, Finance Minister Says – Japan Times
Policy and Politics
Biden Announces Order Limiting Asylum at the Southern Border: Here’s What it Will Do
President Biden took long-expected executive action Tuesday that will turn away migrants seeking asylum who cross the southern border illegally at times when there is a high volume of daily encounters. The order will be in effect when the seven-day average of daily border crossings exceeds 2,500 between ports of entry, senior administration officials said, meaning it will go into effect immediately. Biden issued a proclamation announcing the change under the Immigration and Nationality Act.
The core of the new policy is the ability to refuse entry to most foreign nationals who cross the border without prior authorization. For purposes of immigration law, a foreign national enters the United States when they are lawfully admitted by a U.S. official; the new policy will prevent border officials from admitting new asylum seekers while it is active. Officials also said the asylum crackdown will be bolstered by several enforcement measures targeting smuggling networks and organizations that profit from migration in the Western Hemisphere. The measures include revoking U.S. visas for government officials from places including Nicaragua, as well as top corporate officials from companies that provide services like transportation to migrants.
State Legislature Rushes to Pass Bills Before Session Ends Thursday
State lawmakers are attempting to finish up any outstanding business before heading back to their districts at the end of this week. As state Senate Majority Leader Andrea Stewart-Cousins put it, “it’s pencils down” after the last vote. The bulk of lawmakers' priorities were hammered out during state budget negotiations in April, but some issues were left over. Deliberations are now underway on issues related to the environment, adolescent mental health, labor protections, elections, public health and even utilities – with lawmakers hoping to find compromises on a compressed timeline.
- The SAFE for Kids Act and the Child Data Privacy Act became top priorities for lawmakers last month after Gov. Kathy Hochul reaffirmed her support for the two bills – which would, respectively, regulate how social media companies use addictive algorithms with adolescents and restrict the nonconsensual collection of data belonging to children under 18.
- The Packaging Reduction and Recycling Infrastructure Act would require the state to cut its plastics use by 50% over the next 12 years. It would also ban “chemical recycling”. The bill also faces strong opposition. Business groups in the state have also taken a stance against the legislation, warning that it would increase costs.
- The “Better Bottle Bill,” which would increase the deposit for bottle purchases in New York and make more beverage containers (including wine and cider bottles) eligible for deposits. Organized labor and industry leaders have come out against the bill, which they say could place an undue burden on restaurants.
- Lawmakers are considering the NY HEAT Act, a major priority for climate activists as the state attempts to hit its mandated emission reduction goals. The legislation would cap utility payments for low- and moderate-income New Yorkers, remove a subsidy for companies to install new gas hookups and empower the state’s Public Service Commission to enact regulations that would promote the transition away from gas. But the fossil fuel industry and business groups have lobbied hard against the bill arguing it will needlessly increase costs and threaten grid reliability.
- The Executive Chamber hired an outside firm to conduct a probe of the state’s response to the COVID-19 Pandemic a year and a half ago, but its report has not yet been released. A bill sponsored by state Sen. Gustavo Rivera and Assembly Member Jessica González-Rojas would create a state commission independent of the Executive Chamber with the power to subpoena witnesses in order to investigate the state’s response to the pandemic. The bill has been gaining some traction as the session wraps up.
Report: NY Government Transparency has Been Poor. But it's Getting Worse
Despite Governor Kathy Hochul’s vows to make public records and data more easily accessible, many state agencies have become more secretive over the past three years, according to analysis by Reinvent Albany, a nonprofit government watchdog. Far fewer state agencies are now reporting on transparency metrics, such as responsiveness to public-records requests, than in 2021, analysis found. Among the findings:
- A total of 66 state agencies completed 2024 transparency plans, many of which were less detailed than 2021, the group noted.
- Agencies reporting stats on public-records, or Freedom of Information Law (FOIL), plummeted from 2021 (22 agencies, or 31%) to 2024 (6 agencies, or 9%)
- This year, only 49% of agencies had details on their adherence to the state Open Meetings Law. That metric dropped to 39% for the Open Data Executive Order 95 of 2013 and 32% for Project Sunlight.
- In all those key transparency laws and requirements, agencies this year provided less detail about their efforts than they did in 2021.
Health and Wellness
Drug Test Cheating Is At Highest Rate Ever
While employers might expect there to be some cheating when it comes to workplace drug tests, the rate at which this is occurring has reached an all-time high. In the more than 30 years of annual reporting, the percentage of employees in the workplace whose drug test shows signs of tampering increased by more than six-fold in 2023, versus 2022. This finding is part of a new analysis of nearly 9.8 million workforce drug tests released on May 15 by Quest Diagnostics.
The increase in substituted urine specimens in the general workforce, a population of over 5.5 million, was 633% (0.015% in 2022 versus 0.11% in 2023). Invalid urine specimens in the general U.S. workforce increased 45.2% (0.31% in 2022 versus 0.45% in 2023). A result of substituted or invalid suggests a specimen has been tampered with in an attempt to conceal drug use. The increasing rates of substituted or invalid specimens coincide with historically high rates of both general workforce drug positivity and post-accident marijuana positivity.
Read more at Material Handling & Logistics
Election 2024
- Who’s Endorsing Jamaal Bowman and George Latimer?
- In New York and California, a GOP Split Screen on Trump Verdict – Politico
- The Billionaires Rallying Behind Trump After His Conviction - BBC
- Key Races to Watch Across Primaries in NJ, Montana and More – the Hill
- Real Clear Politics Latest GOP Primary Polls – Real Clear Politics
- Real Clear Politics Latest General Election Polls – Real Clear Politics
- Latest Polls - FiveThirtyEight
Industry News
Intel CEO Takes Aim at Nvidia in Fight for AI Chip Dominance, Announces New Products
Intel Corp. Chief Executive Officer Pat Gelsinger took the stage at the Computex show in Taiwan to talk about new products he expects will help turn back the tide of share losses to peers, including AI leader Nvidia Corp. Gelsinger took a direct shot at Nvidia CEO Jensen Huang’s claim that traditional processors like Intel’s are running out of steam in the age of artificial intelligence.
Intel showed its new Xeon 6 data center processors with more efficient cores that will allow operators to cut down the space required for a given task to a third of prior-generation hardware. Like rivals, from Advanced Micro Devices Inc. to Qualcomm Inc., Intel touted benchmarks that showed its new silicon is significantly better than its existing options. AMD and Qualcomm’s CEOs, in earlier Computex keynotes, used Intel’s laptop and desktop processors to show how far ahead they are in certain aspects of technology.
The Dollar Is at Its Strongest Since the 1980s. Can It Last?
Contrary to what many on Wall Street expected, the U.S. dollar has gotten a fresh wind this year, as bumpy inflation data has prompted investors to dial back bets on rate cuts. Measured against other currencies, the greenback is still below the recent 2022 peak when an aggressive Federal Reserve was raising interest rates. But it remains historically expensive in inflation-adjusted terms—just 10% shy of the level at which Richard Nixon ended gold convertibility in 1971, for example, according to data from the Bank for International Settlements. It hasn’t been so consistently strong since the 1980s when the Fed was headed by Paul Volcker, the epitome of the hawkish central banker.
In 1985, the dollar rose so much that U.S. officials became worried about the blow it was dealing to domestic manufacturers. Famously, they agreed to coordinate its depreciation in a meeting with officials from Britain, Germany, France and Japan in the Plaza Hotel in New York. By 1988, it had lost a third of its real value. Something similar could happen again on a smaller scale, particularly if Donald Trump wins the presidential election in November. His economic advisers have in the past advocated for a weaker greenback to narrow the U.S. trade deficit, especially relative to the yuan, which is currently under pressure as foreign investors flee low-yielding Chinese bonds.
OSHA Seeks to Expand Emergency Responder Standards
A new Emergency Response Standard (ERS) has been proposed by the Occupational Safety and Health Administration (OSHA) to impose additional requirements on organizations with employees who respond to workplace incidents, even as a secondary aspect of their work duties. Employers to be covered include manufacturers, warehouses, construction companies, retailers and others employing workers designated to respond to emergencies. “If the proposed rule is adopted, the impact on subject employers will be massive and compliance difficult,” declared John D. Surma, an attorney with the law firm of Ogletree Deakins.
The rulemaking proposal is designed to expand and replace OSHA’s current Fire Brigades Standard, which could easily create the misimpression that the new standard also will apply primarily to governmental emergency responders, note attorneys who work for the law firm of Jackson Lewis. “The proposed rule may sound like it would apply only to municipal entities, but it would cover a broad range of public and private workplaces, as well as volunteer emergency responders.” OSHA estimates the proposed rule will affect 22,552 emergency service organizations and workplace emergency response teams and more than 1.1 million first responders. Any organization that employs first responders or supports a trained internal emergency response team will need to adhere to new training and preparedness requirements, assuming that the proposed rule is adopted in its present form.
Passenger, Cargo Sir Travel on Record Pace
The International Air Transport Association projected the world’s airlines will make $30.5 billion in net profit this year from a record $996 billion in revenues. Passenger numbers will also set a record with 4.96 billion people expected to travel by air. “The human need to fly has never been stronger,” said Willie Walsh, IATA’s Director General. “Moreover, the global economy counts on air cargo to deliver the $8.3 trillion of trade that gets to customers by air.”
While marking the projections as “a major achievement” in terms of the pandemic recovery, Walsh focused on the modest airline margin of just over 3%, with expenses reaching a record high of $936 billion. North American airlines continue to outperform their global peers, and are expected to make $14.8 billion in net profit at an average of $13.10 in profit per passenger.
Maersk’s Outlook Buoyed by Disruptions and Congestion
Growing disruption in international shipping operations is helping turn around financial prospects for container lines at a remarkable pace. A.P. Moller-Maersk just raised its full-year guidance for the second time in barely over a month and offered stark evidence of how shipping’s Red Sea diversions are helping boost global freight rates and carrier earnings. The company says it now expects free cash flow of at least $1 billion, compared with its previous outlook for at least negative $2 billion.
Container lines entered 2024 with capacity far ahead of weak demand and a slew of new vessels on order. But the attacks by Yemen’s Houthis have sent carriers on long, capacity-consuming routes around the region. Drewry’s measure of global freight rates has skyrocketed more than 56% since late April, and rates from Shanghai to Los Angeles are up nearly 60% in the past month. Meanwhile the shipping giant announced on Monday significant delays in vessel schedules due to severe terminal congestion in Mediterranean and Asian ports. The congestion has resulted in extended waiting times at various ports, impacting Maersk’s ability to maintain regular schedules.
Boeing CEO Claims the Airline is 'a Different Company.' Says Board Will Select Successor
Boeing's outgoing CEO David Calhoun told Reuters on Tuesday that the planemaker's board would decide his successor and he would support its choice. Calhoun is set to step down by the end of the year as part of a broad management shakeup brought on by the planemaker's safety crisis. Speculation has grown over his successor. Calhoun supports Stephanie Pope, the head of Boeing's commercial division, while investors, analysts and others have called for a new top executive with both CEO and engineering experience.
"The board is prepared to make their decisions, they have time to be able to make them," Calhoun told Reuters on the sidelines of an aviation conference in Berlin, adding that he is committed to getting the company through its recovery. Calhoun added that Boeing is a “different company” post the Alaska Air incident, but that it's looking to put the crisis behind them.
GE Aerospace Expanding MRO Operation
GE Aerospace is expanding its maintenance, repair, and overhaul (MRO) operation in Tres Rios, Brazil, with an investment of about $82 million (BRL 430 million), largely to increase repair capacity for CFM LEAP engines in that country. GE currently services more than 500 engines annually for the three largest Brazilian carriers, offering engine disassembly and reassembly, MRO, inspection, and testing. GE Aerospace was launched in April and is the surviving entity since the spin off of the former group’s health care and energy businesses. Since April, GE has announced capital investment programs to improve its manufacturing supply chain in the U.S. and abroad, and to increase employment with hundreds more engineers.
The LEAP engine is a series of high-bypass turbofan engines manufactured by CFM International, a joint venture of GE Aerospace and Safran Aircraft Engines. The LEAP-1A variant powers the Airbus 320neo series of twin-engine aircraft, while the LEAP-1B is installed in the Boeing 737 MAX aircraft. When the Brazilian expansion program is complete GE Aerospace will be available to service more than 800 engines annually at that location.
Read more at American Machinist
Toyota Apologizes for Cheating on Vehicle Testing and Halts Production of Three Models
Toyota Chairman Akio Toyoda apologized Monday for massive cheating on certification tests for seven vehicle models as the automaker suspended production of three of them. The wide-ranging fraudulent testing at Japan’s top automaker involved the use of inadequate or outdated data in collision tests, and incorrect testing of airbag inflation and rear-seat damage in crashes. Engine power tests were also found to have been falsified.
The company said the wrongdoing does not affect the safety of the vehicles already on roads, which include the Corolla subcompact and Lexus luxury vehicles. Certification problems starting surfacing two years ago at Toyota group companies, truck maker Hino Motors and Daihatsu Motor Co. — specializing in small models — and Toyota Industries Corp., which makes machinery and auto parts. Mazda and Honda also reported and apologized for improper tests.
Fortune 500 – 70th Anniversary Edition
Seventy years ago, Fortune published the first-ever Fortune 500, the authoritative ranking of America’s largest corporations by revenue. The business world looked a lot different then. America was in the middle of a manufacturing boom, so Fortune’s editors focused the inaugural list on “industrials”—like oil producers, steelmakers, car companies and meatpackers. Today, manufacturing is a much smaller share of the American economy. Retailers, banks, tech, and health care companies now dominate. And the Fortune 500 has been reaching beyond industrials since 1995, making it an authoritative scorecard for the whole business world. A few key trends stand out in the 70th edition of the Fortune 500:
- The past year was the “year of efficiency.” Mark Zuckerberg was right. Profits rose faster than revenues across the Fortune 500 as a whole, as inflation, energy prices, and wage growth cooled.
- High interest rates sent the financial sector soaring. 17 of the 20 fastest-growing companies were in this group.
- California is back! For the first time since 2013, California is home to the most Fortune 500 companies. The state was aided by new entrants, including Workday, DoorDash, and Monster Beverage.
- AI went on a rampage. The 30-year-old server company Super Micro Computer joined the Fortune 500 for the first time. Nvidia and Meta joined the trillion-dollar valuation club. Microsoft is the most valuable company in the world, with a valuation exceeding $3 trillion. All those companies can thank investor optimism about AI for their off-the-charts numbers.
- Walmart and Apple can’t be beat. Walmart remained the highest revenue-generating company for the 12th straight year, and Apple remained the most profitable, generating $97 billion in earnings.
- Despite so much change over the decades, 49 of the original Fortune 500 companies from 1955 have remained on the list every year. They include Spam-maker Hormel, pharma giant Pfizer, and Exxon Mobil.
Read more at Fortune (Subscription)