Member Briefing May 3, 2023

Posted By: Harold King Daily Briefing,

JOLTS: Job Openings Fell in March While Layoffs and Discharges Jumped

Employment openings pulled back further in March, hitting a nearly two-year low in a sign that the ultra-tight U.S. jobs market is loosening up and possibly putting less pressure on inflation, the Labor Department reported Tuesday. The department’s Job Openings and Labor Turnover Survey showed that job vacancies totaled 9.59 million for the month, down from 9.97 million in February and below the FactSet estimate for 9.64 million.

At the same time, layoffs and discharges jumped by 248,000 to just over 1.8 million, taking the rate as a share of the workforce up to 1.2% from 1%. Though the data set runs a month behind the nonfarm payrolls number, the Federal Reserve watches the JOLTS report closely for signs of labor slack. A lower number is positive for inflation as it indicates less pressure on wages and could ease pressure on the Fed to continue raising interest rates.

Read more at CNBC

War in Ukraine Headlines


Employment Cost Index Up 1.2% in First Quarter, Following 1.1% Increase in Prior Three Months

The U.S. employment cost index, the broadest measure of U.S. labor costs, rose 1.2% in the first quarter after gaining 1.1% in the last three months of 2022, the Labor Department said Friday. Economists surveyed by the Wall Street Journal has expected a 1% gain. Compensation climbed at 4.8% clip in the 12 months ended in March, down from 5.1% in the prior quarter. That was the highest rate since 1990. Economists say that compensation in the 3% range is consistent with the Federal Reserve’s 2% inflation target.

Wages and salaries increased 1.2% last quarter. matching the gain in the prior three month period. The 12-month increase in wages rose 5%, down from 5.1% in the fourth quarter. Benefits rose 1.2% in the first quarter after a 1% gain in the October-December quarter. The 12-month increase in benefits moderated to 4.5% from 4.9% in the fourth quarter.

Read more at MarketWatch

Manufacturing Job Openings and Hires Fell in March, Separations Down Year on Year

Job openings in the manufacturing sector fell to 693,000 in March from 707,000 in February and 905,000 in March of 2022 the Labor Department reported Tuesday. The department’s Job Openings and Labor Turnover Survey also showed that hiring in the sector fell by 23,000 from February to March to 393,000. That is 69,000 fewer people hired than in  March 2022.

The department also reported that separations in manufacturing – both layoffs and quits – rose by 6,000 to 415,000.  That is 53,000 fewer that a year ago when 462,000 were separated. This is a sign that fewer people are quitting their jobs in search of higher pay and staying with the relative security of their current employer.

See the data at the Bureau of Labor Statistics

COVID News – US to End Most COVID-19 Vaccine Mandates for Travelers, Federal Workers Next Week

The Biden administration will end most of the last remaining federal COVID-19 vaccine requirements next week when the national public health emergency for the coronavirus ends, the White House said Monday. Vaccine requirements for federal workers and federal contractors, as well as foreign air travelers to the U.S., will end May 11. The government is also beginning the process of lifting shot requirements for Head Start educators, healthcare workers, and noncitizens at U.S. land borders.

The requirements are among the last vestiges of some of the more coercive measures taken by the federal government to promote vaccination as the deadly virus raged, and their end marks the latest display of how President Joe Biden’s administration is moving to treat COVID-19 as a routine, endemic illness.

Read more at The AP

Treasury Chief Janet Yellen Says U.S. Risks Default as Soon as June 1 Without Debt Ceiling Increase

Treasury Secretary Janet Yellen said the U.S. government could become unable to pay all of its bills on time as soon as June 1 if Congress doesn’t first raise the debt limit. The new estimate released Monday sets a shorter timeline than forecasters had previously expected, putting the U.S. potentially just weeks away from the first default on the U.S. debt. Republicans and Democrats have been debating how to raise the debt ceiling for months, but they have so far made little progress toward reaching an agreement.

The Congressional Budget Office, a nonpartisan budget agency, updated its own projection on Monday after having previously forecast that the U.S. could default as soon as July. Lower-than-expected tax receipts this year create a “significantly greater risk that the Treasury will run out of funds in early June” than CBO had expected, the agency’s director said.

Read more at the South China Morning Post

What Made it Into the 2024 New York Budget?

After blowing past the April 1 original state budget deadline and weeks of closed-door budget negotiations, amended budget bills finally began to get introduced Sunday evening and Monday morning, marking the official beginning of the end of budget season. The new language comes following Gov. Kathy Hochul’s unveiling of a “conceptual agreement” on the fiscal year 2024 state budget during a surprise press conference last week. Among the policy issues settled are bail reform rollbacks, expansion of charter schools in New York City and an increase in the payroll mobility tax on big businesses in New York City to help the financially strained MTA.  

One small bit of good news for manufacturers is the inclusion of funding for the Manufacturers Intermediary Apprentice Program. Here’s a guide to help navigate the biggest sticking points in the state budget and whether or not they’ve been included.

Read more at City & State

Empire Center: Over-Budget and Over-Deadline The 2023 New York State Budget

After the official release of the New York state budget, the experts at the Empire Center provided some insights. Ken Girardin, Empire Center Fellow writes: “Governor Hochul’s budget division has already indicated state expenses will outpace revenues by more than $20 billion over the next three years. Hiking spending more than $2 billion above the governor’s February proposal and drawing from the state’s fund balance to cover part of it, will increase those budget gaps and leave New York with less ability to manage them, especially in an economic downturn.”

While Bill Hammond, Sr,. Fellow for Health Policy adds: “New York’s already high Medicaid spending has skyrocketed by more than one-third over the past four years — and this budget deal promises more of that unsustainable trend. Instead of focusing on the best interests of vulnerable New Yorkers, the state’s leaders are managing this critical program based on manufactured crises and misinformation campaigns.” 

Read more Budget insights at the Empire Center

U.S. Construction Spending Rebounds in March on Nonresidential Structures

U.S. construction spending increased more than expected in March, boosted by investment in nonresidential structures, but single-family homebuilding remained depressed amid higher mortgage rates. The Commerce Department said on Monday that construction spending rose 0.3% in March after declining 0.3% in February. Economists polled by Reuters had forecast construction spending gaining 0.1%. Construction spending increased 3.8% on a year-on-year basis in March.

Spending on private construction projects rebounded 0.3% after dropping 0.7% in February. Outlays on private non-residential structures like gas and oil well drilling surged 1.0% in March. Non-residential spending is helping to keep business investment barely afloat. Investment in residential construction fell 0.2%, with spending on single-family housing projects dropping 0.8%. Outlays on multi-family housing projects climbed 0.4%, continuing to be supported by demand for rental housing. Spending on public construction projects rose 0.2% after jumping 1.1% in February. Investment in state and local government construction projects increased 0.3%, while federal government construction spending declined 0.7%.

Read more at US News

Tight Supply Fuels Demand for Newly Built Homes

Home builders are enjoying stronger-than-expected business this spring, capitalizing on the recent fall in mortgage rates and the shortage of existing homes for sale. Last year’s rapid rise in mortgage rates made home purchasing far more expensive for most buyers, slowing home sales and pressuring the home-building industry. Home builders pulled back on land acquisition and new construction.

Now, new single-family home sales are bouncing back with supply tight in the existing-home market. Active listings in March stood at roughly half of where they were four years earlier, according to, in part because higher mortgage rates made many homeowners reluctant to sell and give up their current low rates. That low inventory has put home builders in a good spot. Newly built homes made up about one-third of single-family homes for sale in March, up from a historical norm of 10% to 20%.

Read more at the WSJ

FDIC Suggests Scrapping $250,000 Bank Account Insurance Limit—But Just For Businesses

The federal agency tasked with insuring Americans’ bank accounts recommended raising its $250,000 insurance threshold in “targeted” circumstances Monday, including for business accounts, suggesting regulators are considering major reform following the collapse of a series of regional banks—which the Biden Administration insists does not pose a broad threat to the American financial sector.

“The recent failures of Silicon Valley Bank and Signature Bank, and the decision to approve Systemic Risk Exceptions to protect the uninsured depositors at those institutions, raised fundamental questions about the role of deposit insurance in the United States banking system,” FDIC chairman Martin Gruenberg said in a statement. The FDIC lifted its $250,000 threshold for account holders at both banks after the firms failed in mid-March, letting depositors recoup all their money, after some tech startups warned they could miss payroll if their SVB deposits weren’t made available.

Read more at Forbes

IBM Will Stop Hiring Humans For Jobs AI Can Do, Report Says

Technology giant IBM plans to stop hiring people to fill thousands of roles in the coming years that the company believes artificial intelligence can handle, CEO Arvind Krishna told Bloomberg. Krishna said in an interview he believes around 30% of about 26,000 non-customer-facing positions, like human resources jobs, could be replaced by AI over a five-year period—amounting to about 7,800 lost jobs.

HR duties like documenting employee moves to different departments and writing employment verification letters will likely be among the first rolled over to AI, Krishna told Bloomberg. Jobs focused on interacting with customers and developing software at the 260,000-worker strong company should not be impacted in coming years, according to Krishna. He did not specify whether the planned move to AI-based roles would start immediately.

Read more at Forbes

Goldman Sachs Report: AI Will Have Large Impacts on Labor Force and Productivity

If generative AI delivers on its promised capabilities, the labor market could face significant disruption. Using data on occupational tasks in both the US and Europe, we find that roughly two-thirds of current jobs are exposed to some degree of AI automation, and that generative AI could substitute up to one-fourth of current work. Extrapolating our estimates globally suggests that generative AI could expose the equivalent of 300 million full-time jobs to automation.

The good news is that worker displacement from automation has historically been offset by creation of new jobs, and the emergence of new occupations following technological innovations accounts for the vast majority of long-run employment growth. The combination of significant labor cost savings, new job creation, and higher productivity for non-displaced workers raises the possibility of a productivity boom that raises economic growth substantially, although the timing of such a boom is hard to predict. The boost to global labor productivity could eventually increase annual global GDP by 7%.

Read more at Goldman Sachs

OSHA Announces National Emphasis Program to Reduce Workplace Falls

The U.S. Department of Labor announced Tuesday that its Occupational Safety and Health Administration has begun a National Emphasis Program to prevent falls, the leading cause of fatal workplace injuries and the violation the agency cites most frequently in construction industry inspections. The emphasis program will focus on reducing fall-related injuries and fatalities for people working at heights in all industries.

The targeted enforcement program is based on historical Bureau of Labor Statistics data and OSHA enforcement history. BLS data shows that of the 5,190 fatal workplace injuries in 2021, 680 were associated with falls from elevations, about 13% of all deaths. The program establishes guidance for locating and inspecting fall hazards and allows OSHA compliance safety and health officers to open inspections whenever they observe someone working at heights.

Read more at EHS Today

Skoufis Plan for Orange County IDA Monitor Included in State Budget

A proposal to create a state monitor to oversee the Orange County Industrial Development Agency is included in the state budget, Senator James Skoufis (D, Cornwall) said Monday. He proposed the plan months ago because of what he said is mismanagement by the agency. Skoufis cited one recent incentive package for Royal Wines in Goshen, which he said would provide a per job subsidy amounting to $580,000.

Under the soon-to-be approved measure, the state inspector general’s office would oversee the monitor, the plan would sunset after three years unless the legislature opts to continue it and the IDA would be responsible for paying for the new fulltime position. The Republican-controlled Orange County Legislature has gone on record opposed to the monitor.

Read more at Mid-Hudson News

Ford Cuts Prices of Mustang Mach-E After Tesla Moves

Ford Motor Co said on Tuesday it is cutting prices on its Mustang Mach-E electric vehicle and reopening orders after a series of price cuts by rival Tesla Inc (TSLA.O), the second time it has reduced prices this year. The No. 2 U.S. automaker said it is also increasing the range for standard-range battery models as it increases production in the second half of the year.

Ford said it is cutting most Mach-E prices by $3,000 or $4,000 depending on the version or by as much as 7.8%. The price of the Mach-E Premium rear-wheel drive version is dropping from $50,995 to $46,995. Last month, the federal EV tax credit for the Mach-E fell by half to $3,750 from $7,500 after new battery sourcing requirements took effect.

Read more at Reuters

Ford First Quarter Revenue, Profits Top Estimates; EV Unit Loses $722 Million

Ford (F) reported first quarter revenue and earnings that topped Wall Street expectations on Tuesday while also breaking out results for its EV segment for the first time, where losses totaled more than $700 million in Q1. Revenue came in at $41.5 billion for the quarter, up 20% from last year. Earnings per share came in at $0.63, more than the $0.41 expected by analysts. Last year, Ford reported a net loss of $3.1 billion during its first quarter due to losses related to its investment in EV maker Rivian (RIVN).

Ford's breakdown of its business segments still shows deep losses in its Model e EV business unit, though that is expected to improve through the end of the year. "Quarterly shipments of and revenue from EVs were limited by production interruptions of two highly popular vehicles: the Mustang Mach-E SUV, to make industrial changes that will nearly double manufacturing capacity, and the F-150 Lightning pickup, to isolate and address a battery issue before it became a problem for customers," Ford said in a statement.

Read more at YahooFinance