Ulbrich Economic Update - Number 37 (June 2023)

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June 2023 Economic Update Executive Summary

U.S. Business Contracts

The Americas

U.S. MANUFACTURING CONTRACTED FOR A SEVENTH STRAIGHT MONTH IN MAY as new orders continued to plummet amid higher interest rates, but factories pushed employment to a nine-month high (ISM). Other May data showed: U.S. job growth accelerated to 339,000, but a jump in the unemployment rate to a seven-month high of 3.7% suggested that labor market conditions were easing. Consumer confidence slipped as concerns about the economic outlook lingered, although more households planned to purchase motor vehicles and other big-ticket items over the next six months.

April data showed: Industrial production rose 0.5% as a sharp gain in motor vehicles drove factory output 1% higher. Motor vehicle production surged 9.3%. Durable goods orders increased 1.1%, and new orders for key U.S.-manufactured capital goods rebounded 1.4%. New factory orders rose 0.4%, boosted largely by defense spending. The leading economic indicators fell 0.6%, and the index is down 4.4% over the six-month period to April 2023. The Consumer Price Index was up 4.9% YOY, but core consumer prices rose 5.5% from a year earlier, a slight dip from 5.6% in March. Producer prices rebounded 0.2%, leading to the smallest annual increase in producer inflation in more than two years. Retail sales increased 0.4%, less than expected. The U.S. trade deficit jumped 23% in April to $74.6bn, the most in 8 years. U.S. exports of goods plunged 5.3%.

Flag of Germany and Euro Banknotes


GERMANY’S ECONOMIC OUTPUT IN THE 1ST QTR SHRANK 0.3% FROM THE PREVIOUS QUARTER, tipping the economy into a recession. Until now, Germany had defied predictions that Russia’s full-scale invasion of Ukraine would send the country into recession. Japan emerged from a technical recession driven by a post-COVID recovery in household spending and tourism, but economists warned that the strength of the recovery was modest, with exports and manufacturing weak. GDP grew 1.6% in the 1st Qtr.

Metals & Commodities

A SPUTTERING RECOVERY IN CHINA DRAGGED COPPER PRICES TO A FIVE-MONTH LOW in late May, delaying one of the most widely anticipated bull runs in commodity markets. Copper’s benchmark futures contract closed at $8,272/tonne, down 6.9% over the past month. Global platinum demand is forecast to surge 28% this year to 8.2 million ounces after investors piled in, adding to strong industrial consumption and increasing use of the metal in car catalytic converters in the first quarter.

ArcelorMittal Dofasco steel mill Hamilton, Ontario

Steel Industry Updates

ARCELORMITTAL WILL SUPPLY GENERAL MOTORS WITH ITS XCARB recycled and renewably produced steel, which offers significantly lower carbon emissions compared to much of the carbon steel available in North America. The steelmaker will supply material from its Dofasco mill in Hamilton, Ontario. H2 Green Steel signed a memorandum of understanding with Mercedes “to work together to enable a long-term supply of green steel produced in North America for Mercedes’ auto plants in North and South America.”

Automotive Trends

TOYOTA’S TOP SCIENTIST SAID A LACK OF RESOURCES means battery electric vehicles (BEV) cannot be the auto sector's only answer to climate change, warning that focusing on BEVs could lead some drivers to hold onto polluting vehicles. Hyundai and LG Energy Solutions plan to build a $4.3bn electric vehicle battery plant in Georgia with IRA incentives. California asked the EPA to approve its plan to require all new vehicles sold in the state by 2035 to be either electric or plug-in electric hybrids.

Nuclear power plant

Energy Sector News

FRENCH PRESIDENT MACRON IS PUSHING TO HAVE THE FIRST REACTOR in a series of six new nuclear reactors up and running by 2035. The plans, which could be extended by at least another eight reactors, are the linchpin in France’s vision to reduce its net emissions to zero over the next three decades. Dow Chemical will install X-Energy Reactor’s Xe-100 high-temperature gas-cooled nuclear reactor at one of its Gulf Coast sites in a joint agreement aiming to generate safe, reliable, low-carbon power and steam.

Medical Insights

MEDTRONIC WILL BUY EOFLOW, a company based in South Korea that makes a tubeless, disposable insulin pump on a patch. The purchase will allow Medtronic to compete with Insulet, which has tubeless insulin pumps, and Tandem, which bought patch pump-maker AMF Medical. Embecta announced plans to develop its own insulin pump, signaling a major shift in its business model. Spun off from Becton Dickinson last year, Embecta is the largest maker of disposable pen needles and insulin syringes for diabetics. As of May, the number of world-wide COVID-19 cases has reached at least 689 million with more than 6.882 million deaths.

Artist concept of the Blue Moon Lander. Credits Blue Origin
Artist concept of the Blue Moon Lander. Credits: Blue Origin

Aerospace Developments

NASA AWARDED A CONTRACT TO BLUE ORIGIN TO PROVIDE A LUNAR LANDER FOR A MOON MISSION that is scheduled to launch in 2029. NASA agreed to pay $3.4bn for the 50-foot-tall spacecraft, which is named Blue Moon and can transport four astronauts to the moon’s surface. Ryanair awarded Boeing a landmark order for as many as 300 of the largest 737 MAX aircraft in a bet on the post-pandemic travel recovery. The order has a list value of $40 billion, though major deals typically command big discounts. Boeing's latest quarterly result, a net loss of $425mn, did not deliver the much-needed boost to the company's bottom line.

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