Member Briefing September 5, 2024
Job Openings Fell More Than Expected In July In – But Higher in Manufacturing
Job openings slumped to their lowest level in three and a half years in July, the Labor Department reported Wednesday in another sign of slack in the labor market. The department’s closely watched Job Openings and Labor Turnover Survey showed that available positions fell to 7.67 million on the month, off 237,000 from June’s downwardly revised number and the lowest level since January 2021.
While the job openings level declined, layoffs increased to 1.76 million, up 202,000 from June.
Total separations jumped by 336,000, pushing the separations rate as a share of the labor force up to 3.4%.
Hires rose as well, up 273,000 on the month, putting the rate at 3.5% or 0.2 percentage point better than June.
In the manufacturing sector there were 505,000 job openings, up 31,000 from June, but down 30,000 from July 2023. There were 356,000 hires in the sector up 20,000 from June and down 46,000 from a year earlier. Total separations in the sector were 348,000, unchanged from June and 8,000 fewer than July 2023.
Read more at The Bureau of Economic Analysis
US Trade Deficit Widest In Two Years On Imports Surge
The US trade deficit in July expanded to its largest since mid-2022, according to government data released Wednesday, as imports rose more quickly than exports. Overall, the trade gap widened to $78.8 billion, from a revised $73.0 billion in June, the Department of Commerce said. The growth was slightly more than analysts expected. Businesses were likely to be frontloading imports ahead of an increase in tariffs, analysts say, given that Washington earlier unveiled plans to hike levies on Chinese goods ranging from semiconductors to batteries and solar panels. The US goods deficit with China increased by $4.9 billion to $27.2 billion, as exports fell and imports picked up.
In July, imports jumped 2.1 percent to $345.4 billion, boosted by capital goods like computer accessories, as well as by industrial supplies. Exports, meanwhile, edged up 0.5 percent to $266.6 billion, the Commerce Department report said. Capital goods imports have been supported by boosts from investments relating to government incentives in the Inflation Reduction Act and CHIPS Act, said Matthew Martin, US economist at Oxford Economics. Among individual segments, exports of semiconductors rose but auto shipments and that of consumer goods fell as well. Exports have had a harder time with global demand weakening and with a strong dollar.
Construction Spending Dipped in July
Total construction spending declined 0.3% July. The monthly drop was owed to a pull-back in both residential and nonresidential outlays. Although total spending is still up 6.7% over the past year, construction activity is losing momentum as elevated financing costs narrows the pipeline of new projects getting started. Lower interest rates should eventually help bring about a turnaround, however ongoing weakness in the forward-looking Architecture Billings Index (ABI) suggests a material recovery is still off in the distance.
Within private construction, a dip in single-family building drove the overall decline in residential outlays. Private multifamily spending was essentially unchanged in July.
Private single-family spending dipped 1.9% over the month, the sharpest drop since December 2022. As of July, single-family starts have retreated for five straight months and are currently running at the slowest pace in 16 months.
Total nonresidential construction spending fell 0.2% during July, the second straight monthly decline. Private nonresidential slipped 0.4%, while the public category rose a modest 0.2%.
Private manufacturing outlays were also essentially unchanged, reflecting a slowing yet still sturdy pace of electric vehicle, semiconductor and other manufacturing plant development.
Global Headlines
Middle East
- Israel And Hamas: The Latest News – The Guardian
- Netanyahu rival Gantz criticizes stance on Philadelphi, urges hostage deal - Reuters
- Justice Department Charges Hamas Leaders With Terrorism For Oct. 7 Attack On Israel - Forbes
- Israel Targets Hezbollah Militants In Southern Lebanon As Families Of Hostages Demand Gaza Cease-Fire - VOA
- Greta Thunberg Arrested At Pro-Palestinian Protest In Denmark – France 24
- Burning Tanker Abandoned, Huge Oil Spill Feared - Newsweek
- Iran Pays Millions In Ransom To End Massive Cyberattack On Banks, officials say - Politico
- Extremist Settlers Rapidly Seizing West Bank Land - BBC
- Interactive Map- Israel’s Operation In Gaza – Institute For The Study Of War
- Map – Tracking Hamas’ Attack On Israel – Live Universal Awareness Map
Ukraine
- Ukraine And Russia: The Latest News – The Guardian
- Deadly Russian Aerial Attack Hits Western Ukraine - VOA
- NATO Member Poland Scrambles Aircraft During Russian Attack on Lviv - Newsweek
- Ukraine’s Zelensky Launches Government Overhaul for Fresh Military, Diplomatic Push - WSJ
- Zelenskiy Orders War's Biggest Reshuffle To Give Ukraine 'New Energy' - Reuters
- Russia Unleashes New Strikes as Ukraine Prepares for Cabinet Shake-Up - NYT
- Sorry Not Sorry, Says Mongolia After Failure To Arrest Putin - Politico
- Ukrainian Foreign Minister Submits Resignation - VOA
- 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
Other Headlines
- US Voices Impatience With Taliban Over Morality Law Targeting Afghan Women - VOA
- India Adds Second Nuclear Missile Submarine, Has Third On Way – Nikkei Asia
- French Former PM Edouard Philippe Launches 2027 Presidential Bid – France 24
- Dozens Die in Congo Jailbreak - NYT
- Justin Trudeau Loses Governing Partner - Politico
- France Sees Channel Migrant Deaths As A Problem Of Britain's Making - BBC
- Pope Francis Calls on Indonesia to Battle Extremism - Newsweek
- A U.S. Man Will Actually Play In The Men’s Final For The First Time Since 2006 - WSJ
- Militants on Motorcycles Kill Over 100 in Nigerian Village, Residents Say
- Grenfell Tower Fire Inquiry Blames Deaths On Incompetence And Greed – The Reuters
Policy and Politics
Council Members Fryer Machine, Putnam Precision, Allendale Machinery and Lamothermic Headline Brewster School’s Summer Bridge Program
It was a summer to remember for students participating in the Brewster School District’s initial ‘Brewster Opportunities’ cohort that concluded last Friday with site visits to local tech companies in addition to Westchester Community College. Students initially visited Fryer Machine Systems where they were given a tour by engineer Eric Swart that included explanations of the design and manufacture of machines that are shipped to both domestic and international companies worldwide.
Next came a tour of the Lamothermic Precision Investment Casting Corp. Students were given personalized tours of Lamothermic’s casting process by company president Garrett Noach. Those attending observed wax molds of bike pedals and gears as well as rough metal casts of the products. Students also heard from company officials employed by Putnam Precision and Allendale Machinery Systems about manufacturing and production. Students were able to see samples of the medical supplies produced at Putnam Precision and what it takes to create them. Mark Harris of Allendale demonstrated the use of a robotic arm.
How Immigration Remade the U.S. Labor Force
The U.S. is experiencing its largest immigration wave in generations, driven by millions of people from around the world seeking personal safety and economic opportunity. Immigrants are swelling the population and changing the makeup of the U.S. labor force in ways that are likely to reverberate through the economy for decades. Recent migrants are younger and more likely to be of working age than U.S.-born Americans. Of foreigners who arrived since 2020, 78% are between the ages of 16 and 64, compared with 60% of those born in the U.S., according to the monthly census data.
Since the end of 2020, more than nine million people have migrated to the U.S., after subtracting those who have left, coming both legally and illegally, according to estimates and projections from the Congressional Budget Office. That’s nearly as many as the number that came in the previous decade. Immigration has lifted U.S. population growth to almost 1.2% a year, the highest since the early 1990s. Without it, the U.S. population would be growing 0.2% a year because of declining birthrates and would begin shrinking around 2040, the CBO projects.
Read more and see lots of stats at The WSJ
House GOP Leaders Weigh Options As Government Shutdown Fight Looms
Donald Trump is pressuring Republicans to shut down the government at the end of this month if Congress doesn’t pass a GOP-backed proposal to establish new election rules nationwide. Trump has called on Republicans in Congress to link funding the government with the SAVE Act, which would require proof of citizenship to vote — in a bid to target non-citizen voting. The deadline to fund the government is Sept. 30. The GOP-led House and Democratic-led Senate have to agree on how to move forward in order to prevent a shutdown, and Democrats have decried the SAVE Act as a poison pill.
The two parties are nowhere close to agreeing on a full-year government funding package, meaning a continuing resolution, or CR, will be necessary as a stopgap solution. Speaker Mike Johnson, R-La., has not announced how he plans to handle the issue. Trump also suggested last week that congressional Republicans should demand “more than the SAVE Act," suggesting there should be a “border” component of the government funding bill, too
Health and Wellness
Long Covid Knocked a Million Americans Off Their Career Paths
Among Covid’s superlatives is the blow it dealt to people’s career plans en masse. Never before have so many Americans redrawn their relationships with work as a result of one public-health crisis. More than four years after the pandemic began, some are still reckoning with how to balance their livelihoods and life with long Covid, the chronic condition doctors are still trying to understand. People at the height of careers in finance, technology and healthcare are operating without clarity on when, or if, they can resume the paths they once laid out.
Long Covid has pushed around one million Americans out of the labor force, economists estimate. More than 5% of adults in the U.S. have long Covid, and it is most prevalent among Americans in their prime working years. About 3.6 million people reported significantly modifying their activities because of the illness in a recent survey by the Centers for Disease Control and Prevention.
Election 2024
- Election 2024 Swing State Polls: Harris Leading Or Tied In Most Battlegrounds—But Trump Ahead In Arizona - Forbes
- Once Neglected, Asian Americans Now Courted In Knife-Edge Election – Nikkei Asia
- Kamala Harris Pares Back Biden’s Capital-Gains Tax Proposal - WSJ
- US Seeks To Reassure Voters That Presidential Election Will Be Safe - VOA
- DOJ Announces New Crackdown On Russian Disinformation In 2024 Election - Politico
- Kamala Harris Has Thrived In Debates - Will Her Tactics Work On Trump? - BBC
- What Is Unrealized Capital Gains Tax? Unpacking Kamala Harris-Backed Proposal - Forbes
- Real Clear Politics Latest General Election Polls – Real Clear Politics
- Latest Polls - FiveThirtyEight
Industry News
Japan To Partner With Intel To Build Chip Research Facility
The industry ministry-affiliated National Institute of Advanced Industrial Science and Technology, or AIST, will establish a domestic research and development base for semiconductor production equipment and chip materials, it was learned Tuesday. It will be the first Japanese research institute to introduce extreme ultraviolet lithography equipment, crucial for making chips' circuit line widths narrower. The institute plans to receive technical cooperation from U.S. technology giant Intel in its bid to boost the competitiveness of the Japanese chip industry.
AIST's new base, to be built in three to five years, is expected to feature a system enabling corporations to conduct experiments using extreme ultraviolet lithography equipment for a fee. Also envisioned are measures to develop semiconductor-related personnel through exchanges with foreign research institutes. Intel will provide expertise on chip production using extreme ultraviolet lithography technology. It apparently hopes to pursue potential partnerships in manufacturing equipment and semiconductor materials, areas viewed as Japanese manufacturers' fortes.
China's Chip Capabilities Just 3 Years Behind TSMC, Teardown Shows
An analysis of China’s semiconductor technology shows it is just three years behind Taiwan Semiconductor Mfg. Co. Ltd. The report highlights the limited impact of U.S. export restrictions on China’s consumer chip production. Hiroharu Shimizu, CEO of TechanaLye, shared insights with Nikkei, showing that China’s chip capabilities are rapidly advancing. Shimizu presented semiconductor circuit diagrams from two Huawei Technologies smartphones: the Pura 70 Pro, released in April, and a 2021 model. The latest phone’s chip, Kirin 9010, was designed by HiSilicon and mass-produced by Semiconductor Manufacturing International Corp. (SMIC).
Despite U.S. measures to curb advanced chip technology, SMIC can produce 7-nanometer chips. These chips are nearly comparable in performance to TSMC’s 5-nanometer chips, which were used in Huawei’s 2021 phone. SMIC’s 7-nm chip is 118.4 square millimeters, while TSMC’s 5-nm chip is 107.8 sq. mm. Both chips have similar performance levels, indicating SMIC’s progress.
U.S. Steel Warns of Plant Closings if Sale Collapses
U.S. Steel’s chief executive said the company would close steel mills and likely move its headquarters out of Pittsburgh if its planned sale to Nippon Steel collapses. CEO David Burritt said the nearly $3 billion that Japan-based Nippon Steel has pledged to invest in the Pittsburgh company’s older mills is critical to keeping them competitive and maintaining workers’ jobs. “We wouldn’t do that if the deal falls through,” Burritt said in an interview. “I don’t have the money.”
Burritt’s dour outlook for the storied steelmaker came after Democratic presidential nominee Kamala Harris said Monday that U.S. Steel should remain domestically owned and operated. President Biden, Republican presidential nominee Donald Trump and several members of Congress have similarly lined up against the $14.1 billion deal, which the United Steelworkers union also opposes. Like Biden earlier this year, the vice president didn’t explicitly say she would block the deal, but her comments were widely interpreted as another hurdle for U.S. Steel if she is elected president and the deal’s regulatory review spills into a new administration.
Nvidia Reportedly Subpoenaed By Justice Department As Antitrust Probe Intensifies
Nvidia was subpoenaed as part of a Justice Department antitrust investigation, according to Bloomberg, ramping up the probe and bringing regulators closer to filing a formal complaint against the tech giant. The subpoena was sent to Nvidia and other unnamed technology companies, according to Bloomberg, which cited unnamed people familiar with the investigation and reported the Justice Department’s San Francisco office is spearheading the probe.
Antitrust officials believe Nvidia may be making it more difficult for buyers to switch to other chip suppliers while penalizing those that do not exclusively purchase their AI chips, Bloomberg reported—a concern previously shared among those in the chipmaking industry, according to The New York Times. The investigation into Nvidia has a focus on the company’s $700 million acquisition of AI management firm RunAI as regulators are concerned the deal makes finding alternatives to Nvidia chips difficult, according to Bloomberg.
Lockheed-Raytheon Venture Wins $1.3B Missile Contract
Working as joint-venture partners, Lockheed Martin and Raytheon have drawn a $1.3-billion U.S. Army contract to produce Javelin® missiles plus associated equipment. This follow-on to a May 2023 indefinite-delivery, indefinite-quantity contract is described as the largest single-year production order in the three-decade history of the Javelin system. The new contract will cover Javelin weapon systems and production support for the U.S. Army, which aims to receive 3,960 units annually by late 2026 under the Javelin All Up Round production started last year. However, according to the Javelin Joint Venture, the new contract also will provide more than 4,000 Javelins to replenish rounds sent to Ukraine.
The Javelin is a shoulder-mounted anti-tank missile system that uses infrared guidance, allowing the operator to launch a weapon and seek cover. The “high-explosive anti-tank” (HEAT) warhead is effective against tanks as well as fortifications, and while it has become a less prominent part of U.S. defense weapons program, Javelin reportedly has been highly effective for Ukrainian forces combating Russian tanks in the ongoing conflict there. The Javelin Joint Venture of Lockheed and Raytheon has been produced by the missiles since 1994 – by Raytheon in Tucson, Ariz., and by Lockheed in Orlando, Fla.
Read more at American Machinist
Volvo Cars Abandons 2030 EV-Only Target, Looks to Hybrids
Swedish automaker Volvo Cars scrapped its target of going all electric by 2030 on Wednesday, saying it now expected to still be offering some hybrid models in its lineup at that time. Major automakers have seen slowing demand for EVs partly due to a lack of affordable models and the slow roll-out of charging points, and Volvo Cars is also bracing for the effects of European tariffs on electric cars made in China.
Volvo Cars said in the statement that by 2030 it now aimed for between 90% and 100% of cars sold to be fully electric or plug-in hybrid models, while up to 10% would be so-called mild hybrids, where electric power only supplements the combustion engine. Volvo Cars said in a separate statement that plug-in hybrids would be a critical part of its future profit growth, and that it would revamp its hybrid XC90, with first customers receiving the SUV by the end of the year.
For Volkswagen, the Bumpy Road to Electric Vehicles Starts to Hit Home
Volkswagen’s suggestion that it might have to close a plant in Germany for the first time ever sets up a battle with its powerful union and highlights the mounting pressures on its namesake brand. The carmaker’s bosses raised the prospect of a plant closure on Monday as it navigates an increasingly bumpy transition toward electric vehicles. The company said a “performance program” at its core Volkswagen brand that was agreed upon with union leaders last December would no longer be sufficient to hit profit targets, following a disappointing first half of the year.
“The economic environment became even tougher, and new competitors are entering the European market,” said Chief Executive Oliver Blume in a statement. Group Chief Financial Officer Arno Antlitz blamed the poor result squarely on the poor postpandemic recovery. “In Europe, two million fewer vehicles are currently sold than before Covid,” he said. However, a big bet on electric vehicles under former CEO Herbert Diess with products such as the ID.3 and ID.4 is another reason for today’s weak profitability, according to analysts. “There are plants dedicated to EVs that aren’t producing at the levels expected and costs are out of whack,” said Bernstein analyst Stephen Reitman.
Airplane Engines Are In Short Supply. The Business Of Fixing Older Ones Is Booming.
Parts and labor shortages. Delayed deliveries of new airplanes from Boeing and Airbus. An engine recall. Premature repairs. It’s all piling up, and aircraft engine shops around the world are overflowing. As travelers boarded planes in record numbers this summer, airline executives waited anxiously for repairs and overhauls of their engines. The repair and overhaul of engines has swelled from a $31 billion business before the pandemic to $58 billion this year, according to Alton Aviation Consultancy.
It’s a cash cow for engine makers like GE Aerospace and the hundreds of smaller specialists that service GE engines, and others made by Pratt & Whitney and Rolls-Royce. With many engines needing overhauls about every 7,000 flights, keeping older airplanes longer means more routine maintenance and revamps, adding to demand when they’re due to come into the shop. Those weekslong overhauls are exhaustive: They can cost $5 million apiece and can go for double that for wide-body airplanes, according to Kevin Michaels, a managing director at AeroDynamic Advisory.
DOL Backs IBM Retirees, Urges Lower Court To Reopen Firm's ERISA Pension Plan Lawsuit
The Department of Labor is asking a U.S. Court to Appeals to reopen a class action lawsuit, Joshua Knight v. International Business Machines, filed against IBM and its pension plan administrator in 2022 in support of employees, who allege they were shorted on pension payments. The DOL said the lower court was wrong to rule on April 9 that their Employee Retirement Security Act lawsuit was filed beyond its three-year statute of limitations deadline and "flies in the face" of U.S. Supreme Court precedent.
In June 2022, the tech company was sued by three long-time employees of using an "outdated mortality table" and inflated interest rate assumption to determine the value of annuity benefits paid out by the pension plan. alleged in the DOL appeal filed on August 23. Plan participants alleged IBM failed to disclose that participants would receive less than the actuarial equivalent value of their accrued, vested pension benefit it they selected a joint survivor annuity. Also, the employees alleged that IBM's "Mortality Table is more than 40 years out of date, despite dramatic increases in longevity of the American public."