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Commentary: What manufacturing activity tell us about freight

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The views expressed here are solely those of the author and do not necessarily represent the views of FreightWaves or its affiliates.  

As we transition into July, several economic indicators concerning June manufacturing and employment have been released by various government agencies. This report summarizes findings regarding June manufacturing activity using regional manufacturing surveys conducted by several of the Federal Reserve Banks and employment data for manufacturing as reported by the Bureau of Labor Statistics (BLS).

Regional manufacturing surveys

Regional manufacturing surveys conducted by the Federal Reserve Banks of New York, Dallas, Richmond and Philadelphia suggest that June manufacturing activity substantially rebounded from May levels, but point to an uneven recovery. For example, across three Fed districts that report detailed data on percent of firms reporting increases and decreases, while more firms reported an increase in new orders relative to decreases in June, the number of firms reporting decreased new orders is still elevated as shown below.

Source: New York, Dallas, Richmond, and Philadelphia Federal Reserve surveys

Though the momentum for new orders and production was positive, this has yet to translate to positive momentum for employment. This can be seen plotting the diffusion indices — calculated as the percent of firms reporting an increase less those reporting a decrease — for shipments (as a proxy for production) and employment. The shipments index exceeds zero, indicating more firms reported an increase in shipments relative to a decrease. However, the employment reading is -3.6, suggesting that while the number of firms reducing headcounts slowed from May, manufacturers are not aggressively hiring. This is consistent with research in economics showing that firms are hesitant to make investments during periods of elevated uncertainty.

Source: New York, Dallas, Richmond, and Philadelphia Federal Reserve surveys

Special questions asked on the June Dallas survey shed light on manufacturers’ anticipated time for revenues to return to pre-COVID levels. As shown below, roughly 16% of firms reported higher revenues, whereas 13% reported unchanged revenues. Roughly 50% of firms reported that revenues were not expected to reach pre-COVID levels for at least seven months. This uncertainty about revenue returns corroborates the finding that employment is rising more slowly than shipments and new orders.  

Source: Dallas Federal Reserve survey

Bureau of Labor Statistics manufacturing employment

Preliminary employment data for June 2020 suggests manufacturing employment is rebounding as lockdowns have eased, but employment is substantially below June 2019 levels. Examination of durable goods sectors reveals that only computer and electronic product manufacturing has seen an increase in employment on a year-over-year basis, up approximately 1.1%. This isn’t surprising given the robust demand for electronic products created by the need to conduct operations remotely (e.g., network equipment, mainframes, etc.) Of the 10 durable goods sectors for which the BLS reports monthly employment statistics, 495,500 jobs, or 6.1%, have been lost relative to June 2019. The hardest-hit durable goods sector for job losses on a percent basis was primary metals, with June 2020 employment being 12.4% below June 2019 levels. The largest durable goods sector by employment in June 2020, transportation equipment manufacturing, has also been hard-hit, with employment down 8.9% from June 2019 levels. These data point to an uneven recovery thus far in the durable goods production sectors, which is consistent with the Federal Reserve’s regional manufacturing surveys. The good news is that durable goods employment for June 2020 was up 289,700 jobs from May 2020, or a 4% gain.  

Source: Bureau of Labor Statistics manufacturing employment

In contrast, employment declines in the nondurable goods manufacturing sector have been less severe. As shown below, for the three largest nondurable goods manufacturing sectors (food manufacturing, chemical manufacturing, and plastics and rubber products), year-over-year employment declines have been 2.9%, 1.9% and 2.5%, respectively. Of the nine nondurable goods sectors for which the BLS provides monthly data, employment was down 222,700 jobs on a year-over-year basis, or 5%. On the positive front, June saw the creation of 49,900 jobs from May, or a 1.2% gain. With this being said, sectors such as apparel manufacturing, printing and support activities, and textile mills have shown particularly pronounced job losses. 

Source: Bureau of Labor Statistics manufacturing employment

Conclusion

Manufacturing activity improved substantially in June from May as states eased lockdowns. The recovery has been uneven, with only one sector (computer and electronic product manufacturing) showing year-over-year employment gains. Durable goods manufacturers have shed more jobs on a year-over-year basis, both in absolute and percent terms. While further recovery is expected in July, the magnitude is difficult to predict due to the resurgence of confirmed COVID-19 cases.

Source: https://s29755.pcdn.co/news/commentary-what-manufacturing-activity-tell-us-about-freight

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Volkswagen to make electric car cells, battery packs in U.S.

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German automaker Volkswagen said it was expanding its Chattanooga factory in Tennessee to make electric vehicle cells and battery packs in the United States, alongside assembling electric vehicles.

The company said it plans to break ground for a laboratory in Chattanooga to develop and test cells and battery packs for its upcoming car models assembled in the U.S., with the goal of a fully operational lab by spring 2021.

“A lot of auto companies will farm out the development and testing of batteries to another company, and some will actually do the work of developing and testing in-house. We are doing the latter,” said Wolfgang Maluche, vice president of engineering, Volkswagen of America.

Volkswagen’s plan to produce its own cells and battery packs for electric vehicles in the United States follows an emissions scandal at the company, which admitted to using illegal software to cheat pollution tests in the country.

The scandal has cost Volkswagen 30 billion euros ($35.51 billion) in fines, penalties and vehicle buyback costs worldwide.

Insourcing electric vehicle cells and battery packs reinforces Volkswagen as one of the most ambitious traditional carmakers in the electric vehicle domain, Credit Suisse analyst Dan Levy said.

Last year, the carmaker said it would invest $800 million to build a new electric vehicle at its plant in Chattanooga.

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Source: https://www.autoblog.com/2020/08/13/volkswagen-plans-chattanooga-battery-production/

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The Aston Martin Rapide leads this month’s list of discounts

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Aston Martin was an early entrant into the coupe-shaped sedan battlefield with its rakish Rapide. It was first shown in concept form in 2006 at the Detroit Auto Show before finally going into production in 2010. Ten years have passed since then, and this could well be your last chance to drive a new Rapide off your neighborhood Aston Martin dealership’s lot as the four-door is replaced by the DBX crossover.

If you’ve got your eye on a new Rapide — and congratulations if so — you’ll be pleased to know that you can snag a 2019 model for the low price of just $217,484. Sure, that’s still a lot of money, but it’s $24,341 off the car’s average $241,825 sticker price. That’s the largest monetary savings of August, 2020, and it represents a discount of a little over 10%. And even if the Rapide is getting a little long in the tooth, it’s still a strikingly beautiful machine, particularly in its most recent AMR guise.

Looking for something different but still extremely rapid? The 2019 Acura NSX is selling for an average transaction price of $142,141. That’s an 11% savings off its sticker of $159,703. Or you could opt for a Maserati Quattroporte if you’d like the convenience of a luxury sedan but not the price of the Aston Martin – the four-door Trident-badged machine’s average transaction price this month of $107,372 is a 12.4% discount.

And if none of that is up your alley, you could go full baller with a Rolls-Royce Cullinan SUV for $320,085. That’s a savings of $12,665 off the car’s average retail price of $332,750. Just think of how much Grey Poupon you could afford with all that leftover cash.

For a look at the best new car deals in America based on the percentage discount off their suggested asking prices, check out our monthly recap here. And when you’re ready to buy, click here for the Autoblog Smart Buy program, which brings you a hassle-free buying experience with over 9,000 Certified Dealers nationwide.

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Source: https://www.autoblog.com/2020/08/13/aston-martin-rapide-biggest-discount-price/

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This Toyota Tercel promises minimalism, ’80s-style

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We’re guessing it’s been a while since you’ve seen one of these: Toyota’s humble Tercel, the brand’s longtime entry-level model, an econo-box that resided below the Corolla. This 1983 model is for sale right now on eBay Motors, looking just as you remember. That is, if you remember.

These cars have all but disappeared from American roads despite the fact that the Tercel was quite popular in its day, owing to its combination of an ultra-low sticker price and its high fuel economy. And yet, as those of us who were around in the ’80s and ’90s can attest, the cars were pretty much invisible even back then. Now, though, the tiny Toyota turns heads — it did ours, at least.

This is the second-generation Tercel, which switched to front-wheel drive. This two-door hatchback body style was the most commonly seen, although there was also a four-door hatchback and the better-known all-wheel-driver Tercel wagon. As an SR5, this Tercel is the fanciest available trim level, but it was still pretty parsimonious.

The included original window sticker (!) shows a starting price of $6,618. That includes power front disc brakes but not power steering, which was optioned here for $185. This buyer also ticked the boxes for alloy wheels ($265), a rear window wiper/washer ($90), and carpeted floor mats ($46). The biggest extravagance was a power sunroof for $460. Air conditioning, however, was a bridge too far.

Under the hood, a 1.5-liter engine dishes up 62 horsepower, and since this is an SR5, the driver can track its ministrations with the standard tachometer. It’s fair to say that the new owner will be working the five-speed stick pretty hard to wring the most out of this engine, but just imagine the smile on your face as you motor simply, the way they did back in the Reagan era. After all, not everyone back then was a yuppie or a “Greed-is-good” Wall Street leveraged buyout king. This was a car for the victims of LBOs.

The window sticker shows that this Tercel was originally Light Yellow, and the seller acknowledges that the current golden hue is a respray. The body, though, appears laser-straight — thank that gentle California climate. And the cloth-and-vinyl buckets seats, those carpeted floor mats, and that AM/FM radio all appear well preserved. So far, one bidder has a raised a virtual paddle, offering $3,000. With five days to go, there’s plenty of time for the price to climb. Or not. Whoever ends up with this Tercel will likely have the only one for miles around. Oh, what a feelin’!

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Source: https://www.autoblog.com/2020/08/13/toyota-tercel-for-sale-ebay-motors/

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