Member Briefing May 2, 2023
ISM: U.S. Manufacturing Contracts Again in April
U.S. manufacturing pulled off of a three-year low in April as new orders improved slightly and employment rebounded, but activity remained depressed amid higher borrowing costs and tighter credit, which have raised the risk of a recession this year. Despite the weakness in factory activity and demand for goods reported by the Institute for Supply Management (ISM) on Monday, there was a build-up of inflation pressures last month.
The ISM said its manufacturing PMI increased to 47.1 last month from 46.3 in March, which was the lowest reading since May 2020. Economists polled by Reuters had forecast 46.8. It was the sixth straight month that the PMI remained below 50, which indicates contraction. And activity could remain subdued as the ISM noted that customers' inventory levels "are now at the low end of the 'too high' level," and "likely not conducive to future output growth." The ISM says a PMI reading below 48.7% over a period of time generally indicates the economy is in recession.
War in Ukraine Headlines
- Ukraine and Russia: The Latest News – The Guardian
- Russia Hunts for Spies and Traitors — at Home - Politico
- Homes Smashed, 34 Wounded in Latest Russian Strikes on Ukraine - Reuters
- Russia Launches Second Pre-Dawn Missile Attack in Three Days - BBC
- Why China's Man for Peace in Ukraine Might be the 'Best Possible Choice' for Russia - NBC
- These Democrats are Leading the Call for Biden to Send Jets to Ukraine – The Hill
- War-Crimes Prosecutions in Ukraine Are a Long Game – The Economist
- Russia Launches Another Aerial Assault as Fighting Intensifies - NYT
- McCarthy Responds to Russian Reporter: Russia 'Should Pull Out' of Ukraine – USA Today
- 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
Fed Meeting Preview: Powell Faces Rate Hike Decision Amid Sticky US Inflation
Chair Jerome Powell has achieved a near-perfect consensus as the Federal Reserve raised interest rates aggressively. Now, with the hiking campaign drawing to a close, that agreement is going to be a lot tougher to maintain. With inflation as high as 9% in the past year, Powell’s colleagues were all-in on the fight to curb price pressures, with another 25 basis-point hike expected Wednesday that might be the concluding increase. Yet that consensus is already showing signs of splintering, amid inflation that remains too high while Fed staff — and many private economists — see a recession later this year.
While Wall Street appeared to believe the banking turmoil was largely contained last month the tumult in First Republic Bank last week revived those fears. Concerns that tightening credit standards could help push the economy into a recession have also revved up. Another point of concern is the labor market. While it has remained historically strong during the course of the Fed’s interest rate hikes, it started showing signs of cooling in March. That suggests that the Fed’s dual mandate to stabilize prices while keeping unemployment rates at a minimum could get even more complicated.
China Manufacturing PMI Hits Lowest Level Since Post-Covid Reopening, Official Data Shows
China’s manufacturing activity unexpectedly contracted in April while expansion of services slowed, in the latest evidence of the challenges facing Beijing amid an uneven post-Covid economic recovery. The official manufacturing purchasing managers’ index (PMI) fell below the 50-point mark separating monthly expansion and contraction to 49.2 in April from 51.9 in March, hitting the lowest level since China’s post-pandemic reopening late last year, according to the National Bureau of Statistics on Sunday.
It underperformed the market estimate of 51.5, which came after China posted a surprise economic growth of 4.5 per cent in the first quarter. A sub-index to measure new orders dipped to 48.8 from 53.6, indicating decline in market demand and acting as a major contributor to the fall in the headline indicator. Another index to gauge new export orders also fell to contraction range – to 47.6 from last month’s 50.4 – its lowest level in three months.
COVID News – CDC to Stop Tracking Covid Levels in Communities
The Centers for Disease Control and Prevention is planning to stop tracking the spread of Covid in communities across the U.S., the agency said Friday. Moving forward, the CDC is expected to rely more heavily on Covid-related hospitalizations, according to two people familiar with the plans — much like it does to track the spread of the flu. The agency has been using a color-coded system since February 2022 to indicate high, medium or low transmission of Covid, county by county.
But as reported cases have steadily fallen and availability of rapid, at-home tests has risen, it has become difficult to get an accurate view of how much virus is circulating. The CDC is expected to announce the new tracking system within the coming weeks. The news was first reported by CNN. The CDC said the move away from tracking community level transmission is tied to the May 11 expiration of the national public health emergency.
New York Budget Veteran: Governor and Legislature Racked up Wins While Hochul Changed Narrative
Gov. Kathy Hochul’s Thursday night announcement of a budget framework came as a surprise to many in Albany, but according to Shontell Smith, a veteran of budget negotiations as the former chief of staff and chief counsel to the Senate Democratic Conference, and currently executive vice president for Tusk Strategies, what happened wasn’t new or unusual. Politically, according to Smith, both the governor and the Legislature came away with significant victories.
“For the governor, I think it was important for her to get some wins and reset the conversation. The conversation has been the Legislature’s in charge, not the governor. The governor is saying, no, I’m here. I’m in charge,” Smith said. Hochul is now able to say she garnered a major victory on bail, which was her number one priority. At the same time, she didn’t get everything she wanted, which can be considered a victory for the Legislature. “This was a budget where the speaker and the majority leader had to play a lot of defense in the budget. You look at the governor’s original executive budget proposal. It was heavy on policy, policy the conferences would not have agreed with. What the speaker and the majority leader did was spend the past two months fighting the policy and getting it to a place where people felt comfortable,” she said.
Dollar Gains Before Fed Meeting, Jobs Data
The dollar rose to an almost two-week high against a basket of currencies on Monday before the Federal Reserve is expected to hike interest rates by an additional 25 basis points and after data showed that U.S. manufacturing pulled off a three-year low in April. Investors will focus on whether the U.S. central bank indicates that it expects to pause rate increases after May, or if it keeps alive the possibility of an additional hike in June or later when it concludes its two-day meeting on Wednesday.
The dollar had gained on Friday after data showed that core inflation stayed elevated in March. Consumer price inflation data next week will be watched for further signs of inflation remaining high. Jobs data on Friday is this week’s main economic focus. It is expected to show that employers added 180,000 jobs in April. The dollar index was last up 0.41% on the day at 102.13 after reaching 102.19, the highest since April 19. The euro fell 0.43% to $1.0970. The single currency is holding just below a one-year high of $1.1096 reached last Wednesday.
A Breach at Expeditors International Contributed to Supply-Chain Snarls in 2022, Effects Still Felt
When Expeditors International of Washington Inc. discovered on a Sunday in February last year that hackers had penetrated its network, the global logistics company shut down most of its operating and accounting systems to protect its data and infrastructure. That, in turn, limited its ability to ship freight, manage customs processing and distribute customers’ products. The outage went on for three weeks. Expeditors, which provides logistics services for auto makers, retailers, manufacturers and pharmaceutical companies, hasn’t said what kind of hack it experienced.
Fourteen months after the incident, Expeditors is still dealing with the fallout, battling longtime customer iRobot Corp. in court over the delays and lost business. Though the $2.1 million being sought by the Roomba robot vacuum maker is small change for either company, the case reflects the long tail of a cyberattack and the fragility of the global supply chain where a major shipping company’s operations can be derailed by hackers.
Who is Taking Advantage of the State’s Paid Family Leave Program?
New York State recently began providing 12 weeks of fully paid parental leave for certain State employees to bond with a newborn, adopted or foster child. The State’s parental leave policy builds on a prior program enacted in 2016 that greatly expanded paid family leave for employees statewide and increased the share of private workers eligible for the benefit in New York to at least 88 percent in 2021 — compared to 23 percent nationally. Analysis of claims data from the initial four years of the program indicates:
- Participating insurers approved over 550,000 claims and paid over $2.2 billion in cash benefits to eligible employees.
- Bonding with a newborn child generated over 80 percent of all payments and more than 70 percent of all claims by claim type.
- Women filed and received about two-thirds of all program claims and payments.
- Service employees — such as health care, education, information and legal services workers — accounted for nearly 45 percent of all claims by industry.
- Employees earning less than $40,000 per year accounted for the greatest number of claims, with the number generally decreasing as income rises, suggesting paid family leave is a particularly important benefit to low- to moderate-income employees.
What's The Most Popular PhD Among Billionaires?
Plenty of billionaires never went to college. Some, like Mark Zuckerberg, are famous for dropping out. But at least 35 U.S. billionaires hit the books hard back in the day, spending years in school obtaining a Ph.D. before going on to build or bolster fortunes in the world of business.
In all, at least nine American billionaires got an engineering Ph.D., the most popular degree among high-dollar doctorates. Another 26 got their advanced degree in something else, ranging from STEM fields like biology and chemistry to operations research, marketing and social policy. These billionaires, who account for less than 5% of the 735 Americans on Forbes’ 2023 list, are worth a collective $165 billion. Many made big bucks from their specialized knowledge, while others found great wealth in completely different domains.
Homing in on the Time-Consuming and Pointless Tasks Companies Can Eliminate to Boost Productivity…
In ways big and small, America’s corporate leaders are on a renewed quest to become more efficient. Inflation remains high, profit margins are shrinking and turmoil in the banking sector has increased the likelihood that the U.S. economy tips into a recession. The threat of an economic contraction has put companies under growing pressure from investors to reduce waste and boost productivity. That has led to a wave of layoffs and other cost cutting.
Many companies are also moving beyond broad austerity measures and homing in on the minutiae of everyday work. They are rethinking processes and how employees do their jobs, with the goal of getting workers to make better use of their time. The efforts are permeating U.S. companies to a degree that executives say they haven’t seen in years.
Oil Drops as Economic Growth Concerns Offset OPEC+ Cuts
Oil fell on Monday as concern over the economic impact of the U.S. Federal Reserve potentially raising interest rates and weaker Chinese manufacturing data outweighed support from OPEC+ supply cuts taking effect this month. The Fed, which meets on May 2-3, is expected to increase interest rates by another 25 basis points. The U.S. dollar rose against a basket of currencies on Monday, making oil more expensive for other currency holders.
Banking fears have weighed on oil in recent weeks and in what is the third major U.S. institution to fail in two months, United States regulators said on Monday First Republic Bank has been seized and a deal agreed to sell the bank to JPMorgan.
New International Service Coming to Stewart
New York Stewart International Airport at Newburgh has landed its second international flights with nonstop service to the Faroe Islands. Atlantic Airways will operate seasonal weekly service from August 22 through October 4 to Vagar, the sole airport on the Faroe Islands. Atlantic Airways plans to operate weekly outbound flights from Stewart on Wednesdays with return flights to Stewart on Tuesdays. The flights will take about six hours.
Play Airlines operates daily flights to Reykjavik, Iceland from Stewart with connections to dozens of European cities. Allegiant Air operates service to Orlando-Sanford, Punta Gorda and St. Pete-Clearwater in Florida, as well as Myrtle Beach, South Carolina, and Frontier Airlines offers service to Orlando.
Lockheed Awarded $7.8 Billion for Next Round of F-35s
Lockheed Martin has drawn a $7.8-billion contract from the U.S. Dept. of Defense for 126 more F-35 Lightning II Joint Strike Fighter aircraft. The order – expected to be completed in August 2026 – represents the DoD exercising its option for Lot 17 under the recent agreement on costs for the next three rounds of production for the F-35 series.
Lockheed is the lead contractor for the F-35, a single-engine, Stealth-enabled aircraft deployed for ground attack and combat, and available in three variants: F-35A, for conventional takeoff and landing (CTOL); F-35B, for short take-off and vertical-landing (STOVL); and the F-35C carrier-based variant for Catapult Assisted Take-Off But Arrested Recovery (CATOBAR) variant. All models of the F-35 are being updated a new version of the Pratt & Whitney F135 afterburning turbofan engine, anticipating a more advanced aircraft design that will enhance the fighter jets’ lethality, with electronic hardware and software updates as part of an adoption of dozens of new weapons systems.
Orange Ulster BOCES CTE Students Win Big at Skills USA Competition in Syracuse
Last week thirty Orange-Ulster BOCES Career and Technical Education (CTE) students traveled to Syracuse, NY to participate in the New York State SkillsUSA competition held on April 28, 2023. The competition brought together the top CTE students from across the state to showcase their skills and compete in a variety of events. Recognized for their strong leadership skills, two students were elected to governing roles for SkillsUSA for the upcoming year. Angelina Vargas (Florida UFSD) has been elected as Treasurer, and Kayla Flores (Warwick Valley CSD), has been elected as the NYS Officer at Large.
During the day long competition, Orange-Ulster BOCES (OUB) had four students earn top honors in their fields: Photography Gold Medalist Nate Panuska(Florida UFSD), Cosmetology Silver Medalist Zero Mauras (Minisink Valley CSD), and Digital Cinema Production Bronze Medalists Esther Tanis (Chester UFSD) and Grace Fang (Minisink Valley CSD). OUB, is committed to providing thier students with the skills and knowledge they need to succeed in their future careers. Participation in events such as the New York State SkillsUSA competition is a valuable opportunity for our students to demonstrate their skills and gain confidence and experience in their respective fields.
Falcon Heavy Launches After Series of Weather Delays
A Falcon Heavy rocket lit up the skies over the space coast Sunday evening as it launched from Kennedy Space Center, carrying a communications satellite into space for ViaSat. Heavy rain and winds have plagued the area all week, with teams having to stand down from two different attempts earlier in the week — one for weather and one for a last-minute abort that SpaceX has not explained. But the weather cleared this afternoon, paving the way for a spectacular nighttime launch.
Sunday’s Falcon Heavy mission was different from the previous missions before it as all three of the Falcon Heavy’s boosters were expended. That’s because the mission required more of the rocket’s fuel, leaving no leftovers for a propulsive landing back on land at the Cape or at sea on one of the company’s floating landing platforms.