Member Briefing November 7, 2022
Global Manufacturing PMI Slips Further Into Contraction
The global manufacturing PMI survey's Output Index, which acts as a reliable advance indicator of actual worldwide output trends, signalled a third successive monthly drop in worldwide factory production in October. The rate of decline accelerated to the fastest since June 2020, when disruptions from the global pandemic were most severe. Barring pandemic-related shutdown months, the latest decline was the steepest recorded for just over a decade.
Of the 31 economies for which S&P Global PMI data are available for October, some 21 reported falling production, which was also the case in September. Taiwan and the Czech Republic experienced the steepest downturns and ones that were notably faster than compared to the previous month. This was followed by Poland and Spain, the former continuing to suffer from their proximity to the war in Ukraine and soaring energy costs. The eurozone and UK likewise saw marked downturns on the back of weak demand. Meanwhile in North America, even as manufacturing output remained in expansion, the pace of growth remained only marginal with the cost-of-living crisis continuing to affect demand and, in turn, the growth outlook.
War in Ukraine Headlines
- Ukraine and Russia: The Latest News – The Guardian
- U.S. Privately Asks Ukraine to Show it's Open to Negotiate With Russia – Washington Post
- Russian Shelling Forces Ukraine Nuclear Plant to Run on Backup Generators - WSJ
- Zelenskyy Hails UN Nuclear Investigation Result - CNBC
- Ukrainian Forces Brace for Bloody Fight for Kherson - Reuters
- Russian Soldiers Enter Kherson Homes, Dig in for Urban War – ABC News
- Russian-Occupied Kherson Loses Power After Alleged ‘Sabotage’ - CNN
- Zelensky Accuses Iran of Lying Over Russia Support - BBC
- Ex-KGB Sleeper Agent on Russia's Nuclear Threats: 'Putin is Not a Suicide Bomber' - Insider
- Ukraine Plans Blackouts as It Braces for Extended Loss of Power - NYT
- Ukraine's Russian-Held Nova Kakhovka Dam Damaged in Shelling, Russian Media Report - Reuters
- Map – Tracking Russia’s Invasion of Ukraine – Live Universal Awareness Map
U.S. Payrolls Surged by Better Than Expected 261,000 in October, Mfg + 32,000
Job growth was stronger than expected in October despite Federal Reserve interest rate increases aimed at slowing what is still a relatively strong labor market. Nonfarm payrolls grew by 261,000 for the month while the unemployment rate moved higher to 3.7%, the Labor Department reported Friday. September’s jobs number was revised higher, to 315,000, an increase of 52,000 from the original estimate. Although the number was better than expected, it still marked the slowest pace of job gains since December 2020.
Health care led job gains, adding 53,000 positions, while professional and technical services contributed 43,000, and manufacturing grew by 32,000. Leisure and hospitality was up 35,000 jobs.
Manufacturing Employment, Wages Continue to Increase – Though at a Slightly Slower Rate
According to the Labor Department wages increased, though mostly at a slower rate in manufacturing than in the rest of the economy. Average manufacturing wages rose only 9 cents an hour to a $31.23 average hourly wage, compared to a 12-cent-per- hour increase in overall private wages, which rose to $32.58. Durable goods manufacturing, the larger and more influential sector when it comes to average manufacturing wages, saw wages increase by 8 cents to $32.82: Nondurable goods manufacturing, which traditionally offers lower wages, saw 10-cent growth in average hourly wages from $28.44 to $28.54.
Chief Economist at the National Association of Manufacturers Chad Moutray pointed towards strong manufacturing growth in most manufacturing sectors compared to 2021. “On a year-over-year basis, employment increased in all but two of the major manufacturing sectors, which was encouraging,” Moutray wrote, noting that the industries seeing the best hiring rates of the past year were food manufacturing (which hired 67,500 people), fabricated metal products (56,200), and transportation equipment (55,800).
U.S. COVID – Cases Steady, BQ Variant Growing
The US CDC is reporting 97.3 million cumulative cases of COVID-19 and 1.07 million deaths. Incidence for the week ending October 26 remained relatively steady over the previous week, rising to 265,839 reported cases from 261,315 cases for the week ending October 19. Weekly mortality also remained relatively steady for the week ending October 26, up slightly to 2,649 reported deaths from 2,591 deaths the week ending October 19. Both new hospital admissions and current hospitalizations appear to have leveled over the past week, rising slightly by 2.1% and 0.1%, respectively.
The BA.5 sublineage continues to be the dominant strain in the US, accounting for 49.6% of sequenced specimens, but its estimated prevalence appears to be decreasing more rapidly now. The Omicron sublineages BQ.1 (14%) and BQ.1.1 (13.1%) are exhibiting growth advantages over other sublineages, including BA.4.6 (9.6%) and BF.7 (7.5%). Several other Omicron sublineages continue to exhibit increasing or steady trends, including BA.5.2.6 (2.8%), BA.2.75 (1.8%), and BA.2.75.2 (1.2%).
NYS COVID Update
The Governor updated COVID data through September October 21.
- Daily: 24
- Total Reported to CDC: 75,112
- Patients Currently in Hospital statewide: 2,804
- Patients Currently in ICU Statewide: 303
7 Day Average Positivity Rate - Cases per 100K population
- Statewide 5.81% - 19.72 positive cases per 100,00 population
- Mid-Hudson: 5.81% - 19.02 positive cases per 100,00 population
Cook Political Report Shifts Senate Forecast Toward GOP
The nonpartisan election handicapper Cook Political Report on Friday shifted its forecast of control for the Senate toward Republicans just four days out from the midterm elections. Jessica Taylor, the Senate and governors editor for the Cook Political Report, said in her analysis that Cook was shifting its forecast for the race away from Democrats because the national environment as of late has been seen as more favorable toward Republicans and that issues like the economy and inflation are resonating more with voters now than abortion.
Taylor noted that Democrats could still see a scenario where they maintain their narrow majority at 50-50 in the Senate, but she said it’s possible Republicans could pick up as many as three seats in the elections.
Zeldin Talks His Potential Budget Plan if Elected New York Governor
Zeldin at a news conference in New York City at his campaign headquarters acknowledged a spending plan — the first Republican-written document to land on lawmakers' desks in Albany in more than a decade and a half if he wins — would likely be a difficult one for Democrats in the Legislature. Zeldin wants to make the state friendlier to businesses, pointed to New York's second-to-last ranking in business climate with the Tax Foundation. "It's going to take time; we're going to have to work with the Legislature," he said. "It's not going to be easy because there are people who want to raise taxes, not cut them."
Hochul this year negotiated her first budget since taking office as governor. A budget next year could be far more difficult given a potential slowdown in tax revenue amid an uncertain economy. Zeldin wants an across-the-board cut in taxes, a move that would likely result in the wealthiest New Yorkers seeing a reduction in tax rates for the first time years after Democrats in New York increased taxes in order to fund education and schools at record-breaking levels.
Pfizer, BioNTech Report New Covid Booster is More Protective Against Recent Omicron Variants
New data from Pfizer and BioNTech on their bivalent Covid-19 vaccine suggests the updated product may be more protective against more recent Omicron subvariants than the original version of the vaccine, the companies said in a statement released Friday. The companies said the levels of neutralizing antibodies that target the BA.4 and BA.5 subvariants of the SARS-CoV-2 virus were four-fold higher in people aged 55 and older who received the bivalent booster than in similarly aged people who received a monovalent booster.
The bivalent, which was given an emergency use authorization at the end of August, targets both the original version of the SARS-2 virus and the BA.4/BA.5 variants. Recently BA.5 has been the dominant strain in the United States, but an alphabet soup of newer subvariants — BA.4.6, BQ.1.1 among them — is starting to crowd it out.
Reminder - New York Voting Leave
Election Day is tomorrow and we would like to remind you of New York’s Voter Leave Law.
New York employees may take up to two hours’ time off without loss of pay at the beginning or end of the shift to vote. Most work schedules provide sufficient time to vote either before or after working hours. If the polls are open for at least four consecutive hours before or after the work shift, the employee will be deemed to have sufficient time outside of work hours to vote. The necessary time can be scheduled at the beginning or end of the work shift, whichever provides the least disruption to normal business practices. Employees must request time to vote at least two days in advance.
Bank of England Expects UK to Fall Into Longest Ever Recession
The Bank of England warned the UK would face a "very challenging" two-year slump with unemployment nearly doubling by 2025. Bank governor Andrew Bailey warned of a "tough road ahead" for UK households. It has lifted interest rates to 3% from 2.25%, the biggest jump since 1989, as it tries to control soaring prices.
The Bank had previously expected the UK to fall into recession at the end of this year and said it would last for all next year. But it now believes the economy already entered a "challenging" downturn this summer, which will continue next year and into the first half of 2024 - a possible general election year. While it will not be the UK's deepest downturn, it will be the longest since records began in the 1920s, the Bank said. The unemployment rate is currently at its lowest for 50 years, but it is expected to rise to 6.5%.
The Flip from Shortage to Glut Intensifies Chip Makers
The chip industry has pivoted hard from a clamor for higher output to cost cutting as it adjusts to a slump for semiconductors that has infected almost all parts of its business. Chip companies in recent weeks have instituted hiring freezes and layoffs, slashed capital spending plans, reduced factory output and warned investors of a stark reversal in their customers’ buying habits.
The belt-tightening represents a turnabout after two heady years characterized by sky-high demand for computers, smartphones, cars and internet services that rely on chips. While the chip industry is notoriously cyclical, this wave rose higher and lasted longer than one has in decades, propelled by a pandemic that drove a societal shift toward working and learning from home.
Retailers Predict Record Holiday Sales Amid Historic Inflation
Holiday retail sales are set to grow between 6 and 8 percent this year, according to an estimate from the National Retail Federation (NRF), as inflation remains stubbornly high. Spending from Nov. 1 to Dec. 31 could total as much as $960 billion, a record-shattering figure, showing that consumers continue to spend even as inflation hits their wallets.
The predicted growth would mark a slowdown from 2021, however, when year-over-year holiday sales rose 13.5 percent. While the bulk of the anticipated sales increase will be driven by higher prices — the NRF estimated that most categories will be up 4 to 5 percent annually — the organization noted that volumes are expected to continue to rise as well.
Entry Level Manufacturing Workers Speak Up - 'What It Took to Get Us to Stay'
Pouring over data, analyzing trends and evaluating the efficacy of policies are often how companies study their retention efforts. While those methods offer insights, the best resource for finding out why employees stay at their jobs is to ask them. IndustryWeek did that and spoke with three entry-level workers in different industries. Here are their responses as to what they like about their jobs and why they have stayed.
“Looking at the main concerns all of them mentioned such as pay, scheduling and training, I would say that is what I have found to be true with a lot of people that I talk to. Looking at pay first, there is an issue of equity within companies when it comes to seasoned workers and their pay scale and then the higher pay scale of new workers. In the manufacturing world, this is playing out across many companies.”
German Chancellor Olaf Scholz Criticised Over His Visit to China
German Chancellor Olaf Scholz published an op-ed Thursday in which he defended his trip to China with a German trade delegation comprised of business leaders. "It's been a good three years since my predecessor last visited China," Scholz began, referencing former German Chancellor Angela Merkel. He added that those were, "Three years during which the world has fundamentally changed — due to the COVID-19 pandemic on the one hand, and Russia's war against Ukraine on the other, with its severe repercussions for the international order, our food and energy supply, the economy and prices worldwide."
Scholz's critics charge his visit is primarily motivated by business and economic considerations, as China is Germany's largest trading partner. Scholz conceded in his op-ed that this was very much the case. "A significant amount of trade between Germany and China concerns products where there is neither a lack of alternative suppliers nor a risk of dangerous monopolies. Instead, China, Germany and Europe benefit equally," he wrote.
Why Natural Gas Tankers Are Lining Up Off Europe's Coast
Tankers carrying liquefied natural gas are waiting off Europe's coast, waiting for the price of the fuel to rise. WSJ’s Joe Wallace explains how the tankers are Europe’s attempt to address the energy shortage and what it might mean for the continent this winter.
Each tanker holds enough liquified natural gas to heat a million homes a month, but they can’t unload their cargo, at least not right now.
Wharton, Berkeley, NYU Offering Online M.B.A.s for the First Time
After years of resistance, some of the country’s top business schools are starting virtual M.B.A. programs that require only a few days of in-person instruction. Wharton and Georgetown University’s McDonough School of Business said they would include options for executive and part-time M.B.A. students to take most coursework online in 2023. The move to give students flexible location options comes as demand for two-year, full-time traditional M.B.A. programs has been dropping amid a competitive job market and growing concern about the cost of college.
This fall, part-time M.B.A. students at New York University’s Stern School of Business and the University of California, Berkeley’s Haas School of Business were given an online option for most of their classes. All of the programs will charge online students the same tuition as those who attend in person, and those online students will get the same degree and credential as on-campus counterparts.