Daily Briefing – 511

Auto Production Leads Growth in April Industrial Output

The industrial sector had a solid month for production in April. According to the latest numbers from the U.S. Federal Reserve, industrial production rose by 1.1% last month as manufacturing output increased by 0.8%.  Here are some highlights

  • In its report, the Fed noted that April now marks the fourth month in a row that has seen industrial production grow by at least 0.8%. 
  • In April, much of the increased factory production went towards building cars. Motor vehicles and parts production rose by 3.9%.
  • Excluding auto production, factory output grew just half a percent.
  • Most other durable goods industries also increased production, but by notably less than automotive manufacturers.
  • In nondurable goods, food and beverage production continued to grow at 0.9% last month.
  • There was a 0.8% decrease in plastics and rubber products production.
  • Capacity utilization also grew in April in both industry and manufacturing specifically. Industrial businesses used an average of 79% of their capacity in April, up 0.8% from March, and manufacturing factories specifically saw capacity utilization grow 0.6% to 79.2% last month. 

Read more at IndustryWeek

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U.S. Home-Builder Sentiment Fell Sharply in May Amid Rising Mortgage Rates — NAHB

Confidence among home builders in the U.S. decreased for a fifth straight month in May as rising mortgage rates, increasing material  

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Daily Briefing – 510

Empire Manufacturing Survey: Activity Declined Across the Board

After growing significantly last month, manufacturing activity declined in New York State,  and firms expressed less optimism about the six-month outlook than they did earlier this year, according to the May Empire Manufacturing Survey. Here are some of the key numbers:

  • The general business conditions index retreated thirty-six points to -11.6, its second negative reading in the past three months. 
  • The new orders index fell thirty-four points to -8.8, and the shipments index plunged fifty points to -15.4, marking a sharp reversal for the two measures, both of which increased last month.
  • The unfilled orders index fell to 2.6. The delivery times index held steady at 20.2, pointing to continued lengthening in delivery times, and inventories increased.
  • The index for number of employees increased seven points to 14.0, and the average workweek index held steady at 11.9, indicating a modest increase in employment levels and the average workweek.
  • The prices paid index fell thirteen points to a still elevated 73.7, and the prices received index edged down to 45.6, signaling ongoing substantial increases in both input prices and selling prices, though at a slower pace than last month.
  • The index for future business conditions was little changed at 18.0. Increases in prices and employment are expected to continue in the months ahead. The capital expenditures index fell to its lowest level in several months.

Read more at the NY Fed

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China’s Economic Activity Plummets as COVID Lockdowns Hit Growth

China’s economic activity contracted sharply in April as a wave of lockdowns across the country posed  

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Daily Briefing – 509

Rise in COVID Cases Puts Most of New York State Counties on CDC “High” Alert List

New coronavirus cases surged in most counties in New York State this week, putting them on “high” alert under Centers for Disease Control and Prevention guidelines and triggering recommendations for indoor masking, including inside schools.   The state refrained from imposing an indoor mask mandate, but health officials on Friday afternoon did urge residents living in counties that have been  

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Daily Briefing – 507

NFIB: Small Business Expectations for Better Business Conditions at 48-year Low

The NFIB Small Business Optimism Index was unchanged in April, remaining at 93.2 and the fourth consecutive month below the 48-year average of 98. Small business owners expecting better business conditions over the next six months decreased one point to a net negative 50%, the lowest level recorded in the 48-year-old survey.

  • Thirty -two percent of small business owners report that inflation is their single most important problem in operating their business, the highest reading since the fourth quarter of 1980.
  • Forty-seven percent of owners reported job openings that could not be filled, unchanged from March.
  • The net percent of owners raising average selling prices decreased two points to a net 70% (seasonally adjusted), two points below last month’s highest reading.
  • Thirty-six percent of owners reported that supply chain disruptions have had a significant impact on their business.
  • A net 46% reported raising compensation, down three points from March. A net 27% of owners plan to raise compensation in the next three months. 

Read more at NFIB

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Step One… Biden Calls Inflation His top Domestic Priority

President Joe Biden sought Tuesday to ease fears over  

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Daily Briefing – 506

Recession Fears Send Stocks to Lowest in 2022 as Rout Continues

Major indexes fell to their lowest levels of the year to date, with the S&P 500 declining 3.2%, adding to losses after closing out its longest streak of weekly declines since 2011. The Nasdaq Composite tumbled 4.3% and the Dow Jones Industrial Average shed 2%.

Markets have been shaken this year by a flurry of investor worries. Inflation is running at its fastest pace in decades. That has forced  

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Daily Briefing – 505

Manufacturing Adds 55,000 Jobs, Wage Increases Slowing

Despite persistent reports of a tight hiring market, U.S. manufacturing firms hired a healthy 55,000 more workers in April, up from 43,000 hired in March. The transportation equipment sector added an estimated total of 13,700 jobs, about half of which—6,100—were in motor vehicles and parts production. Machinery production added 7,400 jobs, and wood products, fabricated metal products and computer  

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Daily Briefing – 504

Fed Hikes Rates by Half Percentage Point, Starts Balance Sheet Reduction June 1

The Federal Reserve on Wednesday raised its benchmark overnight interest rate by half a percentage point, the biggest jump in 22 years, and said it would begin trimming its bond holdings next month as a further step in the battle to lower inflation.  The U.S. central bank set its target federal funds rate to a range between 0.75% and 1% in a unanimous decision, with further rises in borrowing costs  

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Daily Briefing – 503

U.S. Job Openings, Total Quits Reach March Records in Tight Labor Market

The Labor Department on Tuesday reported a seasonally adjusted 11.5 million job openings in March, an increase from 11.3 million the prior month. The number of times workers quit their jobs rose to 4.5 million in the same month, slightly higher than the previous record in November of last year. Meanwhile, hiring cooled slightly from the month before to 6.7 million in March.

Average hourly earnings  

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Daily Briefing – 502

U.S. Manufacturing Sector Slows Further in April-ISM

U.S. manufacturing activity slowed for a second straight month in April, but supply bottlenecks appeared to be easing, with the pace of increase in prices for inputs and the backlog of unfinished work at factories moderating.  The Institute for Supply Management (ISM) said on Monday that its index of national factory activity fell to a reading of 55.4 last month from 57.1 in March.

  • The survey’s measure of supplier deliveries rose to 67.2 from 65.4 in March.  Tight supply chains have been exacerbated by Russia’s war against Ukraine and new coronavirus-related lockdowns in China.
  • The survey’s gauge of order backlogs dropped to a reading of 56 from 60.0 in March. It was the second straight monthly decline.
  • With supply strains starting to resolve, inflation at the factory gate could be peaking. A measure of prices paid by manufacturers dropped to a reading of 84.6 from and all time high 87.1 in March.
  • The survey’s measure of factory employment fell to a reading of 50.9 from 56.3 in March. That likely reflected difficulties finding workers.
  • There were a near record 11.3 million job openings at the end of February. 

Read  

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Daily Briefing – 501

Ballooning Benefits Cause Employment Costs Index to Jump 1.4 Percent in Q1

Compensation costs for civilian workers increased 1.4 percent, seasonally adjusted, for the 3-month period ending in March 2022, the U.S. Bureau of Labor Statistics reported Friday. Wages and salaries increased 1.2 percent and benefit costs increased 1.8 percent from December 2021. Wages and salaries increased 4.7 percent for the 12-month period ending in March 2022 and increased 2.7 percent for  

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Daily Briefing – 500

500 -Today’s Daily Briefing is the 500th Published by the Council of Industry

We note this milestone with pride and optimism, as well as a tinge of sadness.  We remain very proud of all of our members and associate members who do so much good for the region through the darkest days of the the pandemic.  We are optimistic that you continue to help shape a better future for your employees, for the region, our nation and the world. And we can’t help but feel sad for  

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Daily Briefing – 499

U.S. Durable-Goods Orders Climb 0.8%, Posting Fifth Increase in Six Months

New orders for products meant to last at least three years increased by 0.8% to a seasonally adjusted $275 billion in March following a 1.7% drop in February, the Commerce Department said Tuesday. The increase was driven by orders for autos, computers and other electronics and marked the fifth increase over the past six months.

First-time orders in February for all manufacturing industries were  

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Daily Briefing – 498

S&P Global Flash PMI for April: U.S. Up, Eurozone Down

The S&P Global Flash U.S. Manufacturing PMI rose to 59.7 in April, the best reading since September, with key measures strengthening, proving that manufacturing activity remained resilient despite numerous challenges. Still, the index for future output eased to a six-month low, even as it continued to point to optimism about production growth moving forward.
Manufacturers continued to  

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Daily Briefing – 497

Seventy-Five Basis Points is the New 50 Basis Points

A relentlessly hawkish Federal Reserve is ramping up market expectations for big interest rate hikes that would have been considered unthinkable (and market crippling) just two months ago.  The shift in market expectations for even more tightening came after Fed Chairman Jerome Powell said at an IMF debate Thursday that a 50-basis-point hike in March was “on the table.” Perhaps even  

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Daily Briefing – 496

The Odds of a Recession are 35%, “Soft  Landing 50%,” Says Moody’s Economist Mark Zandi 

Although many economists and financial experts started the year forecasting that 2022 would be the year that the U.S. put supply-chain issues in the rearview mirror and produced another strong four quarters of economic growth, those hit the wall in February when Russia invaded Ukraine and inflation continued to spiral upward. Since January 2021, one economist in particular has gotten cited repeatedly  

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Daily Briefing – 495

U.S. Housing Starts Unexpectedly Rise to Fastest Pace Since 2006

Residential starts climbed 0.3% last month to a 1.79 million annualized rate from an upwardly revised February figure, according to government data released Tuesday. Applications to build, a proxy for future construction, climbed to an annualized 1.87 million units. The number of total homes authorized for construction but not yet started rose 2.9% in March, while the number of one-family homes  

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Daily Briefing – 494

Industrial Production Climbs in March Driven by Automaker Rebound 

Industrial production climbed 0.9% last month, the Fed said, more than expected and pushing the metric of industry output to an annualized rate of 8.1% for the first quarter. Manufacturing output for March also increased 0.9%. Industrial production year on year rose 5.47% .

Other highlights from the Fed on the state of the manufacturing sector:

  • Total industrial production advanced 8.1 percent for the first quarter.
  • The output of motor vehicles and parts jumped 7.8 percent.
  • Consumer durables and transit equipment increased 5.2 percent.
  • At 104.6 percent of its 2017 average, total industrial production in March was 5.5 percent above its year-earlier level.
  • Capacity utilization climbed to 78.3 percent, a rate that is 1.2 percentage points below its long-run (1972–2021) average.
  • Although, the capacity utilization is still below it’s long run average by 1.2% (from 1972), it still is at its highest level since January 2019. The 2018 cycle high reached 79.9%

Read more at IndustryWeek

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Judge Strikes Down CDC Mask Mandate for Travel

A federal judge in Florida on  

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Daily Briefing – 493

Empire State Manufacturing Survey: Activity “Picked Up Significantly”

After three months of sluggishness, manufacturing activity picked up significantly in New York State, according to the April survey. However, firms are less optimistic about the future as longer delivery times, higher prices, and increases in employment are all expected in the months ahead.

  • The general business conditions index shot up thirty-six points to 24.6. 
  • The new orders index climbed thirty-six points to 25.1.
  • The shipments index rose forty-two points to 34.5, pointing to a strong rebound in orders and shipments.
  • The unfilled orders index climbed to 17.3. 
  • The delivery times index moved down eleven points to 21.8, pointing to ongoing increases in delivery times.
  • The index for number of employees dropped seven points to 7.3,
  • The average workweek index came in at 10.0, pointing to a small increase in the average workweek.
  • The prices paid index climbed thirteen points to 86.4, a record high, 
  • The index for future business conditions fell twenty-one points to 15.2, its lowest level since early in the pandemic. 

Read more at the New York Fed

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U.S. Retail Sales Rise 0.5% in March, But High Gas Prices and Inflation Take Toll

Consumers increased retail and restaurant spending by 0.5% in March compared with  

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Daily Briefing – 492

11.2% – Producer Prices Index Rise in March is Highest on Record, Core was 7.0%

The producer price index, which measures the prices paid by wholesalers, increased 11.2% from a year ago, the most in a data series going back to November 2010. On a monthly basis, the gauge increased 1.4%, above the 1.1% Dow Jones estimate and also a new record. PPI is considered a forward-looking inflation measure as it tracks prices in the pipeline for goods and services that eventually reach  

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Daily Briefing – 491

8.5% – CPI in March Rises by the Most Since 1981. Core CPI up 6.5% 

The Bureau of Labor Statistics’ (BLS) Consumer Price Index (CPI) rose 8.5% in March compared to the same month last year, according to the latest report released Tuesday. That marked the fastest rise since December 1981. This followed a 7.9% annual increase in February. On a month-over-month basis, prices rose 1.2% in March following a 0.8% monthly rise in February.

Some of the biggest contributors  

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Daily Briefing – 490

Recession Risk Is Rising, Economists Say

Economists surveyed by The Wall Street Journal this month on average put the probability of the economy being in recession sometime in the next 12 months at 28%, up from 18% in January and just 13% a year ago. “Risk of a recession is rising due to the series of supply shocks cascading throughout the economy as the Fed lifts rates to address inflation,” said Joe Brusuelas, chief economist at  

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Daily Briefing – 489

$220 Billion – The 2022 State Budget By the Numbers

A litany of policy proposals got included in the budget, including changes to state bail laws and the temporary legalization of to-go cocktails. The budget though is ultimately a financial document filled with the dollars and cents needed to keep the Empire State chugging along until another fiscal year concludes at the end of next March.

  • $31.5 billion – Total amount of total school aid compared to the $31.2 billion proposed by the governor in January. 
  • $7 billion – Total amount of new child care expansion over four years.
  • $4.2 billion – Total amount of an environmental bond act that will go before voters this November. 
  • $600 million – Amount of state support authorized in the state budget to help fund a $1.4 billion stadium for the Buffalo Bills.  
  • $750,000 – Amount for Manufacturing Apprentices.

The deal also includes the suspension of the State’s  

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Daily Briefing – 488

Fed Minutes: Officials Plan to Shrink Fed Balance Sheet by $95 Billion a Month

Officials “generally agreed” that a maximum of $60 billion in Treasuries and $35 billion in mortgage-backed securities would be allowed to roll off, phased in over three months and likely starting in May. In addition to the balance sheet talk, officials also discussed the pace of interest rate hikes ahead, with members leaning toward more aggressive moves. “Many participants noted that one  

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Daily Briefing – 487

Fed’s Balance Sheet Runoff Will be Rapid, Brainard Says

Federal Reserve Governor Lael Brainard on Tuesday said she expects a combination of interest rate increases and a rapid balance sheet runoff to bring U.S. monetary policy to a “more neutral position” later this year, with further tightening to follow as needed. To do so, she said, the Fed will raise rates “methodically” and, as soon as next month, begin to reduce its nearly  

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