Current Affairs
June 14, 2023
PPI Drop
PPI Plunges More Than Expected – Lowest Since Dec 2020
by Tyler Durden
Wednesday, Jun 14, 2023 – 08:36 AM
After a mixed picture from CPI data yesterday (headline down big, core still sticky, supercore rising), PPI was expected to continue to decline in data this morning for May, and it did bigly… Headline PPI fell 0.3% MoM in May (way more than the 0.1% drop expected), which dragged the YoY PPI to just 1.1%. That is the lowest since Dec 2020…
Source: Bloomberg
Under the hood, Goods PPI tumbled 1.6% while Services rose just 0.2%…
Sixty percent of the May decline in the index for final demand goods can be traced to a 13.8-percent drop in prices for gasoline.
The indexes for diesel fuel, chicken eggs, jet fuel, fresh and dry vegetables, and iron and steel scrap also fell. Conversely, prices for tobacco products advanced 1.7 percent. The indexes for electric power and for beverages and beverage materials also increased.
Over 40 percent of the May increase in prices for final demand services can be attributed to margins for automobiles and automobile parts retailing, which rose 4.2 percent.
The indexes for fuels and lubricants retailing; apparel, footwear, and accessories retailing; securities brokerage, dealing, investment advice, and related services; machinery and vehicle wholesaling; and food wholesaling also advanced. Conversely, prices for truck transportation of freight fell 2.1 percent. The indexes for portfolio management and for health, beauty, and optical goods retailing also decreased.
Core PPI was unchanged MoM, dragging the YoY change to +2.8% – the lowest since Feb 2021…
Source: Bloomberg
The pipeline for PPI is also increasingly deflationary as prices for intermediate demand goods plunge…
Source: Bloomberg
Finally, M2 suggests this re-acceleration of the deflationary impulse in PPI is set to continue aggressively…
Source: Bloomberg
The question is – does The Fed care about PPI? Or just its latest SuperCore CPI as an inflation ‘signal’?
Finally, we note the following trend – is this the new economy?
Drink more, drive less?
https://www.zerohedge.com/personal-finance/ppi-plunges-more-expected-lowest-dec-2020
June 13, 2023
Furniture Industry Update
Furniture industry moves forward
June 5, 2023 | 10:37 am CDT
Photo courtesy of Groupe Lacasse.
The economy, along with material costs and labor concerns continues to temper the sales outlook of many residential and contract furniture manufacturers.
According to Allied Market Research, North American demand for furniture — residential and commercial — will hit $400.1 billion by 2030, at a CAGR of 4.9% (2021-2030). The residential segment is forecast to have a greater market share due to ongoing home renovations, plus the growing infrastructure and real estate market. Commercial furniture growth continues to be driven by companies investing in furnishing offices for social distancing and flexible or hybrid workplaces. Smart furniture is also gaining popularity.
Preliminary figures by S&P Global Market Intelligence, published on BIFMA’s website, show the North American office and institutional furniture market size reached an estimated $24.7 billion in 2022, up 18.4 percent from 2021. The United States accounted for $16.2 billion, with Canada at $4.2 billion and Mexico at $4.3 billion.
Based on comments by manufacturers, 2023 is also projected to be relatively positive by many in the contract furniture market.
Steelcase (#5), for example, has seen 17 percent revenue growth for fiscal 2023, despite a challenging environment.
“In the Americas, our fourth quarter orders were stronger than we anticipated and drove revenue and earnings above our expectations,” said Sara Armbruster, president and CEO. “Although our fourth quarter orders were below the prior year, project business from large corporate customers improved sequentially from the third quarter. We’ve seen opportunity creation in the Americas grow on a year-over-year basis for eight of the last nine months, and in recent months, a notable number of larger companies in the United States have announced workplace strategies that emphasize the importance of an in-office presence.”
With the supply chain stabilizing in most cases, allowing for shorter lead times and steady supply, 2023 sales for Groupe Lacasse (#96) are projected to rise compared to 2022, said Sylvain Garneau, president and CEO. “Overall, it might be above 2019 (pre-COVID).”
Projections for 2024, however, are too early to tell.
“When your lead times are two to eight weeks, it is too early to say,” Garneau said. “There is still quite a bit of unknown for 2024: Recession or not? Will there be more returning to work in downtown or not? Will employers invest more in their workplaces to make them more attractive or not? It’s too far out at this time.”
See sidebars below: Changes in the FDMC 300, Outlook for outdoor furniture
On the residential side, new furniture orders dropped 17 percent in February compared to 2022, although up slightly from January 2023 figures, according to the latest issue of Furniture Insights produced by analyst and consulting firm Smith Leonard.
Yet a number of manufacturers remain bullish on projections for 2023 and beyond.
“I am pleased with our third quarter results and the progress the organization has made, especially as we consider the many consumer and macroeconomic headwinds we continue to face,” said Jerry Dittmer, president, and CEO of Flexsteel Industries (#28). “Despite the market challenges…. Our growth initiatives are working and gaining momentum, and we anticipate continuing that drive to deliver even higher sales in the fourth quarter compared to the third quarter results.”
La-Z-Boy (#13) and Ethan Allen (#32) also recorded strong third quarters for fiscal 2023. “We are pleased with our third quarter operating performance,” stated Farooq Kathwari, Ethan Allen chairman, president and CEO. “We are confident in the investments that we are making for the future, but recognize the need to remain cognizant of the slower economic environment in which we are currently operating in. We remain cautiously optimistic,” he added.
Gat Caperton, CEO of Gat Creek (#211), is also cautiously optimistic on 2023 sales growth. “Sales will be up slightly,” he noted. “We’ll do well in the first half of the year, but the second half is shaping up to be a bit soft.”
Projections for 2024, he added, are “good.”
We asked Caperton and Garneau to share some of their tips for success. “Stay focused and resilient!” Garneau said. “Leverage our strengths.”
Caperton added, “Adapt quickly to changes in demand. It’s too hard to predict accurately so you have to adapt quickly.”
He continued, “The past two years were amazingly consistent, given a large bubble of pandemic orders that needed to be worked off.”
Meeting the challenges
Optimism is tempered by concerns. For 2023, it comes down to the “steady ability to produce what is sold, with no major changes in the marketplace,” Garneau noted. 2024’s top concern: “Economic conditions overall.”
Caperton also cited concerns over a possible economic slowdown. “Capital is tight, and spending is down.” That said, “I think both will open up more by the end of 2023,” he added.
https://www.woodworkingnetwork.com/management/fdmc-300/furniture-industry-moves-forward
June 7, 2023
Credit to Mike
Mike Rowe Is On A Mission To Reverse The “Unspeakable Stupidity” Of Devaluing Work
by Tyler Durden
Wednesday, Jun 07, 2023 – 05:00 PM
Authored by Salena Zito via American Greatness,
A few months ago, Mike Rowe stumbled upon a 2011 video of himself speaking in front of the Senate Commerce, Science, and Transportation Committee during the Obama Administration about the mindset of government toward skilled trades. His argument was that skilled trades were the key to saving our economy, not those jobs that require a four-year degree.
His argument fell on deaf ears.
So he went again in April 2014, this time testifying before the House Committee on Natural Resources to discuss the opportunities for skilled trade workers in the energy industry. This time he brought props, specifically the poster his guidance counselor from high school pointed to when he tried to bully Rowe into picking a high-priced university over a community college his senior year.
Rowe said he had nothing against college, but the universities his counselor recommended were expensive. “I had no idea what I wanted to study. I thought a community college made more sense, but Mr. Dunbar said a two-year school was ‘beneath my potential,’” explained Rowe.
“Mr. Dunbar pointed to a poster hanging behind his desk; on one side of the poster was a beaten-down, depressed-looking blue-collar worker. On the other side was an optimistic college graduate with his eyes on the horizon. Underneath them, the text read: Work Smart NOT Hard,” Rowe told the committee.
“Mike, look at these two guys,” Mr. Dunbar said. “Which one do you want to be?”
“I had to read the caption twice. Work Smart NOT Hard?” Rowe recounted.
The visual was jarring, not to mention insulting, yet once again, nothing happened.
Rowe made his final plea to Congress in March 2017 when he once again schlepped to Capitol Hill, this time for the House Subcommittee on Early Childhood, Elementary, and Secondary Education. He discussed how career and technical education (CTE) can help close the skills gap and empower students to succeed, and he stressed the need to reform the current law.
His message was simple: CTE, and skilled trade professions, need a public relations makeover and a champion. “If you want to make America great again, you’ve got to make work cool again,” he said.
“So, my point to Congress was we just have to get people to think differently about the definition of a good job. And we need to put better examples of real people out there who are prospering as the result of learning a trade,” he said.
“We just shot seven or eight PSAs a couple months ago with people who we helped through the trade scholarship fund at the foundation. HVAC workers, plumbers, welders, all making six figures, and I am going to put these PSAs out there in the same spirit of those ads that made people think differently about conservation, and we are going to make people think differently about work,” he said.
The spots are pitch perfect. The first one with Chloe Hudson begins with Rowe dispelling the notion that you cannot make six figures working with your hands. It then cuts to Hudson, a welder who received a work ethic scholarship from mikeroweWORKS and went on to earn six figures a year, talking about the beauty of her life.
“I’m going to raise whatever I have to, I’m going to spend whatever I have to get these examples front and center. So that’s what I’ve got. In a way, it’s nothing new. In another way, it’s me finally saying, ‘Look, this was a good idea 10 years ago, and why not me?’ I’ll do it. I’m going to do it,” Rowe says with his characteristic charm that has endeared him to millions for more than 20 years.
Rowe said people really need to acknowledge the “unspeakable stupidity” of taking shop classes out of high schools 40 years ago. “The unintended consequences of that alone have been unraveling in ways that’s just mind-boggling. We effectively removed from view an entire category of vocations,” he said.
“In the long history of stupidity, you’d have to go a long way to find something dumber than universally removing shop class from high school. But of course, at the same time we did that, we started telling that same generation of kids that the best path for the most people was the most expensive path,” he said of the idea that higher education is the only path to success.
Which brings Rowe to wonder: Were they intentionally telling students who went into trades that they were achieving lower education?
It should make us wonder as well: Who did these decision-makers think was going to take care of their plumbing, fix their car, install their air conditioning, repair their furnace or rewire their house?
Rowe said he knows he is not going to open the eyes of the varsity blues crowd. “I can’t. They’re not persuadable. But there are a lot of people in the middle, a lot of people that just want to feel better about the possibility of exploring a career. So that’s what I’m going to do. I’m going to take my own advice. I’m going to stop telling Congress what to do, and I’m going to do it myself,” he said.
https://www.zerohedge.com/political/mike-rowe-mission-reverse-unspeakable-stupidity-devaluing-work
June 6, 2023
Polyurethane Foam Association Spring Meeting
Polyurethane Foam Association Spring Meeting Focuses On Industry Challenges, New Opportunities For Flexible Foam
ST. PETERSBURG, FL (June 5, 2023)— At the Polyurethane Foam Association’s (PFA) recent Spring meeting in St. Petersburg, the association covered a spectrum of issues impacting the flexible polyurethane foam industry, along with looking at innovations that promise improvements in foam production, quality, and sustainability.
Record attendance saw more than 165 sales and marketing professionals, EHS specialists, technologists, entrepreneurs and C-suite executives join together for meetings, networking sessions, and presentations covering everything from the newest antioxidants to ways in which artificial intelligence may affect the industry.
PFA’s Industry Issues Session covered trends in key market segments, including commercial furniture, automotive, carpet cushion, and more. Other presentations addressed legal and regulatory issues, isocyanates, technical trends, sustainability and supply chain solutions such as nearshoring.
In the Technical Program on the following day, technical papers covered achievements in microbial control, alternative antioxidants, standards for measuring VOCs, and producing polyols from CO2.
Chip Holton of NCFI Polyurethanes, PFA’s President, recognized new PFA members including Ashley Furniture, Sinomax USA, and Hansa-Mixer. He noted that since the lifting of pandemic restrictions, 20 new companies have joined PFA.
“I think this is an indication of our value to the industry,” said Russ Batson, PFA Executive Director. “Since its creation more than 40 years ago, PFA has given the flexible polyurethane foam industry a more authoritative, more effective voice to represent itself to regulators, NGOs, consumers, and other key audiences. Members have proven that by working together, they can accomplish more than trying to confronting industry challenges on their own.”
Keynote speaker Dr. Balaji Padmanabhan of the University of South Florida provided an overview of Artificial Intelligence and how A.I. is likely to impact the business world in the next several years. Dr. Padmanabhan’s recounted the progress of his field from machine learning, to “traditional” A.I. to the “generative” A.I. currently receiving attention from the media and among investors. He explained that generative A.I. allows computers to produce texts, images and even musical compositions based on user-given prompts, templates or dialogue.
Liz Manning of Econic Technologies won the Dr. Herman Stone Technical Excellence Award. Her presentation, “Redeeming Carbon: CO2-Based Polyols for Polyurethane Applications,” was voted best by those attending the Technical Program.
The award is named for Dr. Herman T. Stone, a legendary figure in the flexible polyurethane foam industry who passed away earlier this year at the age of 98. He served as PFA’s first Technical Director. Dr. Stone left his mark on almost every aspect of the FPF industry, from lab research, process development, applications research and technological forecasting through regulatory compliance, patents and trademarks, and waste minimization and disposal. He pioneered much of the FPF industry’s flammability research and was a leader and an officer in the PFA and in other industry and national associations. In 2007, Dr. Stone was inducted into the Flexible Polyurethane Foam Hall of Fame.
Beyond his professional work, Dr. Stone spent much time educating young people on the importance of remembering the Holocaust. His own personal story appears in the Holocaust Museum in Washington, DC.
“Dr. Stone would have been particularly proud of the quality of the technical presentations this Spring,” noted Bill Gollnitz, Past President of PFA and Moderator for the Technical Program. “In the voting for the Technical Excellence Award (the winner is chosen by the audience in the Technical Session), every presentation received first place votes, and all finished within fractions of a point of each other.”
June 5, 2023
European PO Update
Propylene Oxide Prices Increase in Europe Amid Rising Demand From Glycol Industries
- 05-Jun-2023 2:16 PM
- Journalist: Rene Swann
As per the recent analysis, the Propylene Oxide market showcased positive sentiments during May 2023 after declining in the European region for the past couple of months. At the end of April 2023, the Propylene Oxide market shifted upward due to the increased inquiries and offtakes from downstream Propylene Glycol industries.
Meanwhile, Propylene Oxide’s inquiries were stable to low from the Polyol manufacturers for the past few weeks amid low consumption and availability of previous stocks. The regional Polyol manufacturers started destocking their product inventories in the Asian market like India as the Asian key market of China was closed from 1st May to 3rd May 2023 due to the Labour Day holidays. The Polyol market continued to remain dull and weak till the end of the month, and prices were again negatively revised by suppliers.
The supplies were tightened by Glycol producers as the available stocks of downstream product Propylene Glycol were limited in the market due to declined production rates of Propylene Oxide. The reason is that around 60% of Propylene Oxide goes to the Polyol industries to make Polyurethane. For the past few months, the downstream orders were depressing from the Polyol industries. So Propylene Oxide producers cut down their production rates. It affected the feedstock availability to the Propylene Glycol industries. Consequently, the production rates of Propylene Glycol remained moderately low in the past few weeks, and the inventory levels remained below the demand from end-users.
According to the ChemAnalyst data sources, the Propylene Oxide prices increased by 1% in May 2023, and the Propylene Glycol prices rose by USD 20/MT.
On the contrary, the upstream cost pressure eased as the Propylene Oxide key feedstock Propylene’s prices contracted by almost 12% during the month amid decreases in upstream Naphtha costs due to increased inventory levels.
Furthermore, Europe’s manufacturing Purchaser’s Manufacturing Index rose slightly during May 2023, indicating some improvement in manufacturing activities. However, it was below 50 points.
As per ChemAnalyst’s estimation, “The Propylene oxide prices will increase in the upcoming weeks due to positive market sentiments. The increasing demand from downstream Propylene Glycol producers will further boost the manufacturing and trading activities of Propylene Oxide. Meanwhile, recent stabilizations in costs of the feedstock Propylene and improvement in upstream Crude Oil price will increase the upstream cost pressure and production costs of Propylene Oxide. Conversely, inquiries are likely to remain weak from the Polyol industries amid slow consumption from downstream Polyurethane industries.”
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