Member Briefing September 5, 2023
Employers Added 187000 Jobs in August, Showing Resilience but Slower Growth
Nonfarm payrolls grew by a seasonally adjusted 187,000 in August, above the Dow Jones estimate for 170,000, the U.S. Bureau of Labor Statistics reported Friday and The unemployment rate rose sharply. That increase in the jobless level came as the labor force participation rate rose to 62.8%, the highest since February 2020, just before the Covid pandemic declaration. The total labor force size increased by 736,000.
A more encompassing unemployment measure that counts discouraged workers as well as those working part-time for economic reasons jumped to 7.1%, a 0.4 percentage point increase and the highest since May 2022. Average hourly earnings increased 0.2% for the month and 4.3% from a year ago. Both were below respective forecasts of 0.3% and 4.4% and another possible sign that inflation pressures are easing. Hours worked nudged higher to 34.4.
War in Ukraine Headlines
- Ukraine and Russia: The Latest News – The Guardian
- Zelensky Replaces Defense Minister, Citing Need for ‘New Approaches’ - NYT
- Russian Drone Attack Hits Danube Port Infrastructure, Ukraine Says – Reuters
- US Sees 'Notable Progress' by Ukraine Army in South - BBC
- Putin Tells Turkey's Erdogan: No New Grain Deal Until West Meets My Demands - EuroNews
- Ukraine’s Counter-Offensive is Speeding Up – The Economist
- Russia Says it Will Not Let Foreign Banks Exit the Market Easily – Business Insider
- US to Send Depleted-Uranium Munitions to Ukraine – Reuters
- Nobel Prize Foundation Invites Russia, Belarus Back to Stockholm Ceremony - The Washington Post
- Never Mind: Nobel Foundation Cancels Russian Envoy's Invitation to Prize Ceremony – France 24
- 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
NFIB Survey: Increased Financing Costs Tops the List of Credit Concerns for Small Business Owners
Twenty-one percent of owners borrowed or tried to borrow from a bank or credit union in the last three months. Of those borrowing, 32% were very satisfied with the amount and terms offered for the financing received. Another 33% were mostly satisfied and 19% were moderately satisfied. Seventeen percent of owners reported that they were not satisfied.Three-quarters of small business owners did not borrow or try to borrow money for business purposes in the last three months, nearly the same as in April 2023.
Forty percent of owners reported that interest rates were a significant issue. Twenty-three percent reported it was a moderate issue and 13% said it was a mild issue. A third of owners reported that the main purpose to seek financing was to meet operating and inventory expenses, 26% reported to replace capital assets or make repairs, 20% reported to expand their business, and 13% reported other. Refinance or pay down debt was the main financing purpose for 5% of owners.
PCE, Key US Inflation Measure Ticks Up in July
The annual personal consumption expenditures (PCE) price index rose 3.3% in July, up from a two-year low of 3.0% a month earlier, the Commerce Department announced in a statement. The move was fueled by an increase in the price of services, which recorded a 12-month rise of 5.2% -- in stark contrast with the price of goods, which decreased 0.5%. Core PCE, excluding volatile food and energy costs, also ticked up in July to an annual rate of 4.2%.
Month-over-month, PCE increased by 0.2%, as it did in June. Personal income, meanwhile, increased at a monthly rate of 0.2%. "The data bear watching for a reversal of progress on inflation although our estimates suggest prices pressures will ease over the remainder of the year," Rubeela Farooqi, High Frequency Economics' chief U.S. economist, wrote in a note to clients. Analysts and traders largely expect the Fed to hold its benchmark lending rate steady at its next meeting on September 19-20. Fed officials haven't ruled out raising rates again in future, if needed.
COVID Update – Report: New York’s First Covid Wave Peaked Earlier than First Believed
The first wave of the Covid-19 pandemic peaked in New York weeks earlier than is commonly believed, resulting in deaths as early as January 2020, a report Wednesday contended. The state’s first pandemic death occurred during the week ending Jan. 25, 2020, and at least four more people died of the virus in February 2020, according to death certificate data compiled by the U.S. Centers for Disease Control and Prevention.
The data was highlighted in an analysis Wednesday by the Empire Center. The analysis cites retrospective modeling by the University of Washington’s Institute for Health Metrics and Evaluation showing the state’s outbreak likely began by early February that year and peaked March 19. That was three days before a stay-at-home order issued by former Gov. Andrew Cuomo went into effect. New York officials confirmed the state’s first Covid case on March 1, 2020, but previous research has found physical evidence the virus was circulating as early as the first week of February.
NYS COVID Update
The Governor updated COVID data for the week ending August 25th.
Deaths:
- Weekly: 56
- Total Reported to CDC: 80,092
Hospitalizations:
- Average Daily Patients in Hospital statewide: 1,111
- Average Daily Patients in ICU Statewide: 103
7 Day Average Cases per 100K population
- 12.5 positive cases per 100,00 population, Statewide
- 12.9 positive cases per 100,00 population, Mid-Hudson
Useful Websites:
Labor Day 2023: The Movement Strikes Back
More than 500 labor actions, including strikes and protests, have occurred in the United States since Jan. 1, according to Cornell University’s School of Industrial and Labor Relations. From the Teamsters’ settlement with UPS to the ongoing screen actors and writers strikes, more than 320,000 workers have participated in in the actions this year, Cornell research showed.
David Jacobs, a management professor at American University, said the current negotiating battles will set a precedent for others. “We have kind of an ‘Empire Strikes Back’ situation, in which we’ve seen enormous organizing and hope on the worker side and a battle in the courts that will determine whether a more progressive labor policy is effectuated,” An author and expert in the field of labor, Jacobs noted the rising support unions have from Americans since 2010. Gallup research showed 48% of Americans backed labor unions 13 years ago, a number which has steadily climbed to 71% in 2022 and 67% this year. The strikes and settlements of recent years are less cut and dry than some may think, Jacobs said. A multitude of factors such as court rulings and political influence play a significant role in how these negotiations are handled and how they will shape the ones to come.
Read more at The Financial Times
Manufacturing Groups Push Back Against White House Plan to Pay More Workers Overtime
Two manufacturing industry groups are pushing back against a proposed rule from the U.S. Department of Labor (DOL) that would guarantee overtime pay for most salaried workers earning less than $55,000 per year, up from the current cap of about $35,500. If it becomes final, the change would extend overtime protections to 3.6 million salaried workers who are now paid at their standard rate while working more than 40 hours per week, even as their hourly wage colleagues collect time-and-a-half.
According to the National Association of Manufacturers, the rule would add undue regulatory burdens and compliance costs, NAM Managing Vice President of Policy Chris Netram said in a release. “Manufacturers have spent the past several years adapting operations and personnel management resources to meet the evolving needs of their workforce in a post-pandemic environment, including through improved wages and benefits and productive workplace accommodations. The DOL’s proposed rule would inject new regulatory burdens and compliance costs to an industry already reeling from workforce shortages and an onslaught of other unbalanced regulations,” Netram said. Likewise, the National Association of Wholesaler-Distributors (NAW) said the rule would introduce further instability in an already strained labor market.
Read more at Supply Chain Quarterly
Pentagon to Release Defense Industrial Strategy in December
The Pentagon is more than a third through preparing a national defense industrial strategy, with the full document set for release in December, according to Halimah Najieb-Locke, the military’s industrial base czar. The strategy will arrive at a time of increased attention on the defense industry’s capacity. Russia’s invasion of Ukraine has shown how taxing a long-term conflict can be, while competition with China demands the Pentagon produce more advanced weapons.
The strategy’s goal is not to change the Pentagon’s buying authorities. Instead, the goal is to better use its existing ones and its relationship to the industrial base. The strategy will attempt to fill gaps like those seen with the 155mm rounds. Its goals include a ready workforce, resilient supply chains and fair markets. It will include three phases. The first, focused on development, is already complete, said Najieb-Locke, who called this industrial base strategy as the Pentagon’s first ever. Other issues of focus include managing sole-source suppliers and ensuring the military has a supply of critical components even as technology advances.
McMahon: NYS Job Count Still lags Summer of ’19
Measured on a seasonally adjusted basis, private employment in New York State as of July was still 90,700 jobs short of its February 2020 pre-pandemic peak (-1.2 percent), while the total U.S. private jobs count was up roughly 4 million jobs (+3.2 percent), according to data from the state Labor Department and the U.S. Bureau of Labor Statistics (BLS). If the Empire State had matched the nationwide trend during this period, it would have had 357,000 more private-sector jobs in July.
Private job counts as of July exceeded pre-pandemic levels in 38 states, including neighboring New Jersey (+3.5 percent), Pennsylvania (+1.3 percent), and Massachusetts (+0.8 percent). Only seven states have experienced weaker employment recoveries since early 2020—and in several of those cases, slow job growth was due largely to factors other than the pandemic, such as severe hurricanes in Louisiana and falling shale oil production in North Dakota. By contrast, private sector employment has grown much faster in New York’s large peer states: Florida (+8.6 percent), Texas (+8.5 percent), and even California (+3.0 percent).
Read more at the Empire Center
OSHA Heat “Framework,” As the Temperature Rises, Employer Obligations Rise Too
On August 30, 2023, OSHA released a “Regulatory Framework” meant to outline potential options for the elements of a future OSHA standard. This framework shows that OSHA is focused on a programmatic standard where employers are required to create a plan to evaluate and control heat hazards in their workplaces, but also permit some customization of those plans based on various factors. In the short term, this framework provides employers with an indication of the type of items OSHA may be looking for during a heat illness or injury inspection. However, this framework is far from a final OSHA standard and any final heat-safety standard will almost surely be challenged in the courts, potentially further extending implementation.
While in the past focus on heat-safety violations may have been limited to the construction and agriculture industries, OSHA is now equally focused on heat-safety violations found in indoor work environments, such as manufacturing facilities. This expanded focus includes the manufacturing and warehouse industries. OSHA has also been conducting an annual heat awareness campaign for the last decade and in 2022, began its heat enforcement program.
Toyota Output Hits Monthly Record for July on Robust Demand
Toyota Motor Corp.’s global production rose 10% last month to a July record of 918,347 vehicles on robust demand and further easing of pandemic-related disruptions. Worldwide sales, including subsidiaries Daihatsu Motor Co. and Hino Motors Ltd., rose 5.2% to 918,345 units on strong demand in North America, India and the Philippines, the world’s biggest automaker said Wednesday. Sales in China fell amid intense competition with local brands.
Toyota on Tuesday suspended production at all its Japanese plants after a rare system malfunction made it impossible to order parts. The plants started to gradually resume operations Wednesday, and the company said it doesn’t suspect it was the victim of a cyberattack.
US Consumer Spending Accelerates; Declining Savings a Red Flag
U.S. consumer spending increased by the most in six months in July as Americans bought more goods and services, but slowing monthly inflation rates cemented expectations that the Federal Reserve would keep interest rates unchanged next month. Consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased 0.8% last month. Data for June was revised slightly higher to show spending rising 0.6% instead of 0.5% as previously reported. Economists had forecast spending increasing 0.7%. Spending on goods increased 0.7% last month mostly reflecting products with a short life span, including pharmaceuticals, recreational items, groceries and clothing. There were also increases in outlays on recreational goods and vehicles as well as household furnishings and equipment and other long-lasting goods.
The current pace of increase in consumer spending is, however, unlikely sustainable. Households are drawing down excess savings accumulated during the COVID-19 pandemic. Student debt repayments resume in October for millions of Americans and higher borrowing costs could make it harder for consumers to keep using credit cards to fund purchases.
Weekly Jobless Claims Fall
The labor market is cooling, with job openings dropping to their lowest level in nearly 2-1/2 years in July, conditions remains tight. Employers are mostly hanging on to workers after difficulties hiring during the COVID-19 pandemic. Initial claims for state unemployment benefits fell 4,000 to a seasonally adjusted 228,000 for the week ended Aug. 26, the Labor Department said in a separate report on Thursday. Economists had forecast 235,000 claims for the latest week.
The number of people receiving benefits after an initial week of aid, a proxy for hiring, rose 28,000 to 1.725 million during the week ending Aug. 19. Slowing inflation is fueling optimism that the central bank is probably done hiking rates and could engineer a "soft landing." Most economists have walked back their forecasts for a recession this year.
How Does The Boeing 787's No-Bleed System Architecture Reduce Fuel Consumption?
In traditional aircraft systems, bleed air from the primary air stream is taken for pressurization of sumps, valves, and other internal systems. Similarly, bleed air from the bypass stream is used to actuate and cool external components. The replacement of hydraulic and pneumatic systems with electrical systems means reduced bleed air from the engines. The engine provides power to the critical systems in electrical form through shaft-driven generators. The fuel used to condition the air (pressurization) results in maximizing the thrust, thereby achieving optimal engine efficiency.
With minimum or no robbing of air through the bleed system, less fuel is required to produce the optimal thrust. The resultant fuel consumption is lower when most secondary systems are electrically powered. Moreover, with the removal of the bleed system, including manifolds, valves, and fittings, the overall weight of the engine is reduced by hundreds of pounds. That, in and of itself, further enhances the engine's fuel efficiency. According to Mike Sinnett, Director of Boeing 787 systems,