US ECONOMY & POLITICS

U.S. Jobless Claims, Benefits Payments Fall to Pandemic Lows – Wall Street Journal, 7/15/2021

• Applications for unemployment benefits fell to a new pandemic low last week, as the labor market continued to heal from the Covid-19 pandemic.
• Jobless claims declined to 360,000 in the week ended July 10 from a seasonally adjusted 386,000 a week earlier. Last week’s applications count marked the lowest level for claims since March 2020, the month the pandemic hit the U.S. economy.
• The four-week moving average, which can smooth out volatility in the weekly figures, fell to 382,500, also a pandemic low.
• Continuing unemployment payments made through regular state programs—which provides an approximation of the number of people receiving benefits—declined by 126,000 to 3.24 million in the week ended July 3, also the lowest level since March 2020.
• In states that ended the $300 enhanced weekly payment by June 19, continuing claims for regular state programs had fallen 12% by late June from May 15, versus a 7% decline in other states, according to the Federal Reserve Bank of St. Louis.

U.S. manufacturing output dips as chip shortage weighs on motor vehicles – Reuters, 7/15/2021

• Output at U.S. factories unexpectedly fell in June as motor vehicle production dropped amid an unrelenting global semiconductor shortage.
• Manufacturing output dipped 0.1% last month after accelerating 0.9% in May, the Federal Reserve said on Thursday.
• Output at factories grew at a 3.7% annualized rate in the second quarter after increasing at a 2.3% pace in the January-March period.
• Excluding autos, manufacturing output increased 0.4% in June.
• The dip in overall manufacturing output was offset by a 1.4% jump in mining and a 2.7% rebound in utilities to lift industrial production by 0.4% last month.
• Industrial production grew at a 5.5% rate in the April-June quarter after advancing at a 3.6% pace in the first quarter.
• Capacity utilization for the manufacturing sector, a measure of how fully firms are using their resources, fell 0.1 percentage point to 75.3% in June.
• Overall capacity use for the industrial sector 0.3 percentage point to 75.4%.
• It is 4.2 percentage points below its 1972-2020 average.

U.S. import prices rise solidly in June – Reuters, 7/15/2021

• U.S. import prices increased solidly in June as bottlenecks in the global supply chain persisted, the latest indication that inflation could remain elevated for a while amid strong domestic demand fueled by the economy’s reopening and fiscal stimulus.
• Import prices rose 1.0% last month after surging a 1.4% in May, the Labor Department said on Thursday.
• The eighth straight monthly gain left the year-on-year increase at 11.2% compared with 11.6% in May.
• The report also showed export prices increased 1.2% in June after rising 2.2% in May.
• Prices for agricultural exports advanced 1.5%. Nonagricultural export prices gained 1.1%.
• Export prices increased 16.8% year-on-year in June after surging a 17.5% in May.

Philly Fed factory index falls in July to lowest since December – Reuters, 7/15/2021

• Factory activity in the U.S. mid-Atlantic region slowed sharply for the third consecutive month to its lowest growth since December after hitting its highest pace in nearly half a century earlier this spring, a survey showed on Thursday.
• The Philadelphia Federal Reserve Bank said its business activity index fell to 21.9 from 30.7 in June.
• That was well below economists’ expectations for a reading of 28.0, according to a Reuters poll.
• The Philly Fed employment index decreased to 29.2 from 30.7 in June.
• Additionally, the price paid index declined to 69.7 in July from 80.7 in the month prior, after reaching a 42-year high in June.

Child Tax Credit Payments Totaling $15 Billion Arrive for Millions of Americans – Wall Street Journal, 7/15/2021

• Tens of millions of U.S. households can expect to see their bank balances grow Thursday, thanks to the first monthly payments of the expanded child tax credit.
• The Internal Revenue Service issued families payments of up to $300 per child under a program aimed at combating child poverty and turning lump-sum annual tax refunds into predictable household income.
• The Biden administration said it paid about $15 billion, mostly through direct deposits, to families with nearly 60 million children.
• Those monthly payments will continue through December, and Congress is debating whether to continue them.
• The expanded portion of the payments starts shrinking once income reaches $75,000 for an individual and $150,000 for a married couple.
• Households above those levels still get the $2,000 credit, which retains the prior income phaseouts starting at $200,000 for individuals and $400,000 for married couples.

U.S. Senate passes bill to ban all products from China’s Xinjiang – Reuters, 7/15/2021

• The U.S. Senate passed legislation on Wednesday to ban the import of products from China’s Xinjiang region, the latest effort in Washington to punish Beijing for what U.S. officials say is an ongoing genocide against Uyghurs and other Muslim groups.
• The Uyghur Forced Labor Prevention Act would create a “rebuttable presumption” assuming goods manufactured in Xinjiang are made with forced labor and therefore banned under the 1930 Tariff Act, unless otherwise certified by U.S. authorities.
• Passed by unanimous consent, the bipartisan measure would shift the burden of proof to importers.
• The current rule bans goods if there is reasonable evidence of forced labor.

EUROPE & WORLD

China’s Economic Growth Slows in the Second Quarter – Wall Street Journal, 7/15/2021

• China’s economic rebound slowed in the second quarter but continued to show unusual resilience more than a year after the country largely got control of the coronavirus within its borders.
• All told, China’s government said Thursday that gross domestic product grew by 7.9% in the second quarter from a year earlier, in line with economists’ expectations.
• Industrial output rose 8.9% in the second quarter and 8.3% in June compared with a year earlier, according to data released by the National Bureau of Statistics Thursday, beating expectations.
• Retail sales, a key measure for China’s consumer spending, increased 13.9% in the second quarter and 12.1% in June from a year earlier, also topping forecasts.
• Fixed-asset investment grew 12.6% in the first six months of the year, again beating expectations.
• China’s urban surveyed unemployment rate, its headline measure of joblessness, stood steady at 5.0% in June, the same as in May, the statistics bureau said.

TSMC Expects Auto-Chip Shortage to Abate This Quarter – Wall Street Journal, 7/15/2021

• Taiwan Semiconductor Manufacturing Co., the world’s largest contract chip maker, said it expects the chip shortage that has hampered car makers to start easing in the next few months after it ramped up its production of auto chips.
• Revenue increased 20% to US$13.3 billion, and operating margin fell 3.1 percentage points to 39.1% in the second quarter.
• Second-quarter revenue from auto chips increased by 12%, but accounted for just 4% of overall sales.
• Meanwhile, revenue from smartphone chips fell by 3%, accounting for 42% of overall sales.
• The company’s second-quarter net profit rose 11% to the equivalent of US$4.8 billion, or 134.36 billion New Taiwan dollars, from a year earlier.
• The company is on track to increase output of microcontrollers used in cars by about 60% this year compared with last, Chief Executive C.C. Wei said in an earnings call on Thursday.
• However, he said, the broader semiconductor shortage could persist until 2022.

World Bank trims East Asia, Pacific GDP forecast amid COVID-19 concerns – Reuters, 7/15/2021

• Growth in East Asia and the Pacific this year will likely be slower than previously thought, the World Bank said on Thursday, as many countries in the region grapple with spikes in COVID-19 cases, new variants and vaccine supply constraints.
• The East Asia and Pacific region, excluding China, is expected to grow 4% this year, World Bank President David Malpass said, down from a 4.4% forecast in March, with countries like conflict-torn Myanmar facing a deeper-than-expected slump.
• Including China, which the global lender said will likely grow 8.5% in 2021, the region is expected to expand by 7.7% this year, faster than a 7.4% projection made in March, Malpass told a streamed news conference.
• The World Bank chief said he is concerned about developing nations falling behind in what has become a two-speed recovery with advanced economies posting a stronger rebound as more of their people get fully vaccinated.

Factmonster – TODAY in HISTORY

• The Second Battle of the Marne began during World War I. (1918)
• The Russian Soyuz and the U.S. Apollo launched. The Apollo-Soyuz mission was the first international manned spaceflight. (1975)
• After 86 days of gushing oil into the Gulf of Mexico and several previous attempts to contain the flow, BP caps its leaking oil well. (2010)