Ulbrich Economic Update - Number 45 (February 2024)
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February 2024 Economic Update Executive Summary
The Americas
THE U.S. ECONOMY GREW 3.1% LAST YEAR, DEFYING PROJECTIONS OF A RECESSION as a resilient labor market supported strong consumer spending. The year was capped by a 4th Qtr in which the economy grew at a 3.3% annualized pace. January data showed: Manufacturing activity stabilized in January amid a rebound in new orders, but inflation at the factory gate picked up. Total nonfarm payrolls rose by 353,000, the strongest pace of job creation since January 2023. On an annual basis, wages increased 4.5%. The unemployment rate remained unchanged at 3.7%. UofM’s Index of Consumer Sentiment showed a steep increase in consumer confidence for the second month running. Consumer sentiment has surged 29% from November into January.
December data showed: Factory orders gained 0.2%. Civilian aircraft orders rose 0.4%, while orders for motor vehicles, parts and trailers increased 0.9%. Overall industrial output expanded 0.1%, as production at factories rose 0.1%. Mining output was up 0.9%, while utilities fell 1.0%. Durable goods orders were unchanged amid a slump in transportation equipment, where orders dropped 0.9%. Motor vehicle and parts orders gained 0.4%. U.S. producer prices were down 0.1% amid a decline in the cost of goods, while prices for services were unchanged. The leading economic indicators index dipped by 0.1%, following a 0.5% decline in November. Consumer prices increased to 3.4% YOY, up from November’s 3.1%. Retail sales rose 0.6%. Receipts at motor vehicles and parts dealers accelerated 1.1%. Consumer spending sharply accelerated, rising by 0.7%. Construction spending increased 0.9% boosted by a 1.6% surge in single-family homebuilding.
Steel Industry Updates
FRANCE AND ARCELORMITTAL AGREED ON A €1.8BN INVESTMENT TO CUT GREENHOUSE EMISSIONS at its steel plant in Dunkirk. The money will finance electric furnaces and a direct reduction plant, which will cut French carbon emissions from the industrial sector by 5.7%. The EU has imposed the world’s first ever tax on emissions of carbon-intensive imports starting with cement, iron, aluminum, fertilizers, electricity, hydrogen and steel. The levy will come into force in 2026, but the transition is already underway.
Overseas
THE EUROZONE ECONOMY WAS STAGNANT IN THE FINAL THREE MONTHS OF LAST YEAR, held back by shrinking German output and stalled French growth that offset a stronger than expected rebound in Spain and Italy. China's exports grew at a faster pace in December, while deflationary pressures persisted, keeping alive expectations for more policy easing measures to shore up an economy carrying significant pockets of weakness into 2024. China’s exports grew 2.3% YOY vs. a 0.5% increase in November.
Energy Sector News
GLOBAL NUCLEAR POWER GENERATION IS SET TO REACH A RECORD HIGH NEXT YEAR, according to forecasts from the International Energy Agency, marking a resurgence for the technology and boost for efforts to cut carbon dioxide emissions. U.S. battery storage is projected to grow by 82% this year compared to 2023 projections, while solar is projected to grow by 40%. Growth is also expected for wind power, albeit at a slower rate (5%) due to higher costs and permitting challenges, especially for offshore projects.
Medical Insights
SAMSUNG ELECTRONICS IS EXPLORING THE DEVELOPMENT OF NONINVASIVE GLUCOSE MONITORING and continuous blood pressure checking, setting its sights on ambitious health-care goals. The work is part of a broader push to put health features in a range of devices, including its just-announced Galaxy Ring. Dexcom will launch a new continuous glucose monitor this summer for people with Type 2 diabetes who don’t take insulin. Called Stelo, it will offer 15-day sensor wear and a cash-pay option.
Aerospace Developments
COMMERCIAL JET ORDERS HIT RECORDS IN 2023 AS TRAVEL DEMAND SOARED. India’s IndiGo airline ordered 500 jets in June, estimated to be valued at a $55bn list price. Months earlier, Air India ordered 470 jets. The last time an order was this large was in 2011 with American Airlines purchasing 460 aircraft. The Federal Aviation Administration froze increases in production of Boeing’s single-aisle 737 MAX jets due to quality concerns, which have frustrated airline executives dependent on Boeing.
Metals & Commodities
INDONESIA IS FLOODING THE GLOBAL NICKEL MARKET WITH LOW-COST SUPPLIES, forcing rivals to shut unprofitable mines. The country, the world’s largest producer, expanded production by 30% last year even though global demand for the metal used in electric car batteries and stainless steel barely grew. Uranium prices jumped to a 15-year high in mid-January after the world’s largest producer, Kazakhstan’s Kazatomprom, warned it’s likely to fall short of its output targets over the next two years. Lithium prices tumbled more than 80% in the past year to their lowest level since 2020, after excessive levels of supply hit the market.
Automotive Trends
TOYOTA IS GEARING UP TO LAUNCH VEHICLES WITH ADVANCED SOLID-STATE BATTERIES by 2028 that charge in 10 minutes, with a driving range of 750 miles and an extended lifespan. S&P Global forecasts U.S. light vehicle sales will reach 15.9mn units in 2024. Truck makers are betting the freight industry will ditch diesel for electric as government restrictions take effect. Diesel engine maker Cummins and truck builders Daimler and Paccar plan to build a $2bn battery factory for commercial trucks.
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