Current Affairs
September 14, 2020
Intermodal Shortage
“I’ve Never Seen Anything Like This”: Shippers Using West Coast Ports Can’t Book Rail On BNSF And Union Pacific
by Tyler Durden Sun, 09/13/2020 – 20:30
By Stas Margaronis of AJot Insights
A Northern California logistics consultant was unable to book containers on the Burlington Northern Santa Fe (BNSF) or Union Pacific (UP) railroads for the first week of September going to and from U.S. West Coast ports and Midwest destinations.
The consultant said, “I have been working in the industry for thirty years and I have never seen anything like this. It’s weird.”
The result is that importers of low value products being shipped by containers such as tee shirts would be at an economic disadvantage transporting containers by truck as opposed to by rail between U.S. West Coast ports and Midwest destinations, because of the higher cost.
The consultant explained that there is a huge shortage of rail capacity: “There are no rail cars and there are no chassis.”
The consultant, who is not identified, was contracted to research container rail bookings on the UP and BNSF to and from U.S. West Coast ports including:
- Los Angeles
- Long Beach
- Oakland
- Seattle
The result of the research was that: “The railroads will not take any bookings right now and so all the containers going to and from the West Coast to places such as Chicago and Memphis must go by truck.”
The consultant cited the following trucking rates per container as examples:
- Los Angeles/ Long Beach to Chicago: $7000.
- LA/LB to New Berlin, Wisconsin: $6,700.
- LA/LB to Nashville, Tennessee: $7,200.
- LA/LB to Dallas, Texas: $5000.
- LA/LB to Jacksonville, Florida: $8,800.
The consultant said that in the past it had been possible to truck a container coast-to-coast for $2,000: “But those days are gone.”
In addition, “In the good old days you could ship a container from the West Coast to Chicago or Memphis by rail for $1000 dollars.”
The research found one exception. It was possible to ship a container on a COSCO vessel to Shanghai from Memphis, Tennessee via the Port of Prince Rupert, British Columbia utilizing the Canadian National Railway.
The problem: “The travel time was over twenty-one days which is way too slow.”
However, rail intermodal moves are a complex affair, particularly when there is a significant freight imbalance as there is at the moment on the West Coast. A BNSF spokesman told AJOT, “The claim that we have a lack of railcar capacity for international shipments is inaccurate. BNSF is open for business and ready to receive all freight from ocean carriers at the West Coast ports. We have a railcar fleet in excess of demand and have sufficient locomotives, equipment and people across our network to handle current and additional volumes. As always, we are in constant communication with our customers and remain focused on meeting their shipment needs.”
And a UP spokeswoman referred AJOT to an August 26th statement by Kenny Rocker, executive vice president, Marketi:
“We continue to align our resources to handle the increase in demand and are excited to build on the positive momentum we’re seeing this month. And to specifically address the surge of intermodal demand, we are modifying our ingate windows at several intermodal terminals across our network to help manage gate and ramp fluidity. We continue to evaluate our terminal activity and will make any necessary adjustments to accommodate your needs and, at the same time, deliver the safe and reliable service you expect.”
On August 24th, the heads of the Surface Transportation Board (STB) and the Federal Railway Administration (FRA) sent identical letters to the heads of the leading U.S. railroads, including the Union Pacific (UP) and the Burlington Northern Santa Fe (BNSF) expressing concerns about the adequacy of U.S. railroad service and the adequacy of personnel to transport freight.
The letter, signed by Federal Railroad Administrator Ron Batory and Surface Transportation Board Chair Ann Begeman read as follows:
“Recently, however, we have been made aware of service issues, including missed industrial switches and excessively late or annulled trains due to crew availability issues. As you know, with both increasing intermodal and carload volumes and a projected robust harvest fast approaching, railroad employee availability, together with sufficient equipment resourcing, is essential for safe, fluid rail service in support of the nation’s economic recovery. Given the challenges related to changing demand patterns and operating conditions, increased communication and transparency with rail shippers is especially important to ensure they have the information needed to plan their businesses and meet their own customers’ needs.”
Jack Hedge, Executive Director, Utah Inland Port Authority and formerly with the Port of Los Angeles, told AJOT that U.S. West Coast ports are also losing business to the Port of Prince Rupert, British Columbia for containers transported by the Canadian National Railway to and from Chicago and U.S. Midwest destinations: “Imports and exports transiting through the Canadian Port of Prince Rupert and Chicago pay $500 to $1000 less per move than by transporting containers to and from the West Coast ports and Chicago on the UP and BNSF.”
In an August 27th analysis, Trains Magazine reporter Bill Stephens, contrasted responses of the BNSF and UP to spikes in summer imports at the Ports of Los Angeles and Long Beach:
“BNSF Railway and Union Pacific are facing the same problem: An unprecedented spike in intermodal traffic that wants to move out of Southern California to Texas, Chicago, and elsewhere in the Midwest … The onslaught of containers and trailers that began in June and continues today followed record declines in April [and] in May due to the economic impact of the coronavirus pandemic…”
Stephens first cited the response of BNSF:
“As you can imagine, we quickly moved to position resources to be able to handle that increase.” BNSF Chief Operating Officer Katie Farmer told an Intermodal Association of North America webcast earlier this month. “BNSF recalled crews, fired up parked locomotives, and pulled miles of cars out of storage and sent them west as baretable trains. It added drayage support and parking spaces at its Los Angeles area terminals. And BNSF even flew terminal personnel from Chicago and elsewhere on the system to its terminals in Southern California …”
Stephens says UP did not move as fast: “UP took a much more measured approach, even as volume in June jumped 40% in Southern California from one week to the next. UP recalled crews and pulled locomotives and cars from storage, too. But UP did so at its own pace because railroads simply can’t handle such sudden swings in volume, UP Chief Operating Officer Jim Vena explained on the company’s earnings call in July.”
“ There was no way I was going to flow trains one way and have all the deadheads and extra costs. We took it on a systematic basis, and we’re fluid now,” Vena said …
Stephens added, “But UP also has used increasingly expensive surcharges in California – first $500 per container, then $1,500, and now a record $3,500, the Journal of Commerce reports – that tell potential low volume customers to hit the highway. This hurts UP’s partners, the intermodal marketing companies it relies on to fill its railroad-supplied containers.”
Stephens wondered about the different responses: “Why would BNSF move heaven and earth to capture volume while UP aimed to tightly manage its capacity?”
He says, “The most obvious answer is that UP’s response was straight out of the Precision Scheduled Railroading [PSR] playbook. Container traffic isn’t a high-margin business. Running empty trains, or repositioning empties, increases your costs and burns crews and locomotives while throwing your network out of balance.”
September 10, 2020
Danny Noonan at the US Open
‘Caddyshack’ star Michael O’Keefe will caddie at 2020 US Open
September 9, 2020 | 7:54pm
Danny Noonan is going to caddie at the U.S. Open next week.
Well, kind of.
Michael O’Keefe — the actor who played Danny Noonan, the young, impressionable caddie in “Caddyshack’’ — will carry a bag on Monday and Tuesday in practice rounds at the U.S. Open, The Post has learned.
He won’t be on the bag for Ty Webb — aka Chevy Chase. Danny Balin will have to do.
And it won’t be at Bushwood Country Club. Winged Foot will have to do.
Danny will be caddying for Danny — Danny Balin, a 17-year Westchester resident who’s the head pro at Fresh Meadow Country Club on Long Island.
“Whenever I would meet someone and say, ‘I’m Danny,’ they’d go, ‘Danny, do you do drugs?’ ’’ Balin told The Post on Wednesday, mimicking one of the most iconic lines in the movie.
So, Danny Noonan, on the 40th anniversary of “Caddyshack,’’ has a loop at the U.S. Open. Wouldn’t Judge Smails be proud?
The whole thing began when O’Keefe, now 65 and living in Ulster County, penned a tongue-in-cheek piece for golf.com soliciting any player playing in the U.S. Open to hire him to caddie.
O’Keefe, who grew up in Larchmont, caddied at Winged Foot in 1971 and 1972, right before he went west to pursue his acting career. His brother Bill has been a longtime Winged Foot member and is a past president of the club.
“I thought, ‘What if there’ a golfer out there who’s willing to give me a shot to carry their bag?’ ’’ O’Keefe told The Post. “It’s not like I’m going to mess anybody up. I do know the course. It could be fun.’’
O’Keefe’s initial motivation in trying to land a loop was to be able to initiate a donation fund for caddie relief to aid the caddies who were out of work during the pandemic.
When asked how realistic he thought his chances were of getting a bag for the Open, O’Keefe said, “I think it’s absolutely as big a long shot as Carl Spackler winning the Masters,’’ referring to the Bill Murray character who was the mentally unstable groundskeeper in the movie.
Well, next week, O’Keefe will be on the grounds with a golf bag over his shoulder, rubbing shoulders with the likes of Tiger Woods, Phil Mickelson, Dustin Johnson and Rory McIlroy.
“In my opinion, Michael O’Keefe is not going to be able to carry a staff bag around Winged Foot,’’ Balin said with a laugh.
Asked if he plans to bring a lighter carry bag for O’Keefe next week, Balin said, “No, he’ll be carrying the full tour bag. I’m going to put him to work.’’
Balin said he DVRed “Caddyshack’’ on Tuesday night even though he estimated he’s watched the movie “15 or 20 times.’’
“I’m going to have to watch it to get the one-liners down so I can give it to him,’’ Balin said. “Because I’m going to be all over him during this whole … stunt.’’
Michael Breed, the former Golf Channel instructional personality who now teaches at Trump Ferry Point, was the middle man to this transaction, reaching out to Balin, his fellow Met Area pro, and pitching the idea of O’Keefe caddying for him.
“I try to take this somewhat serious, so I would never do this during a tournament round,’’ Balin said. “But I was like, ‘Yeah this will be cool. Danny Noonan. Monday and Tuesday.’ It’ll be a fun couple of days. It’ll lighten the mood up.’’
The USGA plans to have some fun with this, making it a social media event on its platforms.
O’Keefe revealed that he didn’t even play golf as a kid, that he “lied at the Caddyshack audition when they asked if I could play and I said, ‘Yeah.’ ’’
As soon as he got the gig, O’Keefe said he went back to Winged Woot and, with help of then head pro, Tom Nieporte, got lessons “so when I got there [to film the movie] I at least had something that resembled a golf swing.’’
Now he comes full circle, minus the powerhouse movie cast.
“I was lucky to be in the same movie with Bill Murray, Chevy Chase, Rodney Dangerfield and Ted Knight, because those guys are comic legends,’’ he said. “They were just geniuses and they were at the height of their power — all four of them. Anybody can see that all I did was just grab onto their coattails and hang on.’’
O’Keefe, though, has gone on to have an accomplished acting career, which continues today — despite the fact that he’ll forever be known as Danny Noonan.
“Actors are always pigeon-holed, and I didn’t ever have a grudge about it,’’ he said. “But there was a part of me that was like, ‘Man, I wish somebody would know me for the other work that I’ve done, too.’ ’’
September 10, 2020
Danny Noonan at the US Open
‘Caddyshack’ star Michael O’Keefe will caddie at 2020 US Open
September 9, 2020 | 7:54pm
Danny Noonan is going to caddie at the U.S. Open next week.
Well, kind of.
Michael O’Keefe — the actor who played Danny Noonan, the young, impressionable caddie in “Caddyshack’’ — will carry a bag on Monday and Tuesday in practice rounds at the U.S. Open, The Post has learned.
He won’t be on the bag for Ty Webb — aka Chevy Chase. Danny Balin will have to do.
And it won’t be at Bushwood Country Club. Winged Foot will have to do.
Danny will be caddying for Danny — Danny Balin, a 17-year Westchester resident who’s the head pro at Fresh Meadow Country Club on Long Island.
“Whenever I would meet someone and say, ‘I’m Danny,’ they’d go, ‘Danny, do you do drugs?’ ’’ Balin told The Post on Wednesday, mimicking one of the most iconic lines in the movie.
So, Danny Noonan, on the 40th anniversary of “Caddyshack,’’ has a loop at the U.S. Open. Wouldn’t Judge Smails be proud?
The whole thing began when O’Keefe, now 65 and living in Ulster County, penned a tongue-in-cheek piece for golf.com soliciting any player playing in the U.S. Open to hire him to caddie.
O’Keefe, who grew up in Larchmont, caddied at Winged Foot in 1971 and 1972, right before he went west to pursue his acting career. His brother Bill has been a longtime Winged Foot member and is a past president of the club.
“I thought, ‘What if there’ a golfer out there who’s willing to give me a shot to carry their bag?’ ’’ O’Keefe told The Post. “It’s not like I’m going to mess anybody up. I do know the course. It could be fun.’’
O’Keefe’s initial motivation in trying to land a loop was to be able to initiate a donation fund for caddie relief to aid the caddies who were out of work during the pandemic.
When asked how realistic he thought his chances were of getting a bag for the Open, O’Keefe said, “I think it’s absolutely as big a long shot as Carl Spackler winning the Masters,’’ referring to the Bill Murray character who was the mentally unstable groundskeeper in the movie.
Well, next week, O’Keefe will be on the grounds with a golf bag over his shoulder, rubbing shoulders with the likes of Tiger Woods, Phil Mickelson, Dustin Johnson and Rory McIlroy.
“In my opinion, Michael O’Keefe is not going to be able to carry a staff bag around Winged Foot,’’ Balin said with a laugh.
Asked if he plans to bring a lighter carry bag for O’Keefe next week, Balin said, “No, he’ll be carrying the full tour bag. I’m going to put him to work.’’
Balin said he DVRed “Caddyshack’’ on Tuesday night even though he estimated he’s watched the movie “15 or 20 times.’’
“I’m going to have to watch it to get the one-liners down so I can give it to him,’’ Balin said. “Because I’m going to be all over him during this whole … stunt.’’
Michael Breed, the former Golf Channel instructional personality who now teaches at Trump Ferry Point, was the middle man to this transaction, reaching out to Balin, his fellow Met Area pro, and pitching the idea of O’Keefe caddying for him.
“I try to take this somewhat serious, so I would never do this during a tournament round,’’ Balin said. “But I was like, ‘Yeah this will be cool. Danny Noonan. Monday and Tuesday.’ It’ll be a fun couple of days. It’ll lighten the mood up.’’
The USGA plans to have some fun with this, making it a social media event on its platforms.
O’Keefe revealed that he didn’t even play golf as a kid, that he “lied at the Caddyshack audition when they asked if I could play and I said, ‘Yeah.’ ’’
As soon as he got the gig, O’Keefe said he went back to Winged Woot and, with help of then head pro, Tom Nieporte, got lessons “so when I got there [to film the movie] I at least had something that resembled a golf swing.’’
Now he comes full circle, minus the powerhouse movie cast.
“I was lucky to be in the same movie with Bill Murray, Chevy Chase, Rodney Dangerfield and Ted Knight, because those guys are comic legends,’’ he said. “They were just geniuses and they were at the height of their power — all four of them. Anybody can see that all I did was just grab onto their coattails and hang on.’’
O’Keefe, though, has gone on to have an accomplished acting career, which continues today — despite the fact that he’ll forever be known as Danny Noonan.
“Actors are always pigeon-holed, and I didn’t ever have a grudge about it,’’ he said. “But there was a part of me that was like, ‘Man, I wish somebody would know me for the other work that I’ve done, too.’ ’’
September 1, 2020
Manufacturing Strength
US Manufacturing Storms Ahead: ISM Smashes Expectations As New Orders Soar To 16 Year High
by Tyler Durden Tue, 09/01/2020 – 10:14
Following more rebounds in ‘soft’ manufacturing survey data in Europe and Asia (and LatAm – Brazil Manufacturing PMI exploded to a record in July), both ISM and Markit’s measures of US manufacturing sentiment were expected to continue their v-shaped recovery, and they did just that, when first the Markit PMI printed at 53.1, the highest level since January 2019, followed by the ISM Manufacturing, which smashed expectations, printing at 56.0, the highest since November 2018.
Just like last month, the ISM surge was driven largely by New Orders which spiked from 61.5 to 67.6, the highest level since Jan 2004, and while employment continued to rise, from 44.3 to 46.4, it remains in contraction territory.
Looking across the data, virtually all ISM components improved with the exception of Inventories which dipped for both producers and customers, a sign that destocking is taking place and which is actually bullish for even more future demand.
On ISM, Chair Timothy Fiore said that “The August PMI registered 56 percent, up 1.8 percentage points from the July reading of 54.2 percent. This figure indicates expansion in the overall economy for the fourth month in a row after a contraction in April, which ended a period of 131 consecutive months of growth. The New Orders Index registered 67.6 percent, an increase of 6.1 percentage points from the July reading of 61.5 percent. The Production Index registered 63.3 percent, up 1.2 percentage points compared to the July reading of 62.1 percent. The Backlog of Orders Index registered 54.6 percent, an increase of 2.8 percentage points compared to the July reading of 51.8 percent. The Employment Index registered 46.4 percent, an increase of 2.1 percentage points from the July reading of 44.3 percent. The Supplier Deliveries Index registered 58.2 percent, up 2.4 percentage points from the July figure of 55.8 percent.
Looking ahead, Fiore said : “Don’t see why this can’t continue, maybe not as strong, pretty good shape.”
And while the Fed is desperate to average inflation higher, the ISM confirmed that at the commodity level, virtually everything was more expensive:
Meanwhile, unlike last month, when the Markit PMI unexpectedly missed, this time there was convergence between the two series, with Markit noting that the strongest Mfg PMI since Jan 2019 “was underpinned by stronger new order growth as exports rose at the quickest pace for four years.”
The ISM Survey respondents were mixed even as optimism about the future seemed to prevail (except for airlines), although some expressed concerns about the ongoing covid crisis, while others noted that some weakness is starting to emerge:
- “Watching COVID-19 situations in Mexico, Brazil, Philippines [and] Hong Kong. High rates of COVID-19 surging. Currently, lines of supply no longer impacted by COVID-19 related events.” (Computer & Electronic Products)
- “Business is very good. Production cannot keep up with demand. Some upstream supply chains are starting to have issues with raw material and/or transportation availability.” (Chemical Products)
- “Airline industry continues to be under great pressure.” (Transportation Equipment)
- “Current sales to domestic markets are substantially stronger than forecasted. We expected a recession, but it did not turn out that way. Retail and trade customer markets are very strong and driving shortages in raw material suppliers, increasing supplier orders.” (Fabricated Metal Products)
- “Homebuilder business continues to be robust, with month-over-month gains continuing since May. Business remains favorable and will only be held back by supply issues across the entire industry.” (Wood Products)
- “We are seeing solid month-over-month order improvement in all manufacturing sectors such as electrical, auto and industrial goods. Looking to add a few factory operators.” (Plastics & Rubber Products)
- “Rolling production forecasts are increasing each week compared to prior forecast.” (Primary Metals)
- “[Production ramp-up] has been a struggle. We have started and stopped lines numerous times at all 18 of our manufacturing plants due to COVID-19 issues. Surprisingly, our direct suppliers have done an excellent job on shipping ingredients and packaging on time.” (Food, Beverage & Tobacco Products)
- “Strong demand from existing and new customers for our products, stable-to-decreasing input costs for our operations, and record numbers of new business opportunities from prospective customers’ reshoring measures. All trends continuing from the first quarter of fiscal year 2017.” (Electrical Equipment, Appliances & Components)
- “Capital equipment new orders have slowed again. Quoting is active. Many customers waiting for the fourth quarter to make any commitments.” (Machinery)
- “We are starting to see parts of our business rebound in August, while other parts remained weak. Some of our export business has come back for the first time since the start of COVID-19; however, domestic portfolios remain mixed.” (Paper Products)
On PMI, Chris Williamson, Chief Business Economist at IHS Markit notes, made an interesting observation: while new export orders surged, “new orders and export sales at smaller manufacturers continued to fall, highlighting an unbalanced recovery in favor of larger firms.“
“The manufacturing upturn gained further ground in August, adding to indications that the third quarter should see a strong rebound in production from the steep decline suffered in the second quarter.
“Encouragingly, new order inflows improved markedly, outpacing production to leave many companies struggling to produce enough goods to meet demand, often due to a lack of operating capacity. Backlogs of uncompleted work consequently rose at the fastest rate since the early months of 2019, encouraging increasing numbers of firms to take on more staff.
“Key to the upturn was a jump in new export orders, which rose at the fastest rate for four years, reflecting improving demand in many foreign markets, and benefitting larger companies in particular. Disappointingly, new orders and export sales at smaller manufacturers continued to fall, highlighting an unbalanced recovery in favor of larger firms.
Overall a strong report for the month of August which may end up being a problem for the broader economy as it eliminates the need for an urgent intervention by Congress to reboot the fiscal spending that expired on July 31.
September 1, 2020
Manufacturing Strength
US Manufacturing Storms Ahead: ISM Smashes Expectations As New Orders Soar To 16 Year High
by Tyler Durden Tue, 09/01/2020 – 10:14
Following more rebounds in ‘soft’ manufacturing survey data in Europe and Asia (and LatAm – Brazil Manufacturing PMI exploded to a record in July), both ISM and Markit’s measures of US manufacturing sentiment were expected to continue their v-shaped recovery, and they did just that, when first the Markit PMI printed at 53.1, the highest level since January 2019, followed by the ISM Manufacturing, which smashed expectations, printing at 56.0, the highest since November 2018.
Just like last month, the ISM surge was driven largely by New Orders which spiked from 61.5 to 67.6, the highest level since Jan 2004, and while employment continued to rise, from 44.3 to 46.4, it remains in contraction territory.
Looking across the data, virtually all ISM components improved with the exception of Inventories which dipped for both producers and customers, a sign that destocking is taking place and which is actually bullish for even more future demand.
On ISM, Chair Timothy Fiore said that “The August PMI registered 56 percent, up 1.8 percentage points from the July reading of 54.2 percent. This figure indicates expansion in the overall economy for the fourth month in a row after a contraction in April, which ended a period of 131 consecutive months of growth. The New Orders Index registered 67.6 percent, an increase of 6.1 percentage points from the July reading of 61.5 percent. The Production Index registered 63.3 percent, up 1.2 percentage points compared to the July reading of 62.1 percent. The Backlog of Orders Index registered 54.6 percent, an increase of 2.8 percentage points compared to the July reading of 51.8 percent. The Employment Index registered 46.4 percent, an increase of 2.1 percentage points from the July reading of 44.3 percent. The Supplier Deliveries Index registered 58.2 percent, up 2.4 percentage points from the July figure of 55.8 percent.
Looking ahead, Fiore said : “Don’t see why this can’t continue, maybe not as strong, pretty good shape.”
And while the Fed is desperate to average inflation higher, the ISM confirmed that at the commodity level, virtually everything was more expensive:
Meanwhile, unlike last month, when the Markit PMI unexpectedly missed, this time there was convergence between the two series, with Markit noting that the strongest Mfg PMI since Jan 2019 “was underpinned by stronger new order growth as exports rose at the quickest pace for four years.”
The ISM Survey respondents were mixed even as optimism about the future seemed to prevail (except for airlines), although some expressed concerns about the ongoing covid crisis, while others noted that some weakness is starting to emerge:
- “Watching COVID-19 situations in Mexico, Brazil, Philippines [and] Hong Kong. High rates of COVID-19 surging. Currently, lines of supply no longer impacted by COVID-19 related events.” (Computer & Electronic Products)
- “Business is very good. Production cannot keep up with demand. Some upstream supply chains are starting to have issues with raw material and/or transportation availability.” (Chemical Products)
- “Airline industry continues to be under great pressure.” (Transportation Equipment)
- “Current sales to domestic markets are substantially stronger than forecasted. We expected a recession, but it did not turn out that way. Retail and trade customer markets are very strong and driving shortages in raw material suppliers, increasing supplier orders.” (Fabricated Metal Products)
- “Homebuilder business continues to be robust, with month-over-month gains continuing since May. Business remains favorable and will only be held back by supply issues across the entire industry.” (Wood Products)
- “We are seeing solid month-over-month order improvement in all manufacturing sectors such as electrical, auto and industrial goods. Looking to add a few factory operators.” (Plastics & Rubber Products)
- “Rolling production forecasts are increasing each week compared to prior forecast.” (Primary Metals)
- “[Production ramp-up] has been a struggle. We have started and stopped lines numerous times at all 18 of our manufacturing plants due to COVID-19 issues. Surprisingly, our direct suppliers have done an excellent job on shipping ingredients and packaging on time.” (Food, Beverage & Tobacco Products)
- “Strong demand from existing and new customers for our products, stable-to-decreasing input costs for our operations, and record numbers of new business opportunities from prospective customers’ reshoring measures. All trends continuing from the first quarter of fiscal year 2017.” (Electrical Equipment, Appliances & Components)
- “Capital equipment new orders have slowed again. Quoting is active. Many customers waiting for the fourth quarter to make any commitments.” (Machinery)
- “We are starting to see parts of our business rebound in August, while other parts remained weak. Some of our export business has come back for the first time since the start of COVID-19; however, domestic portfolios remain mixed.” (Paper Products)
On PMI, Chris Williamson, Chief Business Economist at IHS Markit notes, made an interesting observation: while new export orders surged, “new orders and export sales at smaller manufacturers continued to fall, highlighting an unbalanced recovery in favor of larger firms.“
“The manufacturing upturn gained further ground in August, adding to indications that the third quarter should see a strong rebound in production from the steep decline suffered in the second quarter.
“Encouragingly, new order inflows improved markedly, outpacing production to leave many companies struggling to produce enough goods to meet demand, often due to a lack of operating capacity. Backlogs of uncompleted work consequently rose at the fastest rate since the early months of 2019, encouraging increasing numbers of firms to take on more staff.
“Key to the upturn was a jump in new export orders, which rose at the fastest rate for four years, reflecting improving demand in many foreign markets, and benefitting larger companies in particular. Disappointingly, new orders and export sales at smaller manufacturers continued to fall, highlighting an unbalanced recovery in favor of larger firms.
Overall a strong report for the month of August which may end up being a problem for the broader economy as it eliminates the need for an urgent intervention by Congress to reboot the fiscal spending that expired on July 31.
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