U.S. manufacturing activity slowed in December amid a cooling in demand for goods, but supply constraints are starting to ease and a measure of prices paid for inputs by factories fell by the most in a decade. 

The Institute for Supply Management (ISM) survey on Tuesday also suggested some improvement in labor supply, with a gauge of factory employment rising to an eight-month high. Still, Timothy Fiore, chair of the ISM manufacturing business survey committee, noted that “shortages of critical lowest-tier materials, high commodity prices and difficulties in transporting products continue to plague reliable consumption.” 

The survey does not fully capture the impact of the Omicron COVID-19 variant, which is rapidly spreading across the United States and abroad. Sky-rocketing infections could force workers to stay home and halt the tentative supply-chain progress. 

“There’s still a lot of ground to make up before supply chains fully normalize, but cooling prices and increased employment are positive signs,” said Will Compernolle, a senior economist at FHN Financial in New York. 

The ISM’s index of national factory activity fell to a reading of 58.7 last month, the lowest level since January 2021, from 61.1 in November. A reading above 50 indicates expansion in manufacturing, which accounts for 11.9% of the U.S. economy. 

Economists polled by Reuters had forecast the index would fall to 60.1. 

All of the six biggest manufacturing industries — chemical products, fabricated metal products, computer and electronic products, food, transportation equipment, and petroleum and coal products — reported moderate-to-strong growth. 

Manufacturers of fabricated metal products expressed optimism that “we have reached the top of the hill to start down a gentle slope that lets us get back to something that resembles normal.” Their counterparts in the chemical products industry said the “gut feeling says it’s getting easier to source chemical raw materials.” 

Machinery makers reported that “costs for steel seem to be coming down some.” They also noted improvements in “performance by suppliers” and “on-time deliveries.” But transportation equipment manufacturers said capacity remained “limited due to the global chip shortage.” 

The ISM survey’s measure of supplier deliveries declined to a reading of 64.9 from 72.2 in November. A reading above 50% indicates slower deliveries to factories. 

The ISM’s Fiore said transportation networks, a harbinger of future supplier delivery performance, were still performing erratically, but there are signs of improvement. 

Raw materials have been in short supply as global economies rebounded from the coronavirus pandemic. Shortages have also been exacerbated by the shift in demand to goods from services early in the pandemic. Millions of workers needed to produce and move raw materials remain sidelined. 

U.S. stocks were trading mixed, with the Dow Jones Industrial Average and the S&P 500 index having hit fresh record highs earlier in the session. The dollar was flat against a basket of currencies. U.S. Treasury prices were mostly lower. 

Price gauge falls 

The nascent signs of improvement in supply chains suggest inflation at the factory gate could soon begin to subside. The survey’s measure of prices paid by manufacturers tumbled to 68.2 last month, the lowest level since November 2020, from 82.4 in November. The 14.2-point plunge was the biggest since October 2011. 

This supports the Federal Reserve’s long-held view that the current period of high inflation is transitory. Inflation is well above the U.S. central bank’s flexible 2% target. 

“The report is consistent with our expectation that inflation will hit an inflection point probably in the first quarter of this year,” said Tim Quinlan, a senior economist at Wells Fargo in Charlotte, North Carolina. 

The ISM survey’s forward-looking new orders sub-index fell to a still-high reading of 60.4 from 61.5 in November. With customer inventories remaining depressed, the slowdown in new order growth is likely to be temporary or limited. 

Factories hired more workers, but turnover rates remained high, a trend which manufacturers said started in August. 

Indeed, a separate report from the Labor Department on Tuesday showed a record 4.5 million Americans voluntarily quit their jobs in November, which will put pressure on businesses to raise wages to attract workers. 

“Replacing those workers is proving unusually challenging,” said Julia Pollak, chief economist at ZipRecruiter. “This is the tightest labor market ever.”

There were 10.6 million job openings at the end of November. The high number of vacancies meant there was a 0.65 unemployed person per job opening, an all-time low. Before the pandemic, there were normally about 2.3 unemployed people per job opening. 

The ISM’s measure of manufacturing employment rose to an eight-month high of 54.2 from 53.3 in November. This, together with very low first-time applications for unemployment benefits, supports the view that job growth accelerated in December. 

According to a preliminary Reuters survey of economists, nonfarm payrolls likely increased by 400,000 jobs in December after rising by 210,000 in November. The Labor Department is scheduled to publish December’s employment report on Friday. 

 
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A refugee who survived the Khmer Rouge’s brutal rule has become the first Cambodian American mayor in the United States.

Sokhary Chau, a city councilor in Lowell, Massachusetts, was unanimously picked by his council peers to assume the legislative body’s top post on Monday. He also became the city’s first Asian American mayor.

“God bless America, right? I was a refugee, now I’m mayor of a major city in Massachusetts,” the 49-year-old, who works for the U.S. Social Security Administration, said after being officially sworn in. “I don’t know if that could happen anywhere else in the world. I’m still trying to absorb it.”

Chau, in his inaugural remarks, reflected on his family’s perilous escape from Cambodia and the former industrial city of Lowell’s deep immigrant roots.

Located on the Merrimack River near the New Hampshire state line, Lowell was an early center of America’s textile industry, drawing waves of European and Latin American immigrants over generations.

Today, the city of more than 115,000 residents is nearly 25% Asian and home to the nation’s second-largest Cambodian community.

“As a proud Cambodian American, I am standing on the shoulders of many immigrants who came before me to build this city,” Chau said Monday before a crowd that included his wife and two teenage sons.

Chau recounted how his father, a captain in the Cambodian army, was executed by the communist Khmer Rouge in 1975 during the country’s civil war.

He said his mother, who died last year, managed to keep her seven children alive for four years, surviving “landmines, jungles, hunger, sickness and uncertainty” to deliver them safely to the U.S.

Chau said America may not have “streets paved with gold” as his family imagined while living in refugee camps, but it’s a land where democracy is possible because of “systems of checks and balances” and principles like fairness, equality and transparency.

In an interview later, Chau said he was around 9 years old when his family initially settled in Pittsburgh, Pennsylvania, with the help of the Catholic Church — an experience that prompted the family to convert to Christianity.

They made their way to Lowell’s growing Cambodian community in the mid-1980s, where some of his older siblings immediately set to work in local factories.

Chau, however, continued his studies and eventually earned a scholarship to Phillips Academy, a exclusive boarding school in nearby Andover. He went on to Macalester College in St. Paul, Minnesota, where he studied economics and political science, also on a scholarship.

Before running for office, Chau said he worked mostly in financial services, including running a mortgage lending company in Lowell with his wife before the housing market crashed in the early 2000s.

Chau’s election follows the ascendance of new Boston Mayor Michelle Wu, whose parents immigrated to the U.S. from Taiwan. She was sworn in last November as Boston’s first woman and first person of color elected to the post.

Chau is also among the growing list of Cambodian American officeholders in Massachusetts: at least two other city councilors, a school committee member and two state lawmakers, all from Lowell, according to Vannak Theng, president of the Cambodian Mutual Assistance Association of Greater Lowell.

But while Cambodian Americans served on local boards and state legislatures nationwide, none were elected mayor, according to the Asian Pacific American Institute for Congressional Studies, a Washington nonprofit that helps Asian Pacific Americans pursue public office and maintains a listing of current officeholders.

In fact, Long Beach, California, home to the nation’s largest Cambodian community, only elected its first Cambodian American city councilor in 2020, the organization noted.

Chau’s election also comes on the heels of a federal court lawsuit that argued Lowell’s election process violated the voting rights of minority residents, who comprise nearly 50% of its population.

A recent settlement in the case prompted the city to change its election process, starting with the 2021 elections. The result was the city’s most diverse class of officeholders, said Oren Sellstrom, litigation director at Lawyers for Civil Rights, a Boston group that brought the 2017 suit.

“Just four years ago, the city’s elected officials were all white and largely unresponsive to the needs of the city’s communities of color,” Sellstrom said. “This historic change in the city’s power structure would never have been possible under the old electoral system.”

To be sure, the mayoral office in Lowell is largely ceremonial.

The city, about 30 miles (50 kilometers) north of Boston, is run by a city manager picked by the council. The mayor is effectively the council president, leading its meetings and also serving as chair of the city’s school committee.

Still, Chau acknowledged his election’s significance to the wider Cambodian diaspora, calling on others to step up in their communities.

“We can no longer be just victims,” he said as he closed his inaugural remarks. “It is our time now to be leaders and to succeed.”
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As the United States deals with its worst yet surge in coronavirus cases, students across the country are having to cope with sudden changes to try to stop the spread of infections. 

Driven by the omicron variant, the average number of new COVID-19 cases has surpassed 400,000 per day, double what it was a week ago and triple the number from two weeks ago. 

That has led school officials to reconsider their plans for bringing students back to classrooms following winter breaks that in many places spanned the Christmas and New Year’s holidays. 

Schools in Los Angeles will not open again until January 11, and students are being required to show a negative COVID-19 test result to be allowed on school grounds. 

Negative tests are also required for students in Washington, D.C., where classes resume Wednesday. 

The school systems in Chicago and Seattle are strongly recommending their students get tested before coming back, but they are not required. 

The surge in infections has also left many schools without enough teachers and staff to hold in-person classes. 

The combination of those shortages and efforts to slow the tide of new cases prompted schools in Milwaukee, Cleveland, Detroit and Philadelphia to shift some or all of their classes back to the online learning platforms that students have had to rely on for education through much of the pandemic. 

Similar forces are having impacts outside of schools as well. The Smithsonian Institution announced that several of its major museums in Washington will have to close or operate under reduced hours for at least 12 days as it experiences “unprecedented staff shortages.” 

Many airlines, while also battling winter weather issues, have had to cancel flights with a lack of air crews healthy enough to work. 

Some information for this report came from the Associated Press and Reuters. 
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The number of asylum applications in Mexico nearly doubled in 2021 from two years earlier, the head of the country’s Commission for Refugee Assistance (COMAR) said on Monday, with most applications being from Haitian and Honduran migrants. 

When compared to 2019, the 131,448 applications mark an increase of 86.84%, according to COMAR. 

“By far, the main nationalities (who requested refuge) were Haitians and Hondurans,” said Andres Ramirez, the head of COMAR, adding that Cubans were a distant third. 

The rise in the number of Haitians making their way through Mexico has been spurred by economic malaise, a devastating earthquake and political turmoil following the assassination of Haitian President Jovenel Moise in July. 

In the previous two years, most applications were filed by Honduran migrants. 

Some 72% of those who applied for asylum in 2021 received a positive response, Ramirez said. Another 2% were also granted complementary protection. 

Central American migrants fleeing violence and poverty in their home countries have long been crossing Mexico on their way north toward the U.S. border, but in recent years, more and more migrants have applied for asylum in Mexico. 
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Five world powers have agreed to work together to stop the further spread of nuclear arms and to avoid nuclear conflict, according to a joint statement.

“We believe strongly that the further spread of such weapons must be prevented,” said the five permanent U.N. Security Council members China, France, Russia, Britain and the United States, collectively known as the P5.

“We affirm that a nuclear war cannot be won and must never be fought,” the countries added.

The statement Monday from the P5 countries comes as tensions escalate between Western nations and Moscow over Russia’s troop buildup at its border with Ukraine. Relations between the U.S. and China are also strained over disagreements such as alleged human rights abuses by Beijing, disputes over the South China Sea and Chinese military flights near Taiwan.

Despite the tensions, the five nuclear powers said they saw “the avoidance of war between nuclear-weapon states and the reduction of strategic risks” as their “foremost responsibilities.”

The statement came after a scheduled review on Tuesday of the Treaty on the Non-Proliferation of Nuclear Weapons was postponed to later in the year because of the coronavirus pandemic.

The five world powers said they were committed to a key article in the treaty, which calls for countries to work toward full disarmament of nuclear weapons in the future.

The Russian Foreign Ministry welcomed the declaration.

“We hope that, in the current difficult conditions of international security, the approval of such a political statement will help reduce the level of international tensions,” it said in a statement. 

Monday’s declaration also comes as diplomats resume talks aimed at reviving Iran’s 2015 nuclear deal with world powers.

The administration of former U.S. President Donald Trump quit the nuclear deal in 2018, saying it was not tough enough on Iran, and reimposed U.S. sanctions. Iran retaliated a year later by publicly exceeding nuclear activity limits agreed on as part of the 2015 deal. President Joe Biden has said he wants to honor the deal again if Iran does the same.

The U.S. has repeatedly warned that time is running out for Iran to agree to a new deal.

Some information in this report came from Reuters and Agence-France Presse. 
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The U.S. Food and Drug Administration (FDA) has authorized use of COVID-19 vaccine booster shots for kids between the ages of 12 and 15.

The FDA said Monday it had amended its emergency use authorization of the Pfizer-BioNTech booster shot to include the younger children.  

In statement, the FDA said the agency has also shortened the waiting period between the primary two-shot vaccination and all booster shots from six to five months.

The agency said it was taking the move to help provide better protection against both the delta and omicron variants of the virus that causes COVID-19.  The Pfizer-BioNTech COVID-19 vaccine is the only one currently authorized for children under 18 by the FDA.

The FDA also on Monday authorized a third vaccine dose for certain immunocompromised children 5 through 11 years of age.

It said the potential effectiveness of an additional dose in children five through 11 years of age was extrapolated from data it had gathered from use in adults.

The new authorizations come as many U.S. school-age children returned to classes Monday following the holiday break. 

But before the changes can take effect, the U.S. Centers for Disease Control and Prevention must sign off on them. CDC director Dr. Rochelle Walensky is expected to rule on the new authorizations later this week.

Some information for this report came from The Associated Press, Reuters, and Agence France-Presse.
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