Daily Briefing – 335

Post: Jul. 5, 2021

Economy Adds back 850,000 Jobs, Manufacturing Higher By 15,000

The U.S. economy added back jobs for a sixth straight month in June, with job growth picking up speed alongside the reopening economy. The biggest payroll gains in the leisure and hospitality industries. However, the labor deficit across these industries — with leisure and hospitality still down by 2.4 million jobs compared to February 2020 levels — comprises the plurality of the nearly 6.8 million total jobs the economy still has left to recover from before the pandemic. Public-sector jobs soared in June, with government payrolls up by 188,000.

Change in non-farm payrolls: 850,000 vs. 720,000 expected and an upwardly revised 583,000 in May
Unemployment rate: 5.9% vs. 5.6% expected and 5.8% in May
Average hourly earnings, month-over-month: 0.3% vs. 0.3% expected and a downwardly revised 0.4% in May
Average hourly earnings, year-over-year: 3.6% vs. 3.6% expected and a downwardly revised 1.9% in May

Manufacturing job growth slowed more than expected, with payrolls rising by 15,000 after a gain of 39,000 in May

OPEC+ Abandons Oil Policy Meeting Aer Saudi-UAE Clash

OPEC+ ministers called off oil output talks on Monday after clashing last week when the United Arab Emirates rejected a proposed eight-month extension to output curbs, meaning no deal to boost production has been agreed. OPEC’s Secretary General Mohammad Barkindo said in a statement on Monday the meeting had been cancelled, without a date for the next one being agreed. The UAE is upset about the low baseline from which its production cuts are calculated and wants it raised. Abu Dhabi says its baseline was set too low when OPEC+ originally forged their pact.

The failure of the talks, which had partly been about an increase in oil output from next month, helped to drive up international benchmark Brent crude, which was trading 1.1% higher at above $77 a barrel.

ISM: Prices Paid By Manufacturers at Record High

The ISM survey’s measure of prices paid by manufacturers jumped to a record 92.1 last month from a reading of 88.0 in May. Consumer prices have been surging, with the Federal Reserve’s main annual inflation measure rising by the most in 29 years in May.

Though higher inflation is generally viewed as transitory, Americans should expect to pay more for goods and services until the demand-supply imbalance eases. A global shortage of semiconductors is undercutting production of motor vehicles, electronics and household appliances. The scarcity of raw materials is driving up costs for both manufacturers and consumers, contributing to an acceleration in inflation in recent months.

Small Manufacturers Struggle with Increased Commodity Prices

Optimus Technologies CEO Colin Huwyler joined Yahoo Finance to discuss recent supply chain pressures.

“Our industry, the broader trucking industry, is seeing significant production delays from chip shortages and things like that. And for us, we’re being impacted as well and there’s been a little focus on helping smaller manufacturers weather some of these storms. And I think that more broadly… the key takeaway is I think there needs to be investment in domestic manufacturing and I think it needs to be broad-based, can’t just focus on specific industries.”

NYS Vaccine and COVID Update

Vaccine Stats as of Monday morning:

One Vaccine Dose

60.5% of all New Yorkers – 11,614,184 (plus 6,951 from a day earlier)
In the Hudson Valley 1,232,866 (plus 557)

Fully Vaccinated

54.6% of all New Yorkers – 10,621,370 are fully vaccinated (Plus 7,089)
In the Hudson Valley – 1,116,822 (plus 594) are fully vaccinated.

The Governor updated COVID data through Sunday July 4th. There were 2 COVID related deaths for a total of 42,986.

Hospitalizations:

Patients Currently in Hospital statewide: 330

Seven Day Average Positivity Rate:

Statewide 0.56%
Mid-Hudson: 0.43%

Useful Websites:

US COVID Update – Cases Rise Slightly, Deaths Decline Sharply

The US CDC reported 33.5 million cumulative COVID-19 cases and 602,401 deaths. Daily incidence has increased over the past week or so, up from a low of 11,281 new cases per day on June 20 to 12,514 on June 30, an increase of 11% over that period. Daily mortality continues to decline, down to 206 deaths per day, the lowest average since March 26, 2020.

With vaccination progress slowing and increasing prevalence of multiple variants of concern (VOCs), including Delta, there is growing concern that the US could face localized COVID-19 surges in the coming months. While the national daily incidence is increasing only slightly, some parts of the country are exhibiting steeper trends.

DiNapoli: Transfer Receipts Bolster Personal Income, Cause for Concern

Recently released data from the U.S. Bureau of Economic Analysis show personal income in New York State has surpassed pre-pandemic levels by 12.8 percent. Personal income, which is comprised of wages, income earned by business owners or members of a partnership (“proprietors’ income”), dividends, interest and rent, and transfer receipts to individuals, totaled nearly $1.6 trillion in the first quarter of 2021, an increase of 51.9 percent from the fourth quarter of 2020 on a seasonally adjusted annual basis. While this is a positive development, there are two causes for concern:

The growth is primarily due to transfer receipts, which account for more than 20 percent of personal income, well above the pre-pandemic share, and account for most of the quarter-over-quarter increase in personal income.
Earnings in seven industrial sectors, including the leisure and hospitality sector that was hardest hit during the pandemic, have not yet returned to pre-2020 levels.

Read more at the Comptroller’s website

US Manufacturing Activity Grows in June, But Slightly Slower

Growth in U.S. manufacturing slowed slightly in June, as supply chain problems persist and businesses say they are still struggling to find workers to keep up with demand.

The Institute for Supply Management, a trade group of purchasing managers, said Thursday that its index of manufacturing activity ticked down in June to a reading of 60.6 from 61.2 in May.

Jobless Claims: 364,000 New Unemployment Claims, Continuing Claims at 3.7 Million

New weekly jobless claims fell back below the 400,000 level for the first time in three weeks, resuming improvements after a brief bump higher in initial filings.

Initial jobless claims, week ended June 26: 364,000 vs. 388,000 expected and an upwardly revised 415,000 during prior week.
Continuing claims, week ended June 19: 3.469 million vs. 3.340 million expected and an upwardly revised 3.413 million during prior week.

US Carmakers Report Higher 2Q Sales, Inventories Shrink

General Motors and Toyota saw impressive increases compared with the same quarter of 2020 when large parts of the U.S. economy remained under tight Covid-19 restrictions. GM said U.S. sales soared 40% this spring to 688,236 units. The firm continued to see robust appetite for larger vehicles, especially pickup trucks. Just two pickup brands — the Chevrolet Silverado and GMC Sierra — accounted for about 35% of all sales.

Toyota scored a 73% increase in U.S. auto sales to 688,813 compared with the second quarter of 2020. Both GM and Toyota have low inventories of popular models, prompting some consumers to defer purchases because they could not find what they wanted, or were put off by elevated prices. Automakers have been forced to dial back or alter production due to the semiconductor crunch, which analysts say is hitting sales as well.

Micron Expects Memory Demand to Remain Strong, Will Sell Utah Plant to Texas Instruments

Micron Technology Inc. expects memory-chip demand to remain high even as the supply of other types of computer chips meets customer needs, the company said late Wednesday as its earnings and an outlook surpassed Wall Street expectations. In a separate release, Micron said that it was selling its fabrication plant in Lehi, Utah, to Texas Instruments Inc. for $1.5 billion

On a call with analysts, Micron Chief Executive Sanjay Mehrotra said that as semiconductor supply shortages subside, memory demand will still remain high. “As that semiconductor shortage gets alleviated over time, that actually is going to create more demand for memory and storage because every end application today, you know, whether it’s analog IC related or memory, CPU cores related, all of them actually require memory and storage.”

“Digital Covid Certificate” The EU Vaccine Passport Goes Into Use This Week

Last Week the European Union launched its “digital covid certificate”, which it hopes will facilitate freer travel around the bloc (though individual countries will ultimately determine their own restrictions). EU citizens and residents (and those of non-EU Schengen countries) can apply for a pass if they have been vaccinated, have recovered from covid-19 or have recently tested negative.

There are concerns about the scheme. One is that it is discriminatory. Only the four vaccines approved by the European Medicines Agency are included, yet some European countries have opted for others, including Hungary, which has administered the Russian Sputnik V jab. Critics also worry it is risky. No one knows how long vaccine-induced protection lasts and much remains unknown about new variants. And yet, the EU is desperate to help pandemic-crippled economies by boosting tourism. As so often during the pandemic, it is a trade-off.

Business Council/NYS DOL Workforce Survey Results

In March the New York State Department of Labor and The Business Council of New York State partnered to conduct a comprehensive survey of New York State businesses focused on workforce development. They received 1,950 unique businesses responses to the survey, representing 8,355 business locations that employ more than 130,000 workers. The goals of this survey were to:

Understand the current and anticipated future needs of the business community, specifically as they relate to hiring needs, skills gaps and training.
Better outline, based on data, where and how to position resources related to training and hiring programs and initiatives.

The Business Council has Extended an invitation to Council of Industry members to attend the Mid-Hudson remote regional stakeholder meeting. The virtual meetings will begin with the survey results, followed by a facilitated discussion of workforce development opportunities.

The Mid-Hudson meeting is Tuesday, July 13, 2:00 – 3:30 PM

Click here to Register at the Business Council

U.S. Chamber Poll: Hiring Bonuses Help Bring Back Workers

Earlier this week, the U.S. Chamber released new polling data revealing some of the most impactful and immediate solutions employers and elected officials can deploy in helping address the country’s deepening worker shortage crisis. At the top of the list? Hiring bonuses. Among other insights, the data shows that:

39% of unemployed Americans who lost their jobs during the pandemic and are not actively looking for work say that a $1,000 hiring bonus would increase their urgency to return to full-time employment.
Other incentives or developments that would encourage unemployed Americans to re-enter the workforce include work-from-home flexibility (32%) and worker vaccination requirements (23%).
The percentage who say hiring bonuses could attract them back to the job market was particularly high among unemployed workers age 25-34 (53%) and those with some college education but not a degree (49%).

The Economist Offers a Global Normalcy Index

The Economist has devised a “normalcy index” to track how behavior has changed, and continues to change, because of the pandemic. the index comprises eight indicators, split into three domains. The first grouping is transport and travel: public transport in big cities; the amount of traffic congestion in those same cities; and the number of international and domestic flights. The second looks at recreation and entertainment: how much time is spent outside the home; cinema box-office revenues (a proxy measure for cinema attendance); and attendance at professional sports events. The third is retailing and work: footfall in shops; and occupancy of offices (measured by workplace footfall in big cities).

The index covers 50 of the world’s largest economies that together account for 90% of global GDP and 76% of the world’s population.

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