Daily Briefing – 369

Post: Sep. 6, 2021

Why the August Jobs Report Missed so Big

The August jobs report out just before Labor Day missed big. The economy added just 235,000 new payrolls, dramatically falling short of expectations of 733,000 — by a third. The unemployment rate was in line with expectations at 5.2%, down from July’s 5.4%.

“The catalyst for the slowdown appears to be the recent surge in the COVID cases as high touch sectors such as leisure and hospitality (0k) and retail trade (-29k) experienced a meaningful slowdown in employment activity,” Bank of America analysts wrote in a research note Friday morning.

A Deeper Look Into the ISM Manufacturing Survey

The Institute for Supply Management’s latest PMI on manufacturing shows the sector has returned to accelerating growth.

The main index for U.S. manufacturing rose 0.4 points to 59.9% in August after slipping 1.1 points in July.
The ISM’s indexes of production and new orders both rose about 2 points, sustaining growth for a fifteenth month.
The manufacturing employment index dropped 4 points to 49.0%, indicating a faster contraction than it saw in June, when it fell into contraction for the first time since the difficult summer of 2020.
The indexes for trade—new export orders and imports—both marked modest growth.
In a sign of persistently strong demand, the ISM’s prices index hit 79.4% in August—a whopping 6.3 points lower than it was in July, a remarkably high figure for rising prices.
Supplier deliveries continued to slow. On that index, for which a figure above 50% indicates slower deliveries, August’s figure dropped 3 points to 69.5%.

New Requirements and Guidance for the Safe Reopening of New York Schools

Late Friday, the NYS Public Health and Health Planning Council passed an emergency regulation and the Health Commissioner issued a determination requiring all teachers, administrators and other school employees to submit to weekly COVID-19 testing unless they show proof of vaccination, with either a CDC vaccine card or the Excelsior Pass.

Governor Hochul also announced that the New York State Department of Health has finalized and released official guidance for classroom instruction. These new actions follow the Governor’s announcement last week of a mask requirement for everyone in school buildings during instructional hours and extracurricular activities. The guidance prioritizes in-person learning and details recommendations and requirements for vaccinations, face masks, physical distancing, and testing to monitor potential transmission, among other areas. The guidance largely tracks with the CDC guidance which districts were advised to follow. It is also intended as a floor and schools have the flexibility to go beyond the guidance. “My top priority is to get children back to school and protect the environment so they can learn, and everyone is safe,” Governor Hochul said.

Child Covid-19 Cases Rise in States Where Schools Opened Earliest

The recent spread of the highly contagious Delta variant has thrown back-to-school plans into disarray, temporarily driving tens of thousands of students back to virtual learning or pausing instruction altogether. Since the school year kicked off in late July, at least 1,000 schools across 31 states have closed because of Covid-19, The shutdowns are hitting classrooms especially hard in the Deep South, where most schools were among the first to open, a possible warning of what’s to come as the rest of the nation’s students start school this month.

Many school systems are reluctant to release contingency plans and are instead forging ahead with solutions that, when possible, keep classrooms open amid outbreaks, mass quarantines and acute staff shortages. School administrators are responding to the sporadic and unpredictable outbreaks with measures like new masking mandates, frequent testing and vaccine mandates for employees. Some say they hope a vaccine for children under 12 happens soon.

US COVID-19 Update

Daily incidence continues to increase, but the trend is tapering off toward a peak or plateau. On August 27, the US surpassed 150,000 new cases per day, and the current average of 153,245 is the highest since January 28. Daily mortality also continues to increase, and the mortality trend may be starting to taper off as well. The US surpassed 1,000 deaths per day on August 24, and the current average of 1,046 deaths per day is the highest since March 11.

The US has administered 372 million cumulative doses of SARS-CoV-2 vaccines, and daily vaccinations have leveled off over the past several days, hovering at slightly more than 800,000 doses per day since August 23. We have not observed a marked increase in daily vaccinations since the US FDA issued full approval for the Pfizer-BioNTech vaccine. Among adults, 74.5% have received at least 1 dose,, and approximately 63.7% of adults are fully vaccinated.

NYS Vaccine and COVID Update

Vaccine Stats as of Sunday September 5th:

One Vaccine Dose

68.0 of all New Yorkers – 13,164,306 (plus 23,145 from a day earlier)
In the Hudson Valley 1,394,038 (plus 1,843)

Fully Vaccinated

60.7% of all New Yorkers – 11,818,492 are fully vaccinated (Plus 20,712)
In the Hudson Valley – 1,235,689 (plus 1,737) are fully vaccinated.

The Governor updated COVID data through Saturday September 54th. There were 27 COVID related deaths for a total of 55,724.

Hospitalizations:

Patients Currently in Hospital statewide: 2,281.

Seven Day Average Positivity Rate:

Statewide 3.31%
Mid-Hudson: 3.60%

Useful Websites:

Manufacturing Adds 37,000 Jobs in August

Job creation for August was a huge disappointment, with the economy adding just 235,000 positions, the Labor Department reported Friday. Leisure and hospitality jobs stalled in August as the unemployment rate in the industry ticked higher to 9.1%.

Instead, professional and business services led gainers with 74,000 new positions. Other gainers included transportation and warehousing (53,000), private education (40,000) and manufacturing and other services, which each posted gains of 37,000.

Congress Braces for Spending Fights Amid Threat of Government Shutdown, Debt Ceiling

Before October, the House is aiming to pass two major pieces of legislation: a roughly $1 trillion bipartisan infrastructure bill and a forthcoming $3.5 trillion spending package backed by Democrats. They’ll also need to pass government funding legislation to avoid a shutdown on Oct. 1. House leadership has set a Sept. 27 deadline to vote on the bipartisan infrastructure bill, as committee chairs rush to finish drafting their portions of the larger spending package by Sept. 15 to hold a floor vote shortly thereafter.

Progressives have threatened to block the bipartisan bill if it comes to the floor before the Democratic-only measure that focuses on issues like health care, climate change and education. The party also faces a tough challenge sticking together on the reconciliation package in the Senate, where it can’t afford any defections. This past week, Sen. Joe Manchin (W.Va.) urged fellow Democrats to hit “pause” on the spending bill and warned that he wouldn’t back the proposed level of spending “without greater clarity about why Congress chooses to ignore the serious effects inflation and debt.

Factory Orders Up in July, While Trade Deficit Shrinks

The U.S. trade deficit narrowed more than expected in July as imports declined likely because of shortages and a shift in domestic spending from goods to services. The Commerce Department said on Thursday that the trade gap fell 4.3% to $70.1 billion. Data for June was revised to show the deficit at $73.2 billion instead of $75.7 billion as previously reported.

The Commerce Department also reported that orders for non-defense capital goods, excluding aircraft, which are seen as a measure of business spending plans on equipment, edged up 0.1% in July instead of being unchanged as reported last month. Shipments of core capital goods, which are used to calculate business equipment spending in the gross domestic product report, rose 0.9%.

Survey: Why People Are Quitting Their Jobs

For people who have recently quit their jobs, entrepreneurship is a very popular and appealing next step. That’s according to a survey released Tuesday by Digital.com, a Seattle-based review site focused on small businesses. Among respondents who had quit their jobs in the last six months, 32 percent said they had done so to start their own businesses. Of those, 62 percent said their top motivation was to be their own boss.

Despite the challenges of running a business, “by pursuing a passion, work won’t feel like work, but will instead give you purpose, which is far more valuable than the dollars earned,” said Dennis Consorte, small-business consultant and expert at Digital.com in a company blog post about the survey. Potential entrepreneurs’ other top motivations for starting a business included a greater focus on their health (52 percent), and better pay and benefits (51 percent). Respondents could select multiple options.

Walmart Gives Raises to More Than 565,000 Store Workers

Walmart Inc. will raise pay for hundreds of thousands of its U.S. store workers as a tight labor market continues to create fierce competition for staff. The company said Thursday it will give raises to more than 565,000 of its 1.6 million U.S. workers, targeting those who work at registers, in the food and household goods areas and who restock shelves.

Those workers will receive at least a $1-an-hour raise starting Sept. 25, the company said in a memo to staff, bringing Walmart’s overall average wage to $16.40 per hour. Store workers in some regions will continue to be paid $11 an hour, an hourly pay floor Walmart established in 2018.

340,000 Individuals Filed New Unemployment Claims, the Lowest Since March 2020

The U.S. saw the least number of new unemployment filings since March 2020 last week as employers sought out more workers to fill open positions during the recovery. Here were the main metrics from the print, compared to consensus estimates compiled by Bloomberg:

Initial unemployment claims, week ended August 28: 340,000 vs. 345,000 and a revised 354,000 during the prior week.
Continuing claims, week ended August 21: 2.748 million vs. 2.808 million and a revised 2.908 million during the prior week.

As of the week ended Aug. 14, about 12.2 million Americans were claiming benefits of all forms, including both regular state and enhanced federal unemployment benefits. That marked an increase of nearly 179,000 versus the previous period, though the overall trend over the past several months has been decreasing.

GM Halts Production at Nearly all North America Assembly Plants Due to New Chip Problem

General Motors will idle nearly all its assembly plants in North America starting Monday as the COVID-19 pandemic affects production of semiconductor chips overseas.

GM said its Arlington Assembly in Texas, where it makes its highly profitable full-size SUVs, will run regular production next week, along with Flint Assembly, where it makes its heavy-duty pickups, Bowling Green Assembly in Kentucky, where it makes its Corvette, and a portion of Lansing Grand River Assembly, where it will make some Chevrolet Camaro and Cadillac Blackwing cars. But all other assembly plants in North America were idled Monday.

Ford Cuts F-150 Pickup Production Again Due to Chip Shortage

The persistent semiconductor shortage is once again forcing Ford Motor Co. to reduce production of some of its most lucrative vehicles, including the F-150 pickup. The cuts affect the company’s Kansas City Assembly plant, as well as plants in Kentucky and Michigan.

“Our teams are making the most of our available semiconductor allocation, finding unique solutions to provide as many high-quality vehicles as possible to our dealers and customers,” Ford vice president of manufacturing and labor affairs John Savona said in an internal memo to employees.

Boeing’s Delivery of New 787 Dreamliners Likely Delayed Until at Least Late October

Deliveries of Boeing’s 787 Dreamliner will likely remain halted until at least late October as the plane maker has been unable to persuade air-safety regulators to approve its proposal to inspect the aircraft, people familiar with the matter said. The impasse has kept Boeing from moving more than $25 billion worth of Dreamliners.

With almost all deliveries paused for nearly a year, airlines and other Boeing customers increasingly are able to use the delay to walk away from deliveries or negotiate for concessions from the aerospace giant. Deliveries were first halted because the company and the Federal Aviation Administration began taking a deeper look at the plane’s manufacturing defects. The holdup has choked off an important source of cash for Boeing and complicated plans for airlines.

The Pandemic’s True Death Toll – Revisiting The Economist’s Excess Death Model

How many people have died because of the covid-19 pandemic? The answer depends both on the data available, and on how you define “because”. Many people who die while infected with SARS-CoV-2 are never tested for it. Conversely, some people whose deaths have been attributed to covid-19 had other ailments that might have ended their lives on a similar timeframe anyway. And what about people who died of preventable causes during the pandemic, because hospitals full of covid-19 patients could not treat them? If such cases count, they must be offset by deaths that did not occur but would have in normal times, such as those caused by flu or air pollution.

Rather than trying to distinguish between types of deaths, The Economist’s approach is to count all of them. The standard method of tracking changes in total mortality is “excess deaths”. This number is the gap between how many people died in a given region during a given time period, regardless of cause, and how many deaths would have been expected if a particular circumstance (such as a natural disaster or disease outbreak) had not occurred. Although the official number of deaths caused by covid-19 is now 4.6m, our single best estimate is that the actual toll is 15.2m people. We find that there is a 95% chance that the true value lies between 9.4m and 18.2m additional deaths.

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