Member Briefing March 21, 2022

March 21, 2022

Posted By: Harold King in Daily Briefing,

Invasion of Ukraine Headlines

NAM Survey: Manufacturers Still Concerned About Supply Chain, Workforce

Most manufacturers remained concerned about inflation, supply chains, unfilled jobs and the possibility of an increased tax burden last month, when the NAM conducted its Q1 2022 Manufacturers’ Outlook Survey. There were several notable data points from the survey, which took place from Feb. 11 to Feb. 25. These include the following:

88.1% of respondents cited supply chain issues as a primary business challenge in the first quarter.
79.0% cited an inability to attract and keep a high-quality workforce.
89.4% had unfilled positions at their companies and were struggling to fill them.
Job growth in 2021 rose at the best pace since 1994, and wage growth is now at a 40-year high.

Russia’s war on Ukraine, the humanitarian crisis there and the resulting sanctions will likely make current manufacturer challenges worse and could affect energy prices into the second quarter, said NAM President and CEO Jay Timmons.

Cost of Imports Increased in February

The cost of imported goods, including oil, grains and autos, increased 1.4% in February. Import prices rose 1.9% in January. The consecutive month increase is the largest in 11 years. The rise in import prices can largely be attributed to a significant jump in oil prices. The cost of oil rose 8.1% in February, though prices are currently trending down. After rising to nearly $130 a barrel after Russia’s invasion of Ukraine, it is now down to about $100. Export prices increased 3% in February, the highest ever recorded. Exports are up 16.6% over the past year.

Moving forward inflation is likely to remain high through the spring with supply chain delays and Russia’s invasion of Ukraine driving up prices for many important commodities. On Wednesday afternoon, the Federal Reserve announced the first increase in interest rates in four years.

U.S. Industrial Production Increased in February as Manufacturing Output Rebounded

Industrial production in the U.S. increased in line with economist estimates in the month of February, according to a report released by the Federal Reserve on Thursday. The report showed industrial production rose by 0.5 percent in February after jumping by 1.4 percent in January. The continued increase in production came as manufacturing output jumped by 1.2 percent in February after having been little changed in each of the previous two months.

Mining output also inched up by 0.1 percent in February after surging by 1.3 percent in January, while utilities output slumped by 2.7 percent in February after spiking by 10.4 percent in January. The Fed said total industrial production in February was up by 7.5 percent compared to a year ago but noted but severe winter weather significantly suppressed industrial activity in February 2021.

US COVID – Vaccinations at Lowest Point Since December 2020

The US CDC is currently reporting 79.4 million cumulative cases of COVID-19 and 964,831 deaths. The decline in daily incidence is tapering off, with the current average at slightly fewer than 31,000 new cases per day. Daily mortality continues to decline, down to 1,107 deaths per day on March 15. While daily mortality continues in an encouraging direction, the US is still reporting more than 1,000 deaths per day. At this pace, the US would surpass 1 million cumulative deaths in the next month.

The US has administered 558 million cumulative doses of SARS-CoV-2 vaccines. Daily vaccinations continue to decline, down from the most recent peak of 1.79 million doses per day on December 6 to approximately 190,000 on March 10, the lowest average since the first week of available data in December 2020, when supply was still extremely limited. A total of 255 million individuals have received at least 1 vaccine dose, which corresponds to 76.7% of the entire US population. A total of 217 million individuals are fully vaccinated, which corresponds to 65.3% of the total population.

Read more at the Johns Hopkins Center for Health Security

NYS Vaccine and COVID Update –

Vaccine Stats as of March 20:

One Vaccine Dose

89.3% of all New Yorkers – 16,448,924 (plus 1,889 from a day earlier).
In the Hudson Valley 1,710,557 (plus 297).

Fully Vaccinated

75.9% of all New Yorkers – 14,737,334 (plus 1,805).
In the Hudson Valley – 1,501,374 (plus 276).

Boosters Given

All New Yorkers – 7,265,004
In the Hudson Valley – 864,009

The Governor updated COVID data through March 20. There were 12 COVID related deaths for a total reported of 69,958

Hospitalizations:

Patients Currently in Hospital statewide: 900.
Patients Currently in ICU Statewide: 159

7 Day Average Positivity Rate – Cases per 100K population

Statewide 1.87% – 10.30 positive cases per 100,00 population
Mid-Hudson: 2.36% – 16.32 positive cases per 100,00 population

Useful Websites:

New York HERO Act Designation Over, Six Months Later

The New York HERO Act website was quietly updated on the afternoon of March 18, 2022 to confirm that the designation of COVID-19 as an airborne infectious disease that presents a serious risk of harm to the public health has ended. This means the “activation” of HERO Act safety plans is over. As such, elements of the HERO Act plan are no longer required to be implemented, including daily health screening, and social distancing.

On March 17, 2022, the designation of COVID-19 as an airborne infectious disease that presents a serious risk of harm to the public health under the HERO Act ended. Private sector employers are no longer required to implement their workforce safety plans.

Virginia Is Undoing COVID Workplace Rules, Weakening in OSHA’s Permanent Rule Argument

With state and local elected officials pulling back on COVID-19 restrictions across the country, it should not seem too surprising that the state of Virginia is getting ready to withdraw its pandemic-related employee health and safety requirements that earlier served as an example for other states to follow. On Feb. 16, the Virginia Department of Labor and Industry (DOLI) Safety and Health Codes Board (HCB) voted to recommend revoking the Commonwealth’s COVID-19 permanent workplace safety standard.

OSHA issued an ETS requiring employers to ensure their employees were vaccinated against COVID. The U.S. Supreme Court struck down that particular standard as unconstitutional earlier this year. At present, the federal agency is swimming against the tide of nationwide rollbacks and is attempting to resurrect some of these requirements by engaging in a permanent rulemaking process, which federal officials believe would survive future court review.

Omicron v Delta – Study Reaffirms What We All Suspected

Researchers have confirmed what doctors had already noticed about the Omicron variant of covid-19: that cases are a lot milder than with Delta, which it replaced as the world’s dominant strain. A study published on Thursday in the Lancet, a journal, found that this is because Omicron is intrinsically a less severe virus than Delta.

The study examined 1.5m COVID cases in Britain. After adjusting for past infection, vaccination status and so on, the researchers found that the risk of hospitalization for Omicron cases was 59% lower than for Delta. The risk of dying was 69% lower. Unvaccinated people were also less sickened by Omicron than by Delta. Vaccines were somewhat less effective against Omicron but still highly protective. Three jabs reduced risk of hospitalization or death by more than 70%. Inevitably, Omicron will be overtaken by other variants. The hope is that they will be weaker still.

A New COVID Variant ‘Not Yet Known to the World’ Just Recorded in Israel is Not Yet Cause for Alarm

Two Israeli travelers returning home from abroad were found carrying a combination of the Omicron variant and the BA.2 “stealth” Omicron variant—a mutation COVID that the country’s health ministry said is “not yet known to the world.” The Israeli Ministry of Health noted that two COVID strains combining into a new variant was a common phenomenon, explaining that when there are two viruses in the same cell and it multiplies, “they exchange genetic material, creating a new virus.”

Some scientists argue that stealth Omicron deserves its own Greek letter name in the coronavirus lexicon, but while BA.2 exhibits divergent mutations from the original Omicron variant, scientists have been more comfortable calling it a subvariant, as it shares many similar characteristics with its parent strain.

Hudson Valley Unemployment Rate Drops to 3.6 Percent in January, Labor Force Down Year on Year

The January 2022 unemployment rate for the Hudson Valley Region is 3.6 percent. It is up from 2.8 percent in December 2021 and down from 6.1 percent in January 2021. In January 2022, there were 40,500 unemployed in the region, up from 31,300 in December 2021 and down from 68,300 in January 2021. Year-over-year in January 2022, labor force decreased by 1,300 or 0.1 percent, to 1,126,100.

Putnam County 3.3 percent
Rockland County 3.3 percent
Dutchess County 3.5 percent
Orange County 3.7 percent
Ulster County 3.7 percent
Westchester County 3.7 percent
Sullivan County 4.1 percent

Hudson Valley Labor Market Profile – Jan 2022

214,000 Americans Filed New Claims Last Week

New unemployment claims improved more than expected last week, further reflecting a tight labor market and relatively low levels of firings and layoffs.

Initial jobless claims, week ended March 12: 214,000 vs. 220,000 expected, 227,000 during prior week.
Continuing claims, week ended March 5: 1.419 million vs. 1.480 million expected, 1.494 million during prior week

The labor market has remained a bright spot in the U.S. economy, especially as a brief hit from the Omicron variant earlier this year unwound further in the most recent economic data. However, with inflation running at a 40-year high, many economists have begun to wonder when rising prices ultimately begin to meaningfully dent demand — and in turn weigh on employers’ desires to bring back more labor.

Intel Announces Plans to Expand European Chip Production

Intel last week announced its plans for expanding chip production in Europe, up to an $88 billion (€80 billion) investment over the next decade to build new facilities in Germany, France, Ireland, Italy, Poland and Spain, to support the European Chips Act goal of locating 20% of the world’s microchip production in Europe by 2030.

In the first phase of the expansion plan, Intel will break ground in the first half of 2023 on the “silicon junction,” two new fabs in Magdeburg, Germany, with production to begin in 2027 pending European Commission approval. Intel plans to build in France its main European foundry design center, as well as a European R&D hub around Plateau de Saclay, with a focus at the facility on high performance computing and artificial intelligence design capabilities.

Why Electric Bills Keep Rising

According to the U.S. Energy Information Administration (EIA), the average retail residential electricity price increased by 4.3% in 2021 to 13.72 cents per kilowatthour (kWh), its fastest rate since 2008. “We forecast that residential retail electricity prices will continue to rise in 2022, although at a slightly slower rate,” EIA researchers wrote. “In 2022, we expect the average nominal price will increase by 3.9% to 14.26 cents/kWh.”

A natural gas supply crunch has made it more expensive for utility companies to buy or produce electricity. Those prices are then passed on to consumers. The cost of natural gas delivered to power plants averaged $4.98 per million British thermal units, more than double the cost in 2020. Even before Russia invaded Ukraine, natural gas had seen a great deal of volatility. Domestic prices reached the highest levels in years ahead of winter as exporters shipped record amounts overseas, including to Europe.

Homebuilders’ Sales Expectations Drop Dramatically, as Mortgage Rates Soar

Rising mortgage rates are starting to take their toll on the nation’s homebuilders, who are more concerned about affordability heading into the all-important spring housing market as mortgage rates surge. Overall, builder sentiment in the market for single-family homes dropped 2 points to 79 in March. February’s read was also revised lower. Last March it stood at 82.

Builders’ sales expectations for the next six months declined a steep 10 points to 70, according to the National Association of Home Builders/Wells Fargo Housing Market Index. Anything above 50 is considered positive sentiment. The index doesn’t often see such large monthly moves. Builders’ view of current sales conditions fell 3 points to 86. This is the fourth straight monthly decline.

Mortgage Rates Top 4% for the First Time Since 2019

The average rate for a 30-year fixed mortgage topped 4% for the first time since May 2019, Freddie Mac said Thursday. At the beginning of the year, the average rate on America’s most popular home loan was 3.22%. It hit a record low of 2.65% in January 2021 and spent more than half the year under 3%.

Home-lending costs had been rising ahead of the Federal Reserve’s decision Wednesday to raise rates for the first time since 2018. And while the Fed’s quarter-point move didn’t affect Freddie Mac’s weekly average of 4.16%, recorded before the central bank’s announcement, it is likely to send rates even higher. Mortgage rates are closely tied to the yield on the 10-year U.S. Treasury, which tends to rise in tandem with the Fed’s benchmark rate.