Member Briefing May 3, 2022
U.S. Manufacturing Sector Slows Further in April-ISM
U.S. manufacturing activity slowed for a second straight month in April, but supply bottlenecks appeared to be easing, with the pace of increase in prices for inputs and the backlog of unfinished work at factories moderating. The Institute for Supply Management (ISM) said on Monday that its index of national factory activity fell to a reading of 55.4 last month from 57.1 in March.
- The survey’s measure of supplier deliveries rose to 67.2 from 65.4 in March. Tight supply chains have been exacerbated by Russia’s war against Ukraine and new coronavirus-related lockdowns in China.
- The survey’s gauge of order backlogs dropped to a reading of 56 from 60.0 in March. It was the second straight monthly decline.
- With supply strains starting to resolve, inflation at the factory gate could be peaking. A measure of prices paid by manufacturers dropped to a reading of 84.6 from and all time high 87.1 in March.
- The survey’s measure of factory employment fell to a reading of 50.9 from 56.3 in March. That likely reflected difficulties finding workers.
- There were a near record 11.3 million job openings at the end of February.
Invasion of Ukraine Headlines
- Ukraine and Russia: the Latest News – Reuters
- Germany Says Dependence on Russian Oil Could End in Late Summer – Fortune
- UK Claims More Than Quarter Of Russia’s Combat Battalions Rendered ‘combat Ineffective’ – Republic World
- Why is Russia Setting Up Detention Centres in Ukraine? – The Economist
- Ukraine Says It Sank Two Russian Naval Boats, as New Blasts Hit Russian Border Area – WSJ
- Lavrov’s Antisemitism Means Israel No Longer Neutral on Ukraine-Russia- Jerusalem Post
- Here’s Why a Rock-and-Roll Legend Refuses to Close his Factory in Russia – Fortune
- UEFA Bans Russia from Women’s Euros and World Cup, Clubs Banned Next Season – Reuters
- Fertilizer Sector Set for Biggest Profits in Years on Russia-Ukraine Conflict – Reuters
- Map – Tracking Russia’s Invasion of Ukraine – Live Universal Awareness Map
China’s Manufacturing Activity Pummeled by COVID Restrictions
China’s National Bureau of Statistics said Saturday that its official manufacturing purchasing managers index dropped to 47.4 in April, from 49.5 in March, falling to its lowest level since February 2020. The result fell short of the median forecast of 48.0 among economists polled by The Wall Street Journal, and well below the 50 mark that separates expansion from contraction.
The subindex of factory production plummeted to 44.4 in April from 48.8 in March, the statistics bureau said. The sharp decline came as factories reduced or halted production due to the spreading virus, said Zhao Qinghe, a senior official at the statistics bureau.
Americans Are Showing Inflation Fatigue, and Some Companies See a Breaking Point
Robust consumer spending has powered the U.S. economy through much of the pandemic, as households were helped by Covid-related government stimulus programs, rising wages and a rebound in the U.S. job market that has pushed the unemployment rate down near prepandemic levels.
However, executives running some of the world’s biggest retailers, manufacturers and consumer-products makers say they are seeing signs that people are becoming less willing to absorb price increases. And a recent survey of U.S. consumers found more than 70% said they have switched to cheaper food and household staples. Nearly 40% said they were delaying purchases of big-ticket items.
US COVID – Seasonality
It’s now predictable that the South will see surges in the summer and Northern states will see surges in the winter — especially around the holidays, former White House Coronavirus Response Task Force coordinator Dr. Deborah Birx told CBS on Sunday morning.
“This is what we have to be prepared for in this country. We should be preparing right now for a potential surge in the summer across the Southern United States because we saw it in 2020 and we saw it in 2021.” Public health officials need to make clear to the public that protection against the infection wanes over time, and precautions should be taken with vulnerable or compromised people, said Birx.
What We Know—and Do Not Know—About Long COVID
The prevalence of long covid is hard to calculate and some early reports gave inflated estimates. The CDC believes one in ten Americans will develop long-covid symptoms more than a month after infection. Britain’s Office for National Statistics (ONS) estimates that 1.7m people, or 2.7% of the population, were experiencing self-reported long covid as of March 5th. Most experienced fatigue, a third had shortness of breath, and almost a quarter reported muscle aches. The condition was most common in women, those aged 35 to 49 and in people living in poor areas. Those employed in social care, education or health care were also more likely to report symptoms.
But there are problems with even these careful estimates. Fatigue and muscle ache could be caused by a number of other conditions. An earlier ONS study found that 5% of people infected with covid had at least one of 12 common symptoms 12 to 16 weeks after infection; 3.4% of a control group who had not been infected also reported one of these symptoms.
South Africa’s Aspen COVID-19 Vaccine Plant Risks Closure After No Orders, Executive Says
Africa’s first COVID-19 vaccination plant, touted last year as a trailblazer for an under-vaccinated continent frustrated by sluggish Western handouts, risks shutting down after receiving not a single order, a company executive said on Saturday. South Africa’s Aspen Pharmacare negotiated a licensing deal in November to package and sell Johnson & Johnson’s COVID-19 vaccine and distribute it across Africa.
The World Health Organization (WHO) called the deal a “transformative moment” in the drive towards levelling stark inequalities in access to COVID vaccines. With only a sixth of adults in Africa fully vaccinated, according to the latest WHO figures from the end of March, Aspen’s agreement to sell an Aspen-branded COVID-19 vaccine, Aspenovax, throughout Africa seemed like a sure bet.
Amazon Labor Union Loses Election at a Smaller Staten Island Warehouse
Employees at an Amazon warehouse in Staten Island voted against unionizing with the Amazon Labor Union, according to a vote tally completed by the National Labor Relations Board on Monday. The loss for the independent, worker-led union came weeks after it led a much larger Staten Island Amazon facility known as JFK8 to become the first in the country to vote to join a union. The Amazon Labor Union also had a smaller presence inside the warehouse. The loss was a blow to the Amazon Labor Union, whose momentous win last month cast it as the future of labor organizing.
Still, organizers suggested that not all hope was lost. Halfway through the vote count, as Amazon’s lead in the tally grew, organizers commented on Amazon’s well-funded resistance to organizing in its facilities, which has included “captive audience” meetings and anti-union propaganda. “The count has finished,” the union tweeted after the vote. “The election has concluded without the union being recognized at LDJ5—sortation center on Staten Island. The organizing will continue at this facility and beyond. The fight has just begun.”
Legislature Considers a Bill to Get Ex-Lt. Governor Off the Ballot
State lawmakers prepared to vote on legislation that would allow Gov. Kathy Hochul to replace her indicted running mate. The question of whether the state Legislature would approve such a bill has dominated Albany the past few weeks, with opinions on the issue divided.
Bill language came late Friday night when state Sen. Liz Krueger and Assembly Member Amy Paulin introduced new legislation on behalf of the governor to remove Benjamin from the ballot. It would allow any nominated or designated candidate to decline their place on the ballot if they have been indicted for or convicted of a crime. Majority Leader Andrea-Stewart Cousins reportedly told Krueger to hold off introducing the legislation. A spokesperson for the state Senate Democrats had initially stated that the chamber would not take up any bill to get Benjamin off the ballot, and Stewart-Cousins herself expressed resistance to changing election rules in the middle of a cycle.
Intel CEO Expects Chip Shortage to Last Until at Least 2024
Intel chief Pat Gelsinger has predicted that the global chip shortage will remain a challenge for the industry until at least 2024, particularly in areas such as foundry capacity and tool availability. Despite this forecast, Gelsinger outlined that Intel is in a “good position” to manage the constraints that arise as a result of the supply chain shortage. “In fact, Intel is rising to meet this challenge,” he told investors on Thursday during a first-quarter earnings call.
“Following our announcements in Arizona, New Mexico, and Ohio, we recently announced a series of investments in Europe, spanning our existing operations as well as our new investments in France and Germany — the silicon junction,” he continued. “These investments position Intel to meet the future growth, and represent a significant step toward our moonshot goal of having half the world’s semiconductor manufacturing located in the US and Europe.”
DiNapoli: Local Sales Tax Collections Up 21% in First Quarter of 2022
Local government sales tax collections grew by 21.1%, or $901 million, in the first quarter of 2022 compared to the same period last year, according to a report released today by New York State Comptroller Thomas P. DiNapoli. Collections for the three-month period totaled nearly $5.2 billion, with growth at least partially driven by inflation, which hit a 40-year-high in March.
New York City’s collections in the first quarter grew by 28.5% compared to the same period last year and exceeded pre-pandemic levels for the second straight quarter after remaining below pre-pandemic levels for most of 2020 and 2021. Outside New York City, nearly every county had double-digit growth in the first quarter. Broome County saw the highest growth at 24.3%, followed by Yates County (22.2%), and Schuyler and Columbia counties (21%). Sullivan County had the lowest growth at 6.6%.
Biden Eyes Long-Awaited Student Debt Relief Starting at $10,000 Per Borrower
President Biden plans to move forward with student loan debt forgiveness, with two sources telling The Hill he is considering action to expunge at least $10,000 per borrower. The debt forgiveness would be through executive action and follows the president asking the Education Department to look into his authority to act unilaterally on student loans a year ago, the results of which have not been publicly announced.
Biden has been under pressure to go farther than the moratorium and forgive debt. The White House has also consistently said the president would sign legislation canceling student debt if Congress passed a bill.
How Can the 4-day Work Week be a True Game-Changer for Employers?
As many employees search for new, more meaningful work in the Great Resignation, they’re looking for continued innovation in their working arrangements. Some employers are delivering in the form of a shortened, often-hybrid work schedule. Such companies as Panasonic and online platform Kickstarter recently moved to the four-day model, which has also been trialed in Microsoft offices. In a pilot from an organization called 4 Day Week Global, 35 North American companies and some two dozen countries and companies around the globe are testing four-day weeks this spring, Forbes reported. There’s even proposed federal legislation to reduce the standard work week from 40 hours to 32.
Some pilot studies have found four-day weeks can improve productivity. Microsoft’s trial in Japan, for example, found workers were happier—and 40% more productive. At the same time not all employees are disciplined or structured enough to manage the ambiguity of blurred lines in this type of schedule. And, if expectations are that the four working days will be longer, that could drive up employee stress.
Shanghai’s COVID Battle; Beijing Focuses on Mass Testing
Fewer than 10,000 covid-19 cases were recorded in Shanghai for the second day in a row, suggesting that the outbreak in China’s biggest city may be easing. On Sunday, officials said that six of 16 districts had reached “zero-covid” status. However, in Beijing, the capital, restrictions were tightened further.
However, China’s commercial capital was dealt a blow on Monday as authorities reported 58 new COVID-19 cases outside areas under lockdown. Still, many people also took heart from data that showed encouraging trends, with 32 new deaths on Sunday, compared with 38 a day earlier, and a total of 6,804 new local cases, down from 7,189 the previous day.
For-Hire Truck Tonnage Index Climbs 3.8%
The American Trucking Associations announced that its advanced seasonally adjusted For-Hire Truck Tonnage Index increased 2.4% in March after rising 0.7% in February. In March, the index equaled 118.8 (2015=100) versus 116.1 in February. Compared with March 2021, the SA index increased 3.8%, which was the seventh straight year-over-year gain and the largest over that period.
In February, the index was up 3.2% from a year earlier. In 2022, year-to-date and compared with the same period in 2021, tonnage was up 2.6%. The not seasonally adjusted index, which represents the change in tonnage actually hauled by fleets before any seasonal adjustment, equaled 123.9 in March, 17.9% above the February level (105.1).In calculating the index, 100 represents 2015. ATA’s For-Hire Truck Tonnage Index is dominated by contract freight as opposed to spot market freight.