Richmond Fed: Manufacturing Activity Improved Modestly in December
Fifth District manufacturing firms reported modest improvements in December, according to the most recent survey from the Federal Reserve Bank of
Richmond. The composite manufacturing index climbed into positive territory, increasing from -9 in November to 1 in December. Each of its three component indexes — shipments, new orders and employment — improved, with the index for shipments seeing the most notable increase from -8 in November to 5 in December.Alongside a slightly positive employment index, the wage index increased notably from 25 to 37 in December, surpassing its October reading of 34.
(…) a larger portion of firms are pessimistic about local business conditions over the next six months, as the expectations index fell to -20 in December.
The indexes for order backlogs and vendor lead time remained firmly in negative territory, indicating that, on balance, businesses continued to see shrinking backlogs and lead times.
The average growth rates of both prices paid and prices received decreased in December. Expectations for both over the next 12 months also decreased and are much lower than current price trends.
Service Sector Activity Softened Further in December
Fifth District service sector activity softened further in December, according to the most recent survey by the Federal Reserve Bank of Richmond. The revenues and demand indexes fell to -12 and -8, moving deeper into negative territory. Firms’ expectations for revenues and demand over the next six months suggest little to no change from current levels. (… )
A larger share of firms reported decreases in their number of employees than increases in December. Their ability to find workers with the necessary skills also deteriorated slightly compared to last month. (…) Firms continued to increase wages and expect further wage increases in the near term.
Growth in prices paid decreased somewhat in December, while growth in prices received increased slightly. Firms expect both to moderate over the coming year.
Manufacturing Services
Pending Home Sales Slid 4% in November
(…) “Pending home sales recorded the second-lowest monthly reading in 20 years as interest rates, which climbed at one of the fastest paces on record this year, drastically cut into the number of contract signings to buy a home,” said NAR Chief Economist Lawrence Yun. (…)
Year-over-year, pending transactions dropped by 37.8%. (…)
Euro zone business lending growth slows sharply in November Bank lending to euro zone companies slowed in November, easing back from the sector’s biggest borrowing binge in over a decade as rising interest rates and a looming recession appear to be taking a toll, European Central Bank data showed on Thursday.
(…) Lending to businesses in the 19-country euro area expanded by 8.4% in November after an 8.9% reading a month earlier while household credit growth slowed to 4.1% from 4.2%.
The monthly flow of loans to companies was also sharply lower at minus 1 billion euros after a 24 billion euro reading a month earlier.
Growth in the M3 measure of money circulating in the euro zone meanwhile slowed to 4.8% from 5.1%, coming below expectations for 5.0% in a Reuters survey.
Chinese ‘Revenge Travel’ Will Lift Tourism in 2023 Get ready for the return of the shoppers from the world’s second-largest economy
(…) It will, however, take some time before Chinese tourists—the largest source of tourism revenue for the world before the pandemic—fully return. For one, the current outbreak in China after reopening has led other countries to introduce restrictions on Chinese visitors. That includes some of the most popular destinations such as Japan and South Korea. Visitors to the U.S. from China will also need to have a negative Covid test from early January.
Such measures may limit the initial influx of Chinese visitors. But given that all those countries have opted to live with Covid-19 anyway, such restrictions will likely go away eventually, especially after the current Covid-19 wave in China ebbs. (…)
Chinese visitors, for example, accounted for around a third of total arrivals in Japan and South Korea before the pandemic. They also made up about a quarter of visitors to Thailand in 2019. (…)
- Chinese officials estimate about 250 million people, or 18 percent of the population, were infected with COVID-19 in the first 20 days of December.
- Milan Reports 50% of Passengers on China Flights Have Covid
Falling FAANG+
Yesterday Amazon (AMZN) became the third of the mega-cap FAANG+ stocks (along with META and NFLX) to close below its closing low made during the COVID Crash in March 2020. Not only have all of AMZN’s post-pandemic gains been erased, but it’s now trading below its lowest close made during the COVID Crash!
(Bespoke)
- The Chatbots Are Coming for Google ChatGPT and a handful of startups founded by Google alumni are aiming to reimagine search for the AI age.
Europe Taps Tech’s Power-Hungry Data Centers to Heat Homes With an energy crisis hitting Europe, governments are exploring ways to recycle electricity used on social-media scrolling, conference calls and video streaming to help heat homes and offices.
(…) Higher energy prices, stemming from Russia’s decision to effectively cut off natural-gas deliveries following its invasion of Ukraine, have boosted the financial incentive for tech companies to invest in systems necessary to sell off their excess heat, energy and tech sector officials say. (…)
Data centers in proximity to district heating systems could provide as much as roughly 50 terawatt-hours a year of excess heat, according to a study from ReUseHeat, an EU-funded project aimed at promoting waste-heat reuse. That would work out to between 2% and 3% of the energy EU households used on space heating in 2020, according to data from Eurostat. (…)
- Russia Rules Out Peace Talks With Ukraine, Says It Won’t Give Up
- China Calls on US to ‘Create the Conditions’ for Military Talks China said it is up to the US to take steps toward resuming high-level military discussions that were suspended after Nancy Pelosi visited Taiwan