Ulbrich Economic Update - Number 46 (March 2024)
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March 2024 Economic Update Executive Summary
The Americas
THE CENTRAL BANK EXPECTS TO REDUCE ITS BENCHMARK INTEREST RATE LATER THIS YEAR. Chairman Powell said that inflation had "eased substantially", but that policymakers still needed "greater confidence" in its continued decline before cutting rates. February data showed: Manufacturing activity slumped further, but there were signs activity was poised to rebound as eight industries reporting growth. U.S. job growth accelerated as nonfarm payrolls gained 275,000 jobs, but a rise in the unemployment rate to 3.9% and moderation in wage gains kept on the table an anticipated interest rate cut in June. Consumer sentiment hit a 31-month high. Consumers continued to express confidence that the slowdown in inflation and strength in labor markets would continue.
January data showed: Factory orders fell by 3.6%, but excluding a 16.2% drop in transportation orders, new orders would have been down 0.8%. Industrial output dipped 0.1%, as production at factories fell 0.5%. Mining output dropped 2.3%, while utilities climbed 6.0%. Durable goods orders plunged 6.1%, pulled down by civilian aircraft orders which plunged 58.9%. Producer prices rose 0.3% but in the 12 months through January, the PPI increased 0.9% vs. 1.0% in December. The leading economic indicators index no longer signals a coming recession for the first time since the summer of 2022. Consumer prices increased 3.1% YOY, decelerating from December’s 3.4% pace. Retail sales fell 0.8% but severe winter storms distorted the data. Personal spending rose 0.2% in January, a slowdown. Construction spending dropped 0.2% as weakness in outlays on public projects more than offset a moderate increase in private homebuilding.
Overseas
JAPAN’S ECONOMY SLIPPED INTO RECESSION after shrinking for a second quarter due to anemic domestic demand. Japan’s economy slipped to fourth-largest in the world. Germany now has the world’s third-largest economy. Eurozone manufacturing is showing signs of life again after industrial production jumped unexpectedly, further signaling that the recent slump in manufacturing in the bloc may be ending. China’s vast manufacturing sector remained in contraction for a fifth consecutive month.
Metals & Commodities
GLENCORE PLANS TO SUSPEND PRODUCTION AND SELL ITS STAKE IN NICKEL OPERATIONS in New Caledonia after a sharp fall in prices for the metal. Benchmark nickel prices have fallen 46% since the start of 2023 to about $16,000 per tonne after a surge in Indonesian supply, making mines in New Caledonia, Australia and other regions of the world unprofitable. Iron ore prices are plunging, down over 10% since mid-February and by nearly 20% this year. Oversupply coupled with falling demand in China from all the sectors that have been the largest buyers of steel — property developers, automakers and home appliance companies.
Steel Industry Updates
CLEVELAND-CLIFFS WILL “INDEFINITELY” IDLE THE WEIRTON TINPLATE OPERATION IN APRIL. After 115 years, the final manufacturing component of what once was Weirton Steel Corp. will shut down. Cliffs blamed the recent decision by the ITC, denying the company’s petition for trade duties on imported tin mill products. Rio Tinto, BHP and BlueScope Steel will study the feasibility of building a pilot ironmaking electric smelting furnace (ESF) in Australia, the country’s first, with a potential start date of 2027.
Automotive Trends
ELECTRIFIED VEHICLES ARE BECOMING MORE DESIRABLE than their gasoline counterparts, influential U.S. magazine Consumer Reports said, while adding seven of them to its top-ten picks for 2024. Four of Toyota's EVs made it to the list, including the Prius and a hybrid version of its Camry sedan. Albemarle, the world’s largest lithium producer, downgraded its 2030 demand forecast for the key battery ingredient by 10% as it now sees the shift to electric cars in the U.S. and Europe taking longer than previously thought.
Aerospace Developments
INTUITIVE MACHINES’ ODYSSEUS LANDER TOUCHED DOWN SAFELY ON THE LUNAR SURFACE at the Moon’s south pole. The mission marks the successful return of the U.S. to lunar exploration in more than 50 years and is a milestone in NASA’s plans to send humans to the lunar south pole in 2026, relying on private companies to help cut the costs of services. Boeing is in talks to buy its former subsidiary Spirit AeroSystems as it tries to get control of a sprawling crisis sparked by the mid-air panel blowout.
Energy Sector News
SWEDEN'S GOVERNMENT WANTS THE EQUIVALENT OF TWO NEW NUCLEAR REACTORS BY 2035 to meet an anticipated surge in demand for clean power and the equivalent of 10 new reactors by 2045. Nearly a quarter of U.S. electricity supply came from renewable sources in 2023 and 9% of total energy used came from green sources. New solar power generation helped to boost the volume of electricity from renewable sources; 42 gigawatts of renewable power generating capacity was added to the grid last year.
Medical Insights
THE FIRST HUMAN PATIENT IMPLANTED WITH A NEURALINK BRAIN CHIP HAS FULLY RECOVERED and is able to control a computer mouse using the patient’s thoughts. The startup's founder Elon Musk said Neuralink would facilitate speedy surgical insertions of its chip devices to treat obesity, autism, depression and schizophrenia. Dexcom received clearance for the first over the counter glucose sensor in the U.S., Stelo, for use by people 18 years and older without a prescription who are not on insulin therapy.
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