Ulbrich Economic Update - Number 15 (August 2021)

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August 2021 Economic Update Executive Summary

vehicle production car doors

The Americas

U.S. GDP ROSE SLIGHTLY IN THE 2ND QTR TO 6.5% ON AN ANNUALIZED BASIS, a smaller than expected increase, as strong consumption was partly offset by weak property investments and inventory drawdowns. June output at America’s factories fell 0.1%. Motor vehicle production dropped 6.6% amid an unrelenting global semiconductor shortage. For the 2nd Qtr, motor vehicle and parts production contracted at a 22.5% rate. Factory orders advanced 1.5% in June. Retail sales climbed 0.6% in June and were up 18% compared with February 2020, just before the pandemic took hold. Auto sales, which have shown signs of slowing amid supply-chain disruptions that have limited the number of vehicles for sale, dropped by 2%. Producer prices rose 1.0%, as an 0.8% jump in the cost of services accounted for nearly 60% of the June increase. Nonfarm payrolls increased by 943,000 jobs in July. Employment is still 5.7 million jobs below its February 2020 peak. The unemployment rate fell to 5.4%, even as 261,000 people entered the labor force.

Flooded Neighborhood


EUROZONE BUSINESSES REPORTED THEIR FASTEST EXPANSION in activity for more than two decades. Disruption of steel shipments due to the intense flooding in Germany's Rhine-Ruhr region has further intensified logistics problems for that country's steel businesses, with Thyssenkrupp the latest to declare force majeure citing transport disruptions. Deadly floods in the Chinese province of Henan curtailed the production of non-ferrous metals, with lead and aluminum the most severely hit.

Metals & Commodities

ALUMINUM PRICES SURGED ON CONCERNS ABOUT REDUCED SUPPLIES FROM CHINA after more power cuts in the metal-producing Yunnan province. Producers received notice from local authorities at the end of July to restrict their power consumption. Iron ore prices remain higher than at any point in the last 10 years. Supply won’t increase significantly in the months ahead, as the biggest producers grapple with a range of problems from labor shortages to bad weather. Tin prices achieved the highest level on record as a boom in consumer electronics and fears of supply disruptions have fueled a 65% price rally since January.

steel coil lifted by crane

Stainless Steel Updates

NORTH AMERICAN STAINLESS RECALLED THE FORCE MAJEURE NOTIFICATION IT ISSUED in July, but the recall changes little with regard to the tight availability of stainless steel in the North American market. Inventory levels across the U.S. stainless steel sector are extraordinarily low. Many service centers and distributors have no incoming material until later in the year. U.S. Steel will not be lured by high prices and rising profits into increasing capacity to make more steel, according to CEO David Burritt. USS reported 2nd Qtr net earnings of $1.012 billion vs. a net loss of $589 million a year ago. ArcelorMittal signed an MoU with the Spanish government for a €1 billion investment to build the world's first large-scale zero-carbon steel plant. It will process iron ore using green hydrogen.

Comac C919 Plane

Latest Aerospace Developments

CHINA’S RIVAL TO BOEING AND AIRBUS POISED TO JOIN BATTLE FOR THE SKIES. China’s first passenger jet is nearing Beijing’s approval to start commercial flights. With the launch of the single-aisle C919, an industry dominated by Airbus and Boeing faces a deep-pocketed and politically connected competitor in state-backed aerospace champion Comac. Lockheed Martin’s space business profits in the 2nd Qtr of this year rose 33% to $335 million due to progress on space-based sensor platforms.

Energy Sector News

THE WORLD'S LARGEST FUSION REACTOR NOW HAS THE WORLD'S MOST POWERFUL MAGNET. The "Central Solenoid," is truly massive at 59 feet tall, 14 feet wide and 1,000 tons. It will be shipped to France and installed at the core of the International Thermonuclear Experimental Reactor, soon to be the world's largest fusion reactor. Singapore unveiled one of the world's biggest floating solar power farms, covering an area the size of 45 football fields, as part of its push to cut greenhouse gas emissions.

EV car charging alternative energy concept

Automotive Industry Advancements

STELLANTIS, THE WORLD'S NO. 4 AUTOMAKER, PLANS TO INVEST MORE THAN $35 BILLION through 2025 on electrifying its vehicle lineup. It aims to make the total cost of owning an EV equal to that of a gasoline-powered model by 2026. Europe's new car market sold 1.5 million fewer vehicles in the first half of this year compared to the same period in 2019. The Electric vehicle startup Rivian is exploring building a second U.S. assembly plant, which will include battery cell production.

Medical Insights & Innovation

WORLD'S FIRST HEART VALVE REPLACEMENT USING AN EXTENDED REALITY PLATFORM was pioneered at a Montreal hospital. It was the first application of the Microsoft HoloLens for use in real-time, extended reality (XR) clinical support of a minimally invasive heart procedure. The biggest private health insurers (UnitedHealth, Cigna, Anthem and Humana) collectively made $31.8bn in profits last year, up 20% from 2019. Amazon Care has approached Aetna, owned by CVS Health, and several other regional insurers in a bid to join their networks and expand coverage but has encountered resistance regarding the payment arrangements.

Diabetes Blood Sugar Test

BLOOD SUGAR TESTS USING SWEAT, NOT BLOOD, COULD BE ON THE WAY. A new, quick and painless sensor may mean far fewer finger pricks for millions of diabetics. A touch-based test measures blood sugar in sweat and applies a personalized algorithm that correlates it with glucose in blood. You place your finger on the sensor for one minute and the hydrogel absorbs tiny amounts of sweat and undergoes a reaction that results in a small electrical current detected by a hand-held device.

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