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U.S. Registries – Linking buyers and sellers across North America

Global trade to see weakest growth since Great Recession

Global trade is forecast to weaken this year to its slowest pace since the depths of the Great Recession due to the U.S.-China trade war, the World Trade Organization said Tuesday.

WTO said it expects volumes of traded goods to rise 1.2% in 2019, well below the 2.6% estimate it issued in April and the weakest growth rate for world trade since 2009.

The organization said estimates for 2020 show growth dropping to 2.7% from 3.0%, but it warned that still depends on resolving trade disputes.

The United States and China are in a wide-ranging dispute that has led to new tariffs on hundreds of billions of dollars’ worth of traded goods. There is little expectation of an imminent resolution to the disagreement, which continues to sap economic growth.

“The darkening outlook for trade is discouraging but not unexpected,” said WTO chief Roberto Azevêdo.

The WTO sees continued risks from the trade wars, saying that “further rounds of tariffs and retaliation could produce a destructive cycle of recrimination.”

The organization noted that some economies are slowing anyway while other outstanding trade issues, such as Britain’s exit from the European Union, are adding to the uncertainty for businesses trading goods.

German Chancellor Angela Merkel, whose country is heading toward recession, said the friction around Brexit showed why Europe had no reason to be haughty about the U.S-China trade dispute.

“We’ve been negotiating for three years over Britain’s orderly exit, and this is causing us great uncertainty, too,” Merkel she said after a meeting Tuesday in Berlin with WTO’s Azevêdo and the heads of four other international economic organizations.

“This exit is meant to happen on Oct. 31, and many businesspeople still don’t know today what their supply chain is going to look like in the future,” said Merkel.

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Strong surveys at odds with slowing growth

•The incoming monthly activity data suggest that GDP growth has slowed from 2.6% annualised in the fourth quarter to only around 1.5% in the first. At the same time, however, the business surveys have remained relatively upbeat, with a weighted average of the ISM activity surveys consistent with GDP growth accelerating above 4% annualised. (See Chart.) It’s clearly possible that growth picks up again in the second quarter. The rebound in consumer confidence suggests that consumption will continue to recover from the plunge in December, while a potential trade deal with China could give a temporary liftto exports. But with the fiscal boost having faded, and the continued slowdown in durables consumption and housing activity suggesting that higher interest rates are taking a heavier toll, a sustained recovery looks unlikely. We expect GDP growth to remain below its 2% potential pace this year, ruling out any further rate hikes from the Fed and ensuring that market expectations of rate cuts will continue to grow.
•Output and activity indicatorsshow that manufacturing output is set to fall in the first quarter. (Page 2.)
•Consumption indicatorsillustrate that spending growth has also slowed sharply.(Page 3.)
•Investment indicators suggest that business equipment investment growth is set to drop back. (Page 4.)
•External indicators reveal that the weakness of exports can’t solely be explained by China. (Page 5.)
•Labour market indicators remain consistent with a gradual acceleration in wage growth. (Page 6.)
•Inflation indicators point to a continued easing in underlying price pressures. (Pages 7 & 8.)
•Financial market indicators show that a 25bp Fed rate cut next year is now fully priced in. (Page 9.)
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Small Business Hiring Breaks Record

The great American jobs machine is still roaring. Slowing global growth and trade friction may cloud the economic horizon, but U.S. small businesses in February went on an historic hiring binge. That’s according to the latest employment report from the National Federation of Independent Business, due out later today.

NFIB has been conducting this monthly survey for decades. The organization’s chief economist William Dunkelberg reports that they’ve never seen results like these:

Job creation broke the 45-year record in February with a net addition of 0.52 workers per firm (including those making no change in employment), up from 0.25 in December and 0.33 in January. The previous record was 0.51 reached in May 1998.

 

NFIB also found a historic low in the percentage of business owners reducing employment—just 3% of survey respondents. “Owners are trying to hold on to the employees they have,” says Mr. Dunkelberg.

Readers can be forgiven for thinking that the economy is headed back down to the slow-growth new normal of the past decade. That’s certainly the consensus in the media industry. But across all industries, the owners of small firms don’t seem to share that view. After the February hiring spree, the survey finds plans for future job creation remain robust and the main obstacle is not lack of business opportunities, but a lack of workers to take advantage of them.

Mr. Dunkelberg shares more results from the survey of firm owners:

Fifty-seven percent reported hiring or trying to hire (up 1 point), but 49 percent (86 percent of those hiring or trying to hire) reported few or no qualified applicants for the positions they were trying to fill… Twenty-two percent of owners cited the difficulty of finding qualified workers as their Single Most Important Business Problem, only 3 points below the record high. Ten percent of owners find labor costs as their biggest problem, a record high for the 45-year survey.

 

It may be a problem for owners but of course rising wages represent welcome news for workers. A net 31% of firms reported raising compensation in February—below January’s 36% surge but still historically strong.

Small firms in the U.S. are reporting record job creation, higher wages and robust expansion plans.

All of this may have U.S. workers raising a toast to the new abnormal.

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December 2018 Report: Small Business Optimism Index

Small Business Optimism Virtually Unchanged as Demand for Workers Remains a Constraint


The NFIB Small Business Optimism Index remained basically unchanged in December, drifting down 0.4 points to 104.4, according to the report released today. Unfilled jobs and the lack of qualified applicants continue to be a primary driver, with job openings setting a record high and job creation plans strengthening. Reports of higher worker compensation remained near record levels and inventory investment plans surged. Expected real sales growth and expected business conditions in the next six months, however, accounted for the modest decline in the Index.

“Optimism among small business owners continues to push record highs, but they need workers to generate more sales, provide services, and complete projects, said NFIB President and CEO Juanita D. Duggan. “Two of every three of these new jobs are historically created by the small business half of the economy, so it will be Main Street that will continue to drive economic growth.”

A recent historical perspective:

  • Actual hiring strengthened to the highest reading in six months, job openings are at a record high levels, and plans to create new jobs are down only three points from August’s record high.
  • The net percent of owners expecting better business conditions in six months and the percent viewing the current period as a good time to expand have both tapered off since the record high Index reading in August but still remain well above their historical averages.
  • Actual capital outlays are five percentage points higher than in August, although plans for outlays are eight points below the high for this expansion.
  • Plans to invest in inventories are only two points below August, the record high. Satisfaction with inventories is two points better.

Last week’s NFIB Jobs Report noted that job creation remained solid with a net addition of 0.25 workers per firm, up from 0.19 in November and the best reading since July. A seasonally-adjusted net 23 percent plan to create new jobs, up one point from November’s reading.  Not seasonally adjusted, 23 percent plan to increase total employment at their firm (up one point), and five percent plan reductions (down two points).

A record 39 percent of small business owners reported job openings they could not fill in the current period. Sixty percent of owners reported hiring or trying to hire, but 90 percent of those reported few or no qualified applicants for the position. Twenty-three percent of owners cited the difficulty in finding qualified workers as their Single Most Important Business Problem.

“Recently, we’ve seen two themes promoted in the public discourse: first, the economy is going to overheat and cause inflation and second, the economy is slowing and the Federal Reserve should not raise interest rates,” said NFIB Chief Economist Bill Dunkelberg. “However, the NFIB surveys of the small business half of the economy have shown no signs of an inflation threat, and in real terms Main Street remains very strong, setting record levels of hiring along the way.”

The percent of business owners reporting that they increased employee compensation continued at 45-year record high levels. In December, a net 35 percent reported increasing compensation and a net 24 percent reported planned increases in the next few months.

The net percent of owners reporting inventory increases fell three points to a net three percent (seasonally adjusted), following November’s strong showing, the second-best since 2005.

A net four percent of all owners (seasonally adjusted) reported higher nominal sales in the past three months, down five points from very strong readings. The net percent reporting higher sales averaged two percent in 2017 but nine percent in 2018, with a peak value of 15 percent. The net percent of owners expecting higher real sales volumes fell one point to a net 23 percent of owners. Consumer spending has remained steady and small manufacturing and construction firms cannot find enough employees to fill their open positions, selling all they can produce without more workers.

Unchanged from last month, 61 percent of owners reported capital outlays. Of those making expenditures, 42 percent reported buying new equipment, 25 percent acquired vehicles, and 15 percent improved or expanded facilities. Six percent acquired new buildings or land for expansion and 15 percent spend money for new fixtures and furniture.

Thirty-two percent of owners reported all credit needs met (unchanged), and 50 percent said they were not interested in a loan, up three points. By comparison, only three percent reported financing was their top business problem (up one point), while 13 percent cited taxes (down six points), 14 percent citing regulations and red tape, and 23 percent the availability of qualified labor.

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US Manufacturing Building Boom Roars Along

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While big numbers of retirees or soon-to-be retirees are helping drive the call for a new influx of manufacturing workers, they aren’t the only reason for the urgency. U.S. manufacturers continue to announce expansions or new builds across the country and that growth means more workforce needs. Here is a look at where some of that manufacturing building growth is occurring.

The widely trumpeted growth surge in U.S. manufacturing is showing up in both new and expanded manufacturing facilities across the nation. Some factories have opened, others have been announced and even more are still raising the roof or extending their walls.

 

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Jack Ma: Time for manufacturing to undergo ‘new’ transformation

Having rolled out its “new retail” strategy, Alibaba Group now has set its sights on helping the manufacturing industry transform and prepare for upcoming threats and opportunities the market will face.

“New manufacturing” would see traditional business-to-consumer manufacturers transition to deliver experiences and more personalised services, driven by consumer expectations, said Alibaba’s co-founder and executive chairman Jack Ma, who was speaking Wednesday at the Chinese vendor’s computing conference here.
While new retail was a melding of offline and online consumer experiences, new manufacturing was a culmination of manufacturing and services industries, Ma said.

The adoption of IT and digital transformation addressed the need for standardisation, scalability, and flexibility. However, as long as processes could be standardised, he noted, machines could replace the need for humans to perform such tasks.

This underscored the need to focus on delivering customer experiences, something which machines would not be able to fulfil and would require the work of humans, he said, adding that Alibaba aimed to help the manufacturing industry reform.

Ma said: “New retail seeks to redefine the retail sector. Today, I’d like to talk about new manufacturing because it will soon bring a wave of threats and opportunities to the manufacturing industry in China, and around the world. We must be prepared, both mentally and in every way possible.”

Factories today were expected to be able to produce a wide variety of products, and at scale, he said. To effectively meet such demands, the manufacturing industry would need the key tools that new retail required, including data analytics, cloud, artificial intelligence, and Internet of Things (IoT).

“Data analysts and algorithm engineers of the future will not be working in-house at internet companies, but in manufacturing facilities instead,” he added.

US trade confrontation requires 20-year defense

He reiterated a prediction he made earlier this week at Alibaba’s investors meetup here, when he described the trade war as “a mess” that could potentially drag on for two decades. He said the move was the US government’s attempts to curtail China’s increasing economic clout, just as the former did against Japan during the 1980s.

He urged Chinese enterprises, in particular SMBs, to be prepared should the trade war stretch 20 years.

Highlighting the need to leverage the latest technology and new ideas, Ma said great enterprises operating today would have experienced and survived tough market environments. Innovators would prevail, he added.

Based in Singapore, Eileen Yu reported for ZDNet from The Computing Conference 2018 in Hangzhou, China, on the invitation of Alibaba Group.

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Manufacturing Led Workforce Development is the key to Resolving the Skills Gap Crisis

It is a great, but terrifying time to be a manufacturer in the United States. New manufacturing plants are popping up and existing manufacturers are pushing their capacity to the limit. The big issue that remains however, is the skills gap. Retiring baby boomers are vacating skilled manufacturing jobs. To complicate matters our culture tends to emphasize academics more than job happiness. Anyone involved in manufacturing knows it can be an extremely rewarding field to work in and many great jobs do not require a four year degree to perform. There should be no shame for an individual who would prefer to build things and work with their hands while contributing to an incredible economic powerhouse. That’s not to say that manufacturing is just a blue collar paradise. There are jobs of every shape, size and technical qualification and modern manufacturing is a far cry from the dark dirty factories of the past. If you spend a little time with these hard working talented people, you will see how passionate they are about their jobs, communities and making quality products.

M33333anufacturer Led Solutions

In recent years, a number of manufacturers have organized to address the skills gap directly in their own communities. They do this by working directly with educators. We don’t see real change without the efforts of these people, they are the answer to this problem and they need our support. These are just some examples from here in California, but initiatives and groups like them are forming all over the country:

  • Grow Manufacturing Initiative
  • San Joaquin Manufacturing Alliance
  • Sacramento Valley Manufacturing Initiative

Grow Manufacturing Iniative

In Northern California, centered in Chico, CA. Manufacturers organized to form GMI and they have made a real impact in the communities they service. They have been very successful in aligning the skills being taught with the needs of local manufacturers. They host an annual manufacturing expo as well as train the trainer (educators) events. Bill Gaines of Transfer Flow was also instrumental in inspiring the formation of the Sacramento Valley Manufacturing Initiative.

San Joaquin Manufacturing Alliance

In the Central Valley, centered around Fresno, CA. Manufacturers organized to form SJVMA. They have achieved great results in addressing the needs of manufacturers for a skilled workforce and have formed a sizable organization that also includes an annual manufacturing summit that attracts hundreds of participants, vendors and sponsors. Mike Betts of Betts Manufacturing is incredibly passionate and dedicated a tremendous amount of his own time and resources to helping establish and make SJVMA a viable and effective organization.

Sacramento Valley Manufacturing Initiative

In the greater Sacramento Area, manufacturers including Harris and Bruno, Tri Tool, Snowline Engineering, Garner Products, Siemens, JL Haley, TechnicFMC, Zi Machine, and Blue Diamond Growers along with some affiliates including Managed Solutions formed SVMI in 2018. The group has already hosted train the trainer events, factory tours and established a dedicated and passionate board of directors. They recently launched their website, and will be working hard to meet the work force demands of manufacturers in the area for years to come.

 

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U.S. Manufacturing Activity Surged in June

WASHINGTOim-15555N—American factory activity accelerated for the second straight month in June, signaling momentum in the U.S. manufacturing sector.

The Institute for Supply Management on Monday said its manufacturing index rose to 60.2 in June from 58.7 in May. Numbers above 50 indicate activity is expanding across the manufacturing sector, while numbers below 50 signal contraction. Economists surveyed by The Wall Street Journal had expected a 58.1 reading for June.

The index in February hit 60.8, its highest level since May 2004, before easing in March and April. It picked up in May and again in June.

Broader economic growth appeared to pick up in the just-completed second quarter after a modest slowdown in the early months of 2018. The unemployment rate declined below 4% this spring and forecasters expect solid growth this year, supported by recent tax cuts and strong consumer sentiment.

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