Member Briefing November 20, 2023
U.S. October Industrial Production Fell 0.6%, Due In Large Part to UAW Strike
Industrial production fell 0.6% in October, marking the largest monthly decline registered so far this year (chart). That came on top of downward revisions to September's data as well, which caused the initial reaction to this report to be fairly somber. But the headline details overstate recent weakness. The slowdown can largely be traced to the 10% drop in motor vehicles & parts manufacturing amid the strikes at various auto manufacturers during the month of October. In volume terms, vehicle assembles slipped by about 1.7 million last month.
If we strip away autos, manufacturing production eked out a scant 0.1% gain, which is not as bad but hardly encouraging. If we take a very high level view of things, the big picture is not terribly positive either. After the initial fallout that came with the pandemic, overall production bounced back relatively quickly in the second half of 2020 and throughout most of 2021. The biggest impediment in those years was the logjam in global supply chains. But 2022 and the first 10 months of 2023 have seen output go mostly sidewise. The result is that the overall index level of industrial production has yet to return to where it was more than five years ago at its September 2018 peak.
War in Israel Headlines
- Israel and Hamas: The Latest News – The Guardian
- Is Israel's Military Strategy to Eradicate Hamas Working? - NYT
- Israel Says Soldier Executed, Foreign Hostages Held at Gaza's Shifa Hospital – Reuters
- WHO Says Gaza's al-Shifa Hospital a Death Zone, as Hundreds Leave - BBC
- 31 Premature Babies are Evacuated From Al-Shifa Hospital to Southern Gaza - NPR
- U.S. Warship Downs Iranian-Backed Drone in Red Sea - UPI
- Yemen’s Houthi Rebels Hijack an Israeli-Linked Ship in Red Sea and Take 25 Hostage - AP
- Israel Hopeful of Hamas Deal to Release Hostages in 'Coming Days' - BBC
- Logistical 'Sticking Points' Hold up Hostage Deal – USA Today
- Congress Faces Fierce Battle Over Israel, Ukraine Aid – The Hill
- Interactive Map- Israel’s Operation in Gaza – Institute for the Study of War
- Map – Tracking Hamas’ Attack on Israel – Live Universal Awareness Map
War in Ukraine Headlines
- Ukraine and Russia: The Latest News – The Guardian
- It’s Time to End Magical Thinking About Russia’s Defeat - WSJ
- Russian Parliament Passes Record Budget, Boosting Defense Spending – ABC News
- As the War Grinds on, Ukraine Needs More Troops. Not Everyone is Ready to Enlist - CNN
- As U.S. Wavers on Ukraine Aid, Europe Steps Up – WSJ
- 'Waves' of Russian Drones Attack Kyiv for Second Night in a Row - BBC
- U.S. Oversight of Ukraine Aid, Explained – The Dispatch
- Ukraine War: Marines Gain Riverbank Foothold But Front Lines Barely Move - BBC
- Ukraine Says it Has Pushed Russian Forces Back Up to 5 Miles From the Banks of Dnipro River – Insider
- Ukrainian Teen Returns to Ukraine After Being Taken to Russia From Occupied Mariupol - 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
N.Y. Fed: Manufacturing Firms Expect Continued Hiring, But at a Slower Pace
Supplementary questions in the November 2023 Empire State Manufacturing Survey focused on expected changes in firms’ workforces, factors underlying the changes, and recent trends in wages. On the issue of employment and hiring plans, about half of manufacturing firms expect employment to remain unchanged in the upcoming year. For those reporting changes, more businesses said they plan to expand headcounts over the next year than said they would reduce them. Among manufacturing firms, 33 percent said they plan to add workers, while 15 percent indicated planned reductions, which represents a positive balance similar to last November’s survey. However, this balance was narrower than in last year’s survey, suggesting a slowing in hiring for the region’s manufacturing sector compared to last year.
Respondents planning to raise employment were asked to rank the factors underlying their decisions. Among manufacturers, high expected sales growth easily ranked first, with an overworked staff and a lack of needed skills following more distantly. Businesses were also asked about how they were changing their wage and salary structures, if at all, to attract new employees and retain existing employees. The share of firms reporting raising starting wages and/or salaries for most job categories fell from roughly 60 percent last year to about 30 percent this year. When asked about the use of pay to retain existing employees, 34 percent of manufacturers increased pay more than in recent years to retain existing employees, a fall from 55 percent in both surveys one year ago.
China Retail Sales, Industrial Data Grow Faster Than Expected in October
China on Wednesday reported better-than-expected retail sales and industrial data for October, while the real estate drag worsened. Retail sales grew by 7.6% last month from a year ago, above the 7% growth forecast by a Reuters poll. Industrial production rose by 4.6% year-on-year in October, faster than the 4.4% pace predicted by the Reuters poll. Fixed asset investment for the first 10 months of the year grew by 2.9% from a year ago, missing expectations for a 3.1% increase. Investment into real estate fell by 9.3% during that time, a steeper decline than the 9.1% drop reported for the first nine months of the year.
Within retail sales, sports and other leisure entertainment products saw sales surge by 25.7% in October from a year ago, the data showed. “Retail sales in October was particularly strong, beating even our above-consensus estimates,” Louise Loo, lead economist at Oxford Economics, said in a note Wednesday. “At this juncture we are skeptical that the now-three consecutive months of strong retail sales data are pointing to a permanent upshift in consumers’ spending propensities,” Loo said. “Year-to-date retail sales data showed low value discretionary items emerging as an outperforming segment, consistent with what we think is typical of weak economic recoveries (when the consumer’s willingness to spend rests on smaller-ticket items),” the Oxford Economics report said.
COVID 19 News - The US Army is Asking Soldiers Dismissed for Refusing the COVID-19 Vaccine to Come Back.
A January 2023 Department of Defense memo rescinded the military rules that required service members get the COVID vaccine, which were put in place in August and November 2021. The memo said that no one serving in the armed forces will be separated for refusing to take the vaccine if they seek a religious, administrative, or medical accommodation. The letter, which has been circulated on social media, says that former soldiers who were separated for refusing to take the vaccine can request a correction of their military record.
It instructs those who wish to rejoin the service to contact a recruiter. The new outreach to these soldiers comes amid a recruiting crisis for the United States military. In 2022, the US Army fell short by about 15,000 soldiers, or 25%, according to Army Times.
NYS COVID Update
The Governor updated COVID data for the week ending November 17th.
Deaths:
- Weekly: 52
- Total Reported to CDC: 81,008
Hospitalizations:
- Average Daily Patients in Hospital statewide: 1,066
- Average Daily Patients in ICU Statewide: No Data
7 Day Average Cases per 100K population
- 7.9 positive cases per 100,00 population, Statewide
- 8.3 positive cases per 100,00 population, Mid-Hudson
Useful Websites:
J.P.Morgan Global Manufacturing PMI®: Weak Demand Leads to Further Cuts to Output, Employment and Inventories
The J.P. Morgan Global Manufacturing PMI™ edged down from 49.2 in September to 48.8 in October, with activity in the sector contracting for the 14th consecutive month. New orders (up from 48.4 to 48.6) decreased at a slightly slower rate, but output (down from 49.8 to 48.9), exports (down from 47.6 to 47.5) and employment (down from 49.7 to 48.7, weakest since August 2020) deteriorated further.
Survey respondents remained positive in their outlook for future output (down from 60.7 to 58.5), but that measure fell to an 11-month low. Delivery times (down from 51.0 to 50.5) narrowed for the ninth straight month in October despite some slowing, another sign that supply chain bottlenecks have improved. Meanwhile, input prices (up from 52.7 to 53.1) accelerated again, growing very modestly overall.
OSHA Aligns with NLRB and Seeks to Add Union Reps to Inspections
The Occupational Safety and Health Administration (OSHA) has proposed a rule that would allow employees to request that a non-governmental third party—which could be a representative from a labor union—to join an OSHA safety inspection of a non-union employer’s facility. In a separate development, OSHA and the National Labor Relations Board (NLRB) also announced that they have entered into a formal agreement to work together closely, coordinating their activities in a manner that promotes unionization of the workforce.
Commenting on the OSHA proposal to allow employees and agency inspectors to choose third parties, such as union representatives, to accompany the inspectors when they walk around employer facilities, Marc Freedman, vice president, employment policy for the U.S. Chamber of Commerce, said, “Without question, if OSHA moves forward with this regulation, the agency will be making clear its agenda is no longer focused on improving workplace safety but on promoting organized labor.” In addition, he stressed that if the new rule is adopted as proposed, it would open the door to other parties with a grievance against the employer to be allowed in if an employee requested them.
US Housing Starts Rise Moderately; Tight Supply Supporting New Construction
U.S. single-family homebuilding increased marginally in October and activity could remain moderate in the near term amid higher mortgage rates. Nevertheless, new construction remains supported by an acute shortage of houses on the market, with the report from the Commerce Department on Friday showing permits for future single-family homebuilding rising to the highest level in nearly 1-1/2 years last month. Residential investment rebounded in the third quarter, ending nine straight quarters of decline.
Single-family housing starts, which account for the bulk of homebuilding, rose 0.2% to a seasonally adjusted annual rate of 970,000 units last month, the Commerce Department's Census Bureau said. Data for September was revised up to show starts rising to a rate of 968,000 units instead of 963,000 units as previously reported. Single-family homebuilding peaked in May. Starts for housing projects with five units or more jumped 4.9% to a rate of 382,000 units in October.
U.N. Plastic Treaty Talks Grapple With Re-Use, Recycle, Reduce Debate
A third round of United Nations negotiations in pursuit of the world's first treaty to control plastic pollution has drawn more than 500 proposals from those involved, participants said on the last day of the talks on Sunday. Some said the number of submissions represented progress, while campaign group Greenpeace said it was "chaos". Negotiators, who have spent a week meeting in the Kenyan capital of Nairob at talks known as INC3, have until the end of next year to strike a deal for the control of plastics, which produce an estimated 400 million tonnes of waste every year.
The plastics industry, oil and petrochemical exporters, including Russia and Saudi Arabia, have said a global deal should promote recycling and re-use of plastic, but environmental campaigners and some governments say much less needs to be produced in the first place. Greenpeace said a successful deal would require the United States and the European Union to show greater leadership than they have so far.
New York Attorney General Sues Pepsi in New Plastic Pollution Fight
New York Attorney General Tish James is testing a new legal strategy to fight plastic pollution in what could be a model to force companies to reduce single-use packaging. James announced a lawsuit against PepsiCo, the largest food and beverage company in North America, last week in Buffalo. This is a first-of-its-kind lawsuit as states across the country struggle with how to tackle the growing amount of plastic packaging ending up in landfills. It could provide a pathway to force companies to take on more responsibility for the waste they generate and the impact that plastics have on the environment.
The lawsuit filed in Erie County Supreme Court contends that PepsiCo, which is headquartered in Westchester County, causes public harm from plastic pollution along the Buffalo River and failed to warn customers about the health and environmental risks of its packaging. PepsiCo spokesperson Andrea Foote said the company is serious about plastic reduction and recycling efforts and has been “transparent” about its “journey.” She said the issue requires involvement from municipalities, community leaders and consumers, among others.
U.S. Machine Tool Orders Fall
U.S. manufacturers and machine shops ordered $398.9 million worth of new metal cutting and metal forming/fabricating machinery during September, a drop of -2.8% from the August total but -23.4% lower than the year-ago result for September 2022. It’s notable that September 2022 included orders placed during IMTS 2022, historically a peak opportunity for buyers to book their orders. Through nine-months of activity, U.S. machine tool orders totaled $3.64 billion, which is -13.8% less than the total for January-September 2022.
“We are still seeing strength in key industries, with contract machine shops, medical, and automotive continuing to invest heavily in manufacturing technology,” according to Douglas K. Woods, president of AMT – the Assn. for Manufacturing Technology. “The disparity in manufacturing technology investment across industries indicates that not all are paring back capital spending at once,” Woods explained. “Industries that are spending healthily on manufacturing tech appear to be shifting expenditures toward highly automated machinery as evidenced by rising per-unit values.”
Read more at American Machinist
UAW Ratifies GM Contract Deal After Late Voting Support
United Auto Workers members at General Motors appear to have ratified a record labor contract Thursday despite some of GM's big assembly plants voting it down in recent days. According to the union's online voting tracker all the votes are in and the tentative contract with GM has passed by 54.7%. A source with the union, reported that the deal is ratified with 19,683 members voting "yes" and 16,274 voting "no." The tentative deals reached with the Big 3 included a record 25% raise over four years, as well as significant improvements for pensions and the right to protest the closure of plants.
But the agreements fell short of some ambitious demands made by UAW President Shawn Fain at the outset of the strike in September. Initially, the union called for 40% wage increases over the four-year duration of the contract as well as a four-day workweek at full-time pay. the agreement appeared to elicit disapproval from many longtime workers, returns indicated. A major GM plant in Spring Hill, Tennessee, which employs more than 2,000 workers building the company's Cadillac and Acadia vehicles, voted down the contract by a margin of 56% to 44%, the results showed.
Truckers Tap Brakes on Battery- Cell Rigs, Eye Hydrogen
Some truckers are tapping the brakes on the sector’s push toward battery-cell electric big rigs. Operators in California facing pressing zero-emissions regulations say they’re looking more closely at hydrogen-fueled vehicles, arguing they solve some of the key problems that battery technology presents to their business. The carriers say hydrogen offers longer trips and faster refueling than battery-cell technology, while allowing trucks to haul heavier loads because they aren’t carrying industrial-scale batteries.
Hydrogen technology faces big hurdles, however, because battery-cell development is far more advanced. Fueling stations for hydrogen are also scarce. The question is pressing in California because of rules that bar the introduction of new diesel-fueled big rigs in port trucking operations after this year. Those concerns over range and charging time will get more urgent as truckers look to deploy zero-emissions vehicles on longer hauls
Earnings: Walmart and Target Send Out Not-So-Merry-And-Bright Holiday Vibes
Last week Target Corporation posted a significant earnings gain but also left out the ‘drum rolls’ from its holiday quarter outlook, Walmart Inc. also topped third quarter earnings and revenue estimates along with giving out a cautious guidance. For the quarter that ended on October 31st, Walmart reported revenue of $160.80 billion, topping LSEG’s estimate of $159.72 billion. Revenue rose on the back of the grocery business that thrived from high inflation and strong digital sales.. Also, U.S. e-commerce sales rose 24% YoY and 15% YoY globally. Walmart’s ad business, Walmart Connect, rose 26% YoY.
Target on Wednesday reported a 36.4% earnings increase to $2.10 per share while total revenue declined 4.2% to $25.4 billion. The results marked Target's second earnings increase in a row after falling for six consecutive quarters. Company-wide comparable sales declined 4.9% for the period, driven by a 6% drop in comparable digital sales. Same-store sales declined 4.6%. For Q4, Target expects comparable sales in a "wide range" around a mid-single digit decline. The company guided earnings between $1.90 and $2.60 per share for the quarter
National Transportation Safety Board Wants Anti-Speeding Tech in New Cars
If the National Transportation Safety Board (NTSB) gets its way, your car could soon warn you if you're speeding. The federal agency recommended on Tuesday that the National Highway Traffic Safety Administration (NHTSA) require intelligent speed assistance (ISA) technology on new cars that would warn a driver when the vehicle is speeding.
There are two types of ISA systems: passive and active. Passive, which is what the NTSB wants, warns the driver of the vehicle's excessive speed above the posted limit through visual, auditory, or haptic alerts. Active systems are more intrusive, making exceeding the posted speed limit difficult but not impossible. Other active ISA systems can entirely prevent drivers from exceeding the speed limit. Specific examples of such active systems were not mentioned in the NTSB announcement. The agency asked 17 automakers, including Toyota, General Motors, and Ford, to install passive ISAs in their new vehicles.
Battle for U.S. House Control in 2024 Is Fought in a New York Courtroom
New York’s top court heard oral arguments Wednesday in a case that will determine whether the Democratic-dominated state Legislature will have another chance to draw maps for its 26-member congressional delegation. A Democratic victory in the Court of Appeals would let legislators make the lines for as many as seven Republican-held seats in New York friendlier to Democrats. The stakes are high: Democrats would have kept a majority in Congress in 2022 had they won five additional races. There are two main points being argued. One involves a technical question of whether Democrats brought their suit in time; Republicans say Democrats needed to file it before the court-drawn maps were finalized in 2022.
The other boils down to a line in the state constitution that says any new lines “shall be in force” for the remainder of the decade “unless modified pursuant to court order.” Democrats interpret that language as saying that the maps will remain in place for a full decade unless a court modifies them. Since a court did that last year, the lines can still be changed, they argued. To Republicans, that means that the only way to switch maps mid-decade is when a court modifies them, as one did last year. The Legislature only gets one shot at enacting lines, the GOP said.
Former First Lady Rosalynn Carter Dies at 96
Rosalynn Carter, who as first lady of the U.S. served as a key adviser to her husband, Jimmy, during his turbulent presidency, died at her home in Plains, Ga., on Sunday, according to the Carter Center. She was 96. “Rosalynn was my equal partner in everything I ever accomplished,” former President Carter said in a statement issued Sunday. “She gave me wise guidance and encouragement when I needed it. As long as Rosalynn was in the world, I always knew somebody loved and supported me.”
Eleanor Rosalynn Smith was born Aug. 18, 1927, in the small town of Plains in rural southwestern Georgia. The family lived in town, about 3 miles away from the farm where her future husband grew up. Her family was poor, and her father, a mechanic, died of leukemia when Rosalynn was 13. She was friends with Ruth Carter, Jimmy’s sister, and became infatuated with Jimmy, who was then attending the U.S. Naval Academy. Eventually, Jimmy and Rosalynn went to a movie. On the way home, Jimmy Carter kissed her. “I had never let any boy kiss me on a first date,” she wrote, adding that, “I was completely swept off my feet.”