REUTERS
"US new home sales rebound to six-month high; rising mortgage rates a concern"
By Lucia Mutikani
April 23, 2024
Summary
* New home sales increase 8.8% in March
* Median house price falls 1.9% to $430,700 from year ago
WASHINGTON, April 23 (Reuters) - Sales of new U.S. single-family homes rebounded in March from February's downwardly revised level, drawing support from a persistent shortage of previously owned houses on the market, but momentum could be curbed by a resurgence in mortgage rates.
The report from the Commerce Department on Tuesday also showed the median house price jumped to a seven month-high from February, likely as fewer builders offered price cuts and sales shifted to higher priced homes.
Rising prices and mortgage rates could make housing even more unaffordable, especially for first-time buyers.
"New home sales have remained remarkably strong recently," said Oliver Allen, senior U.S. economist at Pantheon Macroeconomics.
"That said, the renewed rise in mortgage rates and dip in mortgage applications over the past couple of months means that new home sales will probably tread water at best in the near-term, while existing home sales will fall."
New home sales jumped 8.8% to a seasonally adjusted annual rate of 693,000 units last month, the highest level since September, the Commerce Department's Census Bureau said.
The sales pace for February was revised down to 637,000 units from the previously reported 662,000 units.
Economists polled by Reuters had forecast new home sales, which account for about 14% of U.S. home sales, would advance by a rate of 670,000 units.
New home sales are counted at the signing of a contract, making them a leading indicator of the housing market.
They, however, can be volatile on a month-to-month basis.
Sales increased 8.3% on a year-on-year basis in March.
Though the new housing market remains underpinned by the dearth of previously owned homes for sale, rising mortgage rates are taking a toll on affordability.
Data last week showed single-family housing starts and building permits declined in March.
Sentiment among single-family homebuilders was unchanged in April, with the National Association of Home Builders noting that "buyers are hesitating until they can better gauge where interest rates are headed."
The average rate on the popular 30-year fixed-rate mortgage has risen back above 7%, data from mortgage finance agency Freddie Mac showed, as strong reports on the labor market and inflation suggested the Federal Reserve could delay an anticipated interest rate cut this year.
A few economists doubt the U.S. central bank will lower borrowing costs in 2024.
BROAD INCREASE
New home sales rose in all four regions last month, with the Northeast posting a 27.8% surge.
Sales in the Midwest gained 5.3% and increased 7.7% in the densely populated South.
They vaulted 8.6% in the West.
Despite the weakness in permits last month, economists believed residential investment picked up in the first quarter after slowing considerably in the October-December period.
The government is scheduled to publish its snapshot of gross domestic product for the first quarter on Thursday.
Growth estimates for the period are as high as a 3.1% annualized rate.
The economy grew at a 3.4% pace in the fourth quarter.
Stocks on Wall Street were trading higher.
The dollar fell against a basket of currencies.
U.S. Treasury prices rose.
The median new house price increased 6% to $430,700 from February.
That was the highest level since last August.
Prices, however, slipped 1.9% from a year ago.
Most of the new homes sold last month were in the $300,000-$399,999 price range, followed by the $500,000-$749,000 price bracket.
Builders are constructing smaller and cheaper houses, but fewer of them are cutting prices.
The NAHB survey last week showed the share of builders cutting prices fell to 22% in April from 24% in March and 36% in December.
Fewer builders were also offering incentives to boost sales.
Overall house prices continue to rise because of the supply squeeze in the home resale market.
Data from mortgage finance agency Fannie Mae last week showed house prices increased 7.4% on a year-on-year basis in the first quarter compared to a 6.6% rise in the fourth quarter.
Fannie Mae upgraded its estimate for home price growth this year to 4.8% from 3.2% previously.
There were 477,000 new homes on the market at the end of March, up from 465,000 units in February.
At March's sales pace it would take 8.3 months to clear the supply of houses on the market, down from 8.8 months in February.
Houses under construction accounted for 59.1% of inventory.
Homes yet to be built made up 22.2% of supply, while completed houses accounted for 18.7%.
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Paul Simao
https://www.reuters.com/markets/us/us-n ... 024-04-23/
THE ECONOMY
Re: THE ECONOMY
REUTERS
"Tepid US core capital goods orders point to weak business equipment spending"
By Lucia Mutikani
April 24, 2024
Summary
* Core capital goods orders increase 0.2% in March
* Nondefense capital goods jump 5.4%; shipments drop 1.5%
* Durable goods orders rise 2.6%; shipments unchanged
WASHINGTON, April 24 (Reuters) - New orders for key U.S.-manufactured capital goods increased moderately in March and data for the prior month was revised lower, suggesting that business spending on equipment likely remained weak in the first quarter.
The report from the Commerce Department on Wednesday was published ahead of the release on Thursday of the government's advance estimate of gross domestic product for the January-March quarter.
The economy is expected to have delivered another quarter of strong performance, thanks to a resilient labor market that is driving consumer spending.
"From a narrow GDP accounting perspective, there should be no material impact on estimates for tomorrow's first-quarter GDP growth," said Conrad DeQuadros, senior economic advisor at Brean Capital.
"The positive takeaway from this is that the report suggests that weakness in manufacturing does not appear to be intensifying, but neither are there signs of recovery."
Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, rose 0.2% last month, the Commerce Department's Census Bureau said.
Data for February was revised lower to show these so-called core capital goods orders advancing 0.4% instead of 0.7% as previously reported.
March's increase was in line with economists' expectations.
Core capital goods orders gained 0.6% year-on-year in March.
Business spending on equipment has struggled in the aftermath of 525 basis points worth of interest rate hikes from the Federal Reserve since March 2022 to tame inflation.
Though the U.S. central bank is expected to start lowering rates this year, the timing of the first cut is uncertain as inflation remains elevated amid the economy's resilience.
The Fed has kept its policy rate in the 5.25%-5.50% range since July.
Stocks on Wall Street were trading higher.
The dollar rose against a basket of currencies.
U.S. Treasury prices fell.
WEAK SHIPMENTS
Core capital goods shipments rebounded 0.2% after falling 0.6% in February.
These shipments likely were unchanged when adjusted for inflation.
Non-defense capital goods orders surged 5.4% after rising 2.7% in February.
But shipments of these goods slumped 1.5% after increasing by a downwardly revised 2.4% in February.
Non-defense capital goods shipments, which go into the calculation of the business spending on equipment component in the gross domestic product report, were previously reported to have risen 2.6% in February.
"While underlying capital goods shipments rose last quarter, they were probably little changed in real terms and the plunge in non-defense aircraft shipments suggests that overall business equipment investment declined," said Stephen Brown, deputy chief North America economist at Capital Economics.
Economists polled by Reuters estimated that GDP increased at a 2.4% annualized rate in the first quarter.
The economy grew at a 3.4% pace in the October-December quarter.
Business spending on equipment likely contracted for a third straight quarter.
But manufacturing, which accounts for 10.4% of the economy, is stabilizing.
Orders for durable goods, items ranging from toasters to aircraft meant to last three years or more, rose 2.6% in March after a downwardly revised 0.7% advance in February.
An Institute for Supply Management survey this month showed manufacturing grew for the first time in 1-1/2 years in March.
Transportation dominated the rise in orders last month, with bookings shooting up 7.7% after rising 1.8% in February.
They were lifted by a 30.6% jump in civilian aircraft orders after increasing 15.6% in the prior month.
Boeing reported on its website that it had received 113 orders for commercial aircraft, a surge from just 15 in February.
Orders for motor vehicles and parts rose 2.1%.
Orders for computers and electronic products increased 0.8% last month, while those for electrical equipment, appliances and components gained 0.1%.
Orders for fabricated metals rose 0.2%.
But orders for primary metals fell 0.5%.
Shipments of durable goods were unchanged as were inventories.
Unfilled orders rebounded 0.4%.
"The big picture here is that investment remains weak, and this is unlikely to change dramatically while credit conditions remain restrictive, especially for smaller firms," said Oliver Allen, senior U.S. economist at Pantheon Macroeconomics.
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci
https://www.reuters.com/markets/us/us-c ... 024-04-24/
"Tepid US core capital goods orders point to weak business equipment spending"
By Lucia Mutikani
April 24, 2024
Summary
* Core capital goods orders increase 0.2% in March
* Nondefense capital goods jump 5.4%; shipments drop 1.5%
* Durable goods orders rise 2.6%; shipments unchanged
WASHINGTON, April 24 (Reuters) - New orders for key U.S.-manufactured capital goods increased moderately in March and data for the prior month was revised lower, suggesting that business spending on equipment likely remained weak in the first quarter.
The report from the Commerce Department on Wednesday was published ahead of the release on Thursday of the government's advance estimate of gross domestic product for the January-March quarter.
The economy is expected to have delivered another quarter of strong performance, thanks to a resilient labor market that is driving consumer spending.
"From a narrow GDP accounting perspective, there should be no material impact on estimates for tomorrow's first-quarter GDP growth," said Conrad DeQuadros, senior economic advisor at Brean Capital.
"The positive takeaway from this is that the report suggests that weakness in manufacturing does not appear to be intensifying, but neither are there signs of recovery."
Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, rose 0.2% last month, the Commerce Department's Census Bureau said.
Data for February was revised lower to show these so-called core capital goods orders advancing 0.4% instead of 0.7% as previously reported.
March's increase was in line with economists' expectations.
Core capital goods orders gained 0.6% year-on-year in March.
Business spending on equipment has struggled in the aftermath of 525 basis points worth of interest rate hikes from the Federal Reserve since March 2022 to tame inflation.
Though the U.S. central bank is expected to start lowering rates this year, the timing of the first cut is uncertain as inflation remains elevated amid the economy's resilience.
The Fed has kept its policy rate in the 5.25%-5.50% range since July.
Stocks on Wall Street were trading higher.
The dollar rose against a basket of currencies.
U.S. Treasury prices fell.
WEAK SHIPMENTS
Core capital goods shipments rebounded 0.2% after falling 0.6% in February.
These shipments likely were unchanged when adjusted for inflation.
Non-defense capital goods orders surged 5.4% after rising 2.7% in February.
But shipments of these goods slumped 1.5% after increasing by a downwardly revised 2.4% in February.
Non-defense capital goods shipments, which go into the calculation of the business spending on equipment component in the gross domestic product report, were previously reported to have risen 2.6% in February.
"While underlying capital goods shipments rose last quarter, they were probably little changed in real terms and the plunge in non-defense aircraft shipments suggests that overall business equipment investment declined," said Stephen Brown, deputy chief North America economist at Capital Economics.
Economists polled by Reuters estimated that GDP increased at a 2.4% annualized rate in the first quarter.
The economy grew at a 3.4% pace in the October-December quarter.
Business spending on equipment likely contracted for a third straight quarter.
But manufacturing, which accounts for 10.4% of the economy, is stabilizing.
Orders for durable goods, items ranging from toasters to aircraft meant to last three years or more, rose 2.6% in March after a downwardly revised 0.7% advance in February.
An Institute for Supply Management survey this month showed manufacturing grew for the first time in 1-1/2 years in March.
Transportation dominated the rise in orders last month, with bookings shooting up 7.7% after rising 1.8% in February.
They were lifted by a 30.6% jump in civilian aircraft orders after increasing 15.6% in the prior month.
Boeing reported on its website that it had received 113 orders for commercial aircraft, a surge from just 15 in February.
Orders for motor vehicles and parts rose 2.1%.
Orders for computers and electronic products increased 0.8% last month, while those for electrical equipment, appliances and components gained 0.1%.
Orders for fabricated metals rose 0.2%.
But orders for primary metals fell 0.5%.
Shipments of durable goods were unchanged as were inventories.
Unfilled orders rebounded 0.4%.
"The big picture here is that investment remains weak, and this is unlikely to change dramatically while credit conditions remain restrictive, especially for smaller firms," said Oliver Allen, senior U.S. economist at Pantheon Macroeconomics.
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci
https://www.reuters.com/markets/us/us-c ... 024-04-24/
Re: THE ECONOMY
REUTERS
"Solar firm SunPower to cut jobs, wind down most of residential direct sales"
By Reuters
April 24, 2024
April 24 (Reuters) - SunPower plans to reduce its workforce by about 1,000 people in the coming days and weeks and move away from most of its direct sales channel as part of a restructuring plan to lower costs, the solar firm said on Wednesday.
The development comes a day after the company disclosed it identified misstatements in its results for fiscal 2022.
SunPower said it will wind down its SunPower Residential Installation locations and close SunPower Direct sales, adding that installations would be handled by its Blue Raven Solar and independent dealers.
SunPower had acquired Blue Raven for $165 million in 2021.
The company had 586,250 residential customers as of Dec. 31, 2023.
JP Morgan analysts said in a note that the realignment would largely eliminate SunPower's direct sales channel and move the company towards third-party sales.
Companies providing solar power and storage solutions have seen rising inventory levels and metering reforms in California weigh on demand.
The metering reform lowered the tariff residential customers receive from the grid, dampening demand for solar setups.
SunPower, which had 3,800 full-time employees globally prior to the job cut announcement, expects charges of about $28 million related to severance benefits, early contract terminations and certain write-offs.
The steps are being taken to simplify the business structure, transitioning away from areas where the company has been unable to sustain profitable operations, and improving financial controls, SunPower's Principal Executive Officer Tom Werner said in a letter to employees.
Werner, who served as CEO for nearly two decades, was brought back from retirement earlier this year as executive chairman while CEO Peter Faricy left.
Its restructuring plans are likely to be completed by the second quarter.
Shares were down 1.2% in afternoon trade.
Reporting by Mrinalika Roy in Bengaluru, additional reporting by Sourasis Bose and Roshia Sabu; Editing by Shounak Dasgupta and Shailesh Kuber
https://www.reuters.com/business/energy ... 024-04-24/
"Solar firm SunPower to cut jobs, wind down most of residential direct sales"
By Reuters
April 24, 2024
April 24 (Reuters) - SunPower plans to reduce its workforce by about 1,000 people in the coming days and weeks and move away from most of its direct sales channel as part of a restructuring plan to lower costs, the solar firm said on Wednesday.
The development comes a day after the company disclosed it identified misstatements in its results for fiscal 2022.
SunPower said it will wind down its SunPower Residential Installation locations and close SunPower Direct sales, adding that installations would be handled by its Blue Raven Solar and independent dealers.
SunPower had acquired Blue Raven for $165 million in 2021.
The company had 586,250 residential customers as of Dec. 31, 2023.
JP Morgan analysts said in a note that the realignment would largely eliminate SunPower's direct sales channel and move the company towards third-party sales.
Companies providing solar power and storage solutions have seen rising inventory levels and metering reforms in California weigh on demand.
The metering reform lowered the tariff residential customers receive from the grid, dampening demand for solar setups.
SunPower, which had 3,800 full-time employees globally prior to the job cut announcement, expects charges of about $28 million related to severance benefits, early contract terminations and certain write-offs.
The steps are being taken to simplify the business structure, transitioning away from areas where the company has been unable to sustain profitable operations, and improving financial controls, SunPower's Principal Executive Officer Tom Werner said in a letter to employees.
Werner, who served as CEO for nearly two decades, was brought back from retirement earlier this year as executive chairman while CEO Peter Faricy left.
Its restructuring plans are likely to be completed by the second quarter.
Shares were down 1.2% in afternoon trade.
Reporting by Mrinalika Roy in Bengaluru, additional reporting by Sourasis Bose and Roshia Sabu; Editing by Shounak Dasgupta and Shailesh Kuber
https://www.reuters.com/business/energy ... 024-04-24/
Re: THE ECONOMY
REUTERS
"US closes $362 million loan to CelLink for vehicle wiring plant"
By Timothy Gardner
April 24, 2024
WASHINGTON, April 24 (Reuters) - The United States has closed a $362 million loan to CelLink Corp to help finance the construction of a plant in Texas to make components for electric vehicle assembly, the Department of Energy's loan programs office said on Wednesday.
WHY IT'S IMPORTANT
The financing from the government's Advanced Technology Vehicles Manufacturing loan program is for the development of lighter, more efficient flexible circuit wiring harnesses for automotive and other industries.
CelLink has developed a new method of connecting battery cells and packs, and transferring power and data across vehicle sensors, modules and electronic control units, according to the company.
Most wire harness production for the U.S. market is currently in low-cost labor countries due to the complex processes associated with traditional wire harness assembly, the Energy Department has said.
BY THE NUMBERS
Once operational, the plant is expected to produce enough wiring harnesses to support the manufacture of about 2.7 million EVs per year and more than 1,200 jobs.
KEY QUOTES
“EV sales have quadrupled since President (Joe) Biden took office, reaching historic levels just last year and projected to hit new records for 2024, underscoring why it's essential for the United States to harness manufacturing of all the key EV components," said U.S. Energy Secretary Jennifer Granholm.
WHAT'S NEXT
The Texas facility will eventually hold up to 25 manufacturing lines that will be brought online in stages over the next several years depending on demand.
The Biden administration last month slashed its target for electric vehicle adoption projecting that between 35% and 56% of all new vehicles will be electric between 2030 and 2032.
Auto workers in the political battleground state of Michigan had slammed the administration's tougher targets.
Reporting by Timothy Gardner; Editing by Kirsten Donovan
https://www.reuters.com/business/autos- ... 024-04-24/
"US closes $362 million loan to CelLink for vehicle wiring plant"
By Timothy Gardner
April 24, 2024
WASHINGTON, April 24 (Reuters) - The United States has closed a $362 million loan to CelLink Corp to help finance the construction of a plant in Texas to make components for electric vehicle assembly, the Department of Energy's loan programs office said on Wednesday.
WHY IT'S IMPORTANT
The financing from the government's Advanced Technology Vehicles Manufacturing loan program is for the development of lighter, more efficient flexible circuit wiring harnesses for automotive and other industries.
CelLink has developed a new method of connecting battery cells and packs, and transferring power and data across vehicle sensors, modules and electronic control units, according to the company.
Most wire harness production for the U.S. market is currently in low-cost labor countries due to the complex processes associated with traditional wire harness assembly, the Energy Department has said.
BY THE NUMBERS
Once operational, the plant is expected to produce enough wiring harnesses to support the manufacture of about 2.7 million EVs per year and more than 1,200 jobs.
KEY QUOTES
“EV sales have quadrupled since President (Joe) Biden took office, reaching historic levels just last year and projected to hit new records for 2024, underscoring why it's essential for the United States to harness manufacturing of all the key EV components," said U.S. Energy Secretary Jennifer Granholm.
WHAT'S NEXT
The Texas facility will eventually hold up to 25 manufacturing lines that will be brought online in stages over the next several years depending on demand.
The Biden administration last month slashed its target for electric vehicle adoption projecting that between 35% and 56% of all new vehicles will be electric between 2030 and 2032.
Auto workers in the political battleground state of Michigan had slammed the administration's tougher targets.
Reporting by Timothy Gardner; Editing by Kirsten Donovan
https://www.reuters.com/business/autos- ... 024-04-24/
Re: THE ECONOMY
REUTERS
"US weekly jobless claims unexpectedly fall"
By Reuters
April 25, 2024
WASHINGTON, April 25 (Reuters) - The number of Americans filing new claims for unemployment benefits unexpectedly fell last week, pointing to still tight labor market conditions.
Initial claims for state unemployment benefits dropped 5,000 to a seasonally adjusted 207,000 for the week ended April 20, the Labor Department said on Thursday.
Economists polled by Reuters had forecast 215,000 claims in the latest week.
Claims have been bouncing around in a 194,000-225,000 range this year.
Companies are hoarding workers after experiencing difficulties finding labor during and after the COVID-19 pandemic, and are enjoying higher profit gains because of strong pricing power.
Low layoffs are keeping wage growth elevated, sustaining consumer spending, which accounts for more than two-thirds of economic activity.
The number of people receiving benefits after an initial week of aid, a proxy for hiring, declined 15,000 to 1.781 million during the week ending April 13, the claims report showed.
The so-called continuing claims data covered the period during which the government surveyed households for April's unemployment rate.
Continuing claims fell between the March and April survey periods.
The unemployment rate slipped to 3.8% in March from 3.9% in February.
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama
https://www.reuters.com/markets/us/us-w ... 024-04-25/
"US weekly jobless claims unexpectedly fall"
By Reuters
April 25, 2024
WASHINGTON, April 25 (Reuters) - The number of Americans filing new claims for unemployment benefits unexpectedly fell last week, pointing to still tight labor market conditions.
Initial claims for state unemployment benefits dropped 5,000 to a seasonally adjusted 207,000 for the week ended April 20, the Labor Department said on Thursday.
Economists polled by Reuters had forecast 215,000 claims in the latest week.
Claims have been bouncing around in a 194,000-225,000 range this year.
Companies are hoarding workers after experiencing difficulties finding labor during and after the COVID-19 pandemic, and are enjoying higher profit gains because of strong pricing power.
Low layoffs are keeping wage growth elevated, sustaining consumer spending, which accounts for more than two-thirds of economic activity.
The number of people receiving benefits after an initial week of aid, a proxy for hiring, declined 15,000 to 1.781 million during the week ending April 13, the claims report showed.
The so-called continuing claims data covered the period during which the government surveyed households for April's unemployment rate.
Continuing claims fell between the March and April survey periods.
The unemployment rate slipped to 3.8% in March from 3.9% in February.
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama
https://www.reuters.com/markets/us/us-w ... 024-04-25/
Re: THE ECONOMY
REUTERS
"Imports hold back US economy in first quarter, inflation flares up"
By Lucia Mutikani
April 25, 2024
Summary
* First-quarter GDP increases at 1.6% rate
* Consumer spending slows, trade deficit widens
* Core PCE inflation accelerates at 3.7% pace
* Weekly jobless claims fall 5,000 to 207,000
WASHINGTON, April 25 (Reuters) - The U.S. economy grew at its slowest pace in nearly two years in the first quarter amid a surge in imports and small build-up of unsold goods at businesses, signs of solid demand that together with an acceleration in inflation reinforced expectations the Federal Reserve would not cut interest rates before September.
The cooler-than-expected growth reported by the Commerce Department in its snapshot of first-quarter gross domestic product on Thursday, which also reflected a downshift in government spending, exaggerated the moderation in economic activity.
Domestic demand, a better growth measure, was strong as consumer spending moderated slightly while business investment picked up and the housing recovery gained steam.
Trade and inventories are the most volatile GDP components, and are often subject to revision when the government updates its growth estimates.
Fed officials are expected to leave rates unchanged at the U.S. central bank's policy meeting next week.
"The Fed will likely see the GDP report as solid, while the upward surprise to inflation will support the central bank's case for waiting longer before cutting rates," said Daniel Vernazza, chief international economist at UniCredit.
GDP increased at a 1.6% annualized rate last quarter, the slowest pace since the second quarter of 2022, the Commerce Department's Bureau of Economic Analysis said.
Economists polled by Reuters had forecast GDP would rise at a 2.4% rate, with estimates ranging from a 1.0% pace to a 3.1% rate.
The economy grew at a 3.4% rate in the fourth quarter.
The first-quarter growth pace was below what U.S. central bank officials regard as the non-inflationary growth rate of 1.8%.
Excluding inventories, government spending and trade, the economy grew at a 3.1% rate after expanding at a 3.3% rate in the fourth quarter.
That also dispels the notion that government spending was fueling the economy.
The U.S. economy, which has outperformed the economies of other advanced nations, is being supported by a resilient labor market.
U.S. Treasury Secretary Janet Yellen told Reuters in an interview that she was focused on consumer and business spending.
"Those two elements of final demand came in line with last year's growth rate ... so this is the underlying strength of the U.S. economy that showed continuing robust strength and an economy firing on all cylinders."
Price pressures heated up by the most in a year, with a measure of inflation in the economy increasing at a 3.1% rate after rising at a 1.9% pace in the October-December quarter.
The personal consumption expenditures (PCE) price index excluding food and energy surged at a 3.7% rate after increasing at a 2.0% pace in the fourth quarter.
The so-called core PCE price index is one of the inflation measures tracked by the Fed for its 2% target.
Inflation was boosted by increases in the costs of services like transportation, insurance and housing, which offset a decline in goods prices such as motor vehicles and parts.
The strong readings pose an upside risk to March PCE inflation data due to be released on Friday, though much would depend on revisions to the January and February data.
The Fed has kept its benchmark overnight interest rate in the 5.25%-5.50% range since July.
It has raised the policy rate by 525 basis points since March of 2022.
Stocks on Wall Street were trading lower.
The dollar slipped against a basket of currencies.
U.S. Treasury yields rose.
TIGHT LABOR MARKET
A significant slowdown in the labor market is not yet evident.
The Labor Department's weekly jobless claims report showed initial claims for unemployment benefits fell 5,000 to a seasonally adjusted 207,000 in the week ending April 20.
The number of people receiving benefits after an initial week of aid, a proxy for hiring, declined 15,000 to 1.781 million during the week ending April 13.
The so-called continuing claims data covered the period during which the government surveyed households for April's unemployment rate.
Continuing claims fell between the March and April survey periods, implying the unemployment rate was likely unchanged after dipping to 3.8% last month from 3.9% in February.
Low layoffs are keeping wages high, sustaining consumer spending, which accounts for more than two-thirds of economic activity.
Consumer spending grew at a still-solid 2.5% rate, slowing from the 3.3% growth pace rate notched in the October-December quarter.
Spending was driven by healthcare, financial services and insurance, which more than offset a decline in goods, including motor vehicles and gasoline.
Spending is likely to gradually cool this year.
Lower-income households have depleted their COVID-19 pandemic savings and are largely relying on debt to fund purchases.
Recent data and comments from bank executives indicated that lower-income borrowers were increasingly struggling to keep up with their loan payments.
Though income increased at a $407.1 billion rate compared with the fourth quarter's $230.2 billion pace, the gains were eroded by inflation and higher taxes.
Income at the disposal of households after accounting for inflation and taxes rose at a 1.1% rate versus a 2.0% pace in the October-December quarter.
The saving rate decreased to 3.6% from 4.0% in the prior quarter.
"The recent stickiness in inflation lends downside risk to the near-term forecast for consumption as it could weigh on real disposable income," said Ryan Sweet, chief economist at Oxford Economics.
Inventories were whittled down, rising at a $35.4 billion rate after increasing at a $54.9 billion pace in the fourth quarter.
Inventories subtracted 0.35 percentage point from GDP growth.
Part of the spending was satiated with imports, which resulted in the trade deficit widening to $973.2 billion from $918.5 billion in the October-December quarter.
Trade chopped off 0.86 percentage point from GDP growth.
Government spending decelerated to a 1.2% rate from the 4.6% pace notched in the October-December quarter amid a decline in federal government outlays, mostly defense.
Business spending picked up as companies invested in artificial intelligence.
Investment in nonresidential structures like factories contracted for the first time in more than year as the boost from policies by the Biden administration to bring the production of semiconductor manufacturing back to the U.S. faded.
Residential investment recorded its fastest pace of growth since the fourth quarter of 2020, thanks to rising home sales and housing construction, despite higher mortgage rates.
"Don't underestimate this economy," said Shannon Grein, an economist at Well Fargo.
Reporting by Lucia Mutikani; additional reporting by Alessandra Galloni; Editing by Chizu Nomiyama, Andrea Ricci and Paul Simao
https://www.reuters.com/markets/us/us-e ... 024-04-25/
"Imports hold back US economy in first quarter, inflation flares up"
By Lucia Mutikani
April 25, 2024
Summary
* First-quarter GDP increases at 1.6% rate
* Consumer spending slows, trade deficit widens
* Core PCE inflation accelerates at 3.7% pace
* Weekly jobless claims fall 5,000 to 207,000
WASHINGTON, April 25 (Reuters) - The U.S. economy grew at its slowest pace in nearly two years in the first quarter amid a surge in imports and small build-up of unsold goods at businesses, signs of solid demand that together with an acceleration in inflation reinforced expectations the Federal Reserve would not cut interest rates before September.
The cooler-than-expected growth reported by the Commerce Department in its snapshot of first-quarter gross domestic product on Thursday, which also reflected a downshift in government spending, exaggerated the moderation in economic activity.
Domestic demand, a better growth measure, was strong as consumer spending moderated slightly while business investment picked up and the housing recovery gained steam.
Trade and inventories are the most volatile GDP components, and are often subject to revision when the government updates its growth estimates.
Fed officials are expected to leave rates unchanged at the U.S. central bank's policy meeting next week.
"The Fed will likely see the GDP report as solid, while the upward surprise to inflation will support the central bank's case for waiting longer before cutting rates," said Daniel Vernazza, chief international economist at UniCredit.
GDP increased at a 1.6% annualized rate last quarter, the slowest pace since the second quarter of 2022, the Commerce Department's Bureau of Economic Analysis said.
Economists polled by Reuters had forecast GDP would rise at a 2.4% rate, with estimates ranging from a 1.0% pace to a 3.1% rate.
The economy grew at a 3.4% rate in the fourth quarter.
The first-quarter growth pace was below what U.S. central bank officials regard as the non-inflationary growth rate of 1.8%.
Excluding inventories, government spending and trade, the economy grew at a 3.1% rate after expanding at a 3.3% rate in the fourth quarter.
That also dispels the notion that government spending was fueling the economy.
The U.S. economy, which has outperformed the economies of other advanced nations, is being supported by a resilient labor market.
U.S. Treasury Secretary Janet Yellen told Reuters in an interview that she was focused on consumer and business spending.
"Those two elements of final demand came in line with last year's growth rate ... so this is the underlying strength of the U.S. economy that showed continuing robust strength and an economy firing on all cylinders."
Price pressures heated up by the most in a year, with a measure of inflation in the economy increasing at a 3.1% rate after rising at a 1.9% pace in the October-December quarter.
The personal consumption expenditures (PCE) price index excluding food and energy surged at a 3.7% rate after increasing at a 2.0% pace in the fourth quarter.
The so-called core PCE price index is one of the inflation measures tracked by the Fed for its 2% target.
Inflation was boosted by increases in the costs of services like transportation, insurance and housing, which offset a decline in goods prices such as motor vehicles and parts.
The strong readings pose an upside risk to March PCE inflation data due to be released on Friday, though much would depend on revisions to the January and February data.
The Fed has kept its benchmark overnight interest rate in the 5.25%-5.50% range since July.
It has raised the policy rate by 525 basis points since March of 2022.
Stocks on Wall Street were trading lower.
The dollar slipped against a basket of currencies.
U.S. Treasury yields rose.
TIGHT LABOR MARKET
A significant slowdown in the labor market is not yet evident.
The Labor Department's weekly jobless claims report showed initial claims for unemployment benefits fell 5,000 to a seasonally adjusted 207,000 in the week ending April 20.
The number of people receiving benefits after an initial week of aid, a proxy for hiring, declined 15,000 to 1.781 million during the week ending April 13.
The so-called continuing claims data covered the period during which the government surveyed households for April's unemployment rate.
Continuing claims fell between the March and April survey periods, implying the unemployment rate was likely unchanged after dipping to 3.8% last month from 3.9% in February.
Low layoffs are keeping wages high, sustaining consumer spending, which accounts for more than two-thirds of economic activity.
Consumer spending grew at a still-solid 2.5% rate, slowing from the 3.3% growth pace rate notched in the October-December quarter.
Spending was driven by healthcare, financial services and insurance, which more than offset a decline in goods, including motor vehicles and gasoline.
Spending is likely to gradually cool this year.
Lower-income households have depleted their COVID-19 pandemic savings and are largely relying on debt to fund purchases.
Recent data and comments from bank executives indicated that lower-income borrowers were increasingly struggling to keep up with their loan payments.
Though income increased at a $407.1 billion rate compared with the fourth quarter's $230.2 billion pace, the gains were eroded by inflation and higher taxes.
Income at the disposal of households after accounting for inflation and taxes rose at a 1.1% rate versus a 2.0% pace in the October-December quarter.
The saving rate decreased to 3.6% from 4.0% in the prior quarter.
"The recent stickiness in inflation lends downside risk to the near-term forecast for consumption as it could weigh on real disposable income," said Ryan Sweet, chief economist at Oxford Economics.
Inventories were whittled down, rising at a $35.4 billion rate after increasing at a $54.9 billion pace in the fourth quarter.
Inventories subtracted 0.35 percentage point from GDP growth.
Part of the spending was satiated with imports, which resulted in the trade deficit widening to $973.2 billion from $918.5 billion in the October-December quarter.
Trade chopped off 0.86 percentage point from GDP growth.
Government spending decelerated to a 1.2% rate from the 4.6% pace notched in the October-December quarter amid a decline in federal government outlays, mostly defense.
Business spending picked up as companies invested in artificial intelligence.
Investment in nonresidential structures like factories contracted for the first time in more than year as the boost from policies by the Biden administration to bring the production of semiconductor manufacturing back to the U.S. faded.
Residential investment recorded its fastest pace of growth since the fourth quarter of 2020, thanks to rising home sales and housing construction, despite higher mortgage rates.
"Don't underestimate this economy," said Shannon Grein, an economist at Well Fargo.
Reporting by Lucia Mutikani; additional reporting by Alessandra Galloni; Editing by Chizu Nomiyama, Andrea Ricci and Paul Simao
https://www.reuters.com/markets/us/us-e ... 024-04-25/
Re: THE ECONOMY
REUTERS
"Yellen says US economy strong, all options open on China's overcapacity"
By Alessandra Galloni, David Lawder and Andrea Shalal
April 25, 2024
Summary
* Yellen: Q1 GDP data may be revised up; spending, investment strong
* Inflation to continue to ebb despite Q1 flare-up, Yellen says
* Yellen: tapping interest on Russian assets can win G7 support
WASHINGTON, April 25 (Reuters) - U.S. Treasury Secretary Janet Yellen told Reuters on Thursday that U.S. economic growth was likely stronger than suggested by weaker-than-expected data on first-quarter output and said the Biden administration was keeping all options open to respond to threats from China's excess industrial capacity.
In a wide-ranging Reuters Next interview, Yellen also said that a U.S. proposal for using the interest earnings from $300 billion in frozen Russian assets to aid Ukraine could win broad support from G7 allies.
Yellen said U.S. GDP growth for the first quarter could be revised higher after more data is in hand and inflation will ease to more normal levels after a clutch of "peculiar" factors held the economy to its weakest showing in nearly two years.
"The U.S. economy continues to perform very, very well," Yellen said in an interview with Reuters, responding to the Commerce Department's report showing that U.S. gross domestic product grew at a 1.6% annualized rate last quarter.
That was below the 2.4% estimated by economists and less than half the pace in the fourth quarter of 2023 - thanks to substantial drags from trade and private inventories.
The report also showed a worrisome surge in inflation, with the personal consumption expenditures (PCE) price index excluding food and energy rising at a 3.7% annual rate after a 2.0% pace in the fourth quarter of 2023.
Yellen downplayed the inflation jump and said she did not see that as indicating that unemployment needed to increase or other areas of the economy needed to cool to return inflation to the Fed's 2% target.
"The fundamentals here are in line with inflation continuing back down to normal levels," Yellen said.
Fighting inflation remained President Joe Biden's top priority, Yellen said, highlighting his administration's efforts to reduce healthcare, energy and housing costs.
But Biden, a Democrat, has struggled to translate U.S. economic strength into voter support ahead of the November presidential election.
Republican challenger Donald Trump led Biden by seven percentage points in a recent Reuters/Ipsos poll when voters were asked which candidate would be better for the economy.
"What I focus on most is the strength of consumer spending and investment spending," Yellen said.
"Those two elements of final demand came in in line with last year's growth rate ... so this is the underlying strength of the U.S. economy that showed continuing robust strength."
"The headline figure was off a little bit but for reasons that are peculiar and not really indicative of underlying strength," she added.
Indeed, a number of private economists said the GDP data likely overstated any weakness in an economy that had grown at above the rate most see as its potential for nearly two years, despite aggressive interest rate hikes over that span by the U.S. Federal Reserve aimed at quashing inflation.
Yellen said dollar strength has been another byproduct of U.S. growth and tight monetary policy.
She acknowledged that this has put some pressure on other countries, but said currency interventions should occur only in "very rare and exceptional circumstances," when markets are disorderly with excessive volatility.
She declined to comment on the Japanese yen's value when asked whether it was out of line with fundamentals.
Last week, the U.S., Japan and South Korea agreed to consult closely on currencies, acknowledging concerns from Tokyo and Seoul over their currencies recent sharp declines against the dollar.
CHINA OVERCAPACITY
Yellen told Reuters no option was "off the table" for dealing with one threat to the U.S. economy - overproduction in China, which was hurting manufacturers in numerous countries.
She said that while Chinese policymakers have acknowledged they have a problem with excess industrial capacity for electric vehicles, solar panels and other clean energy goods, they need to address it.
The issue was "discussed intensively" last week at a U.S.-China meeting on the sidelines of the International Monetary Fund and World Bank spring meetings in Washington, she said.
Asked about potential for new tariffs or other actions to protect U.S. producers from an expected flood of Chinese exports, Yellen said she would not eliminate any options as a possible response.
She said Chinese overproduction threatens the viability of manufacturers in the U.S., Europe, Japan, Mexico and India but the problem won't be resolved "in a day or a week."
"So it's important that China recognize the concern and begin to act to address it," Yellen said.
"But we don't want our industry wiped out in the meantime, so I wouldn't want to take anything off the table."
The Biden administration is completing a review of the "Section 301" unfair trade tariffs on Chinese imports imposed by former President Donald Trump in 2018, which U.S. officials have said could lead to higher tariffs on some products.
Biden last week called for the review to triple the Section 301 duties on Chinese steel to 25%.
U.S. Trade Representative Katherine Tai also told senators that the U.S. needed to take "early action, decisive action" to protect the fledgling American EV sector from Chinese imports.
U.S. tariffs on Chinese vehicle imports are now about 27.5%, and few Chinese EVs are sold in the U.S. at the moment.
RUSSIAN ASSET PLANS
Yellen said that a proposal under discussion by finance ministers from the Group of Seven (G7) industrial democracies to harness earnings from frozen Russian central bank assets to aid Ukraine can be achieved without an outright confiscation of those assets, allaying the concerns of some countries.
Yellen welcomed what she called a "very constructive step" taken by the European Union to segregate the proceeds from assets held by Brussels-based Euroclear and transfer them to Ukraine, noting future interest could also be pulled forward to back loans to Ukraine.
"This is an approach that could be broadly supported by countries that are concerned about the seizure of assets, and some of the interest could be brought forward through, for example, a loan," Yellen said.
Yellen said the approach was among several options being discussed by G7 countries ahead of a leaders summit in June, adding, "it certainly belongs on the list."
The U.S. approach, led by deputy national security adviser Daleep Singh, is gaining momentum among the G7 nations, two officials from the group told Reuters earlier on Thursday.
Most of the Russian assets held by Euroclear have now been converted to cash, Yellen told Reuters. G7 officials say the assets could generate around $5 billion a year in interest.
Reporting by Alessandra Galloni, David Lawder and Andrea Shalal; Additional reporting by Dan Burns and Lindsay Dunsmuir; Writing by David Lawder, Andrea Shalal and Dan Burns; Editing by Andrea Ricci
https://www.reuters.com/markets/us/yell ... 024-04-25/
"Yellen says US economy strong, all options open on China's overcapacity"
By Alessandra Galloni, David Lawder and Andrea Shalal
April 25, 2024
Summary
* Yellen: Q1 GDP data may be revised up; spending, investment strong
* Inflation to continue to ebb despite Q1 flare-up, Yellen says
* Yellen: tapping interest on Russian assets can win G7 support
WASHINGTON, April 25 (Reuters) - U.S. Treasury Secretary Janet Yellen told Reuters on Thursday that U.S. economic growth was likely stronger than suggested by weaker-than-expected data on first-quarter output and said the Biden administration was keeping all options open to respond to threats from China's excess industrial capacity.
In a wide-ranging Reuters Next interview, Yellen also said that a U.S. proposal for using the interest earnings from $300 billion in frozen Russian assets to aid Ukraine could win broad support from G7 allies.
Yellen said U.S. GDP growth for the first quarter could be revised higher after more data is in hand and inflation will ease to more normal levels after a clutch of "peculiar" factors held the economy to its weakest showing in nearly two years.
"The U.S. economy continues to perform very, very well," Yellen said in an interview with Reuters, responding to the Commerce Department's report showing that U.S. gross domestic product grew at a 1.6% annualized rate last quarter.
That was below the 2.4% estimated by economists and less than half the pace in the fourth quarter of 2023 - thanks to substantial drags from trade and private inventories.
The report also showed a worrisome surge in inflation, with the personal consumption expenditures (PCE) price index excluding food and energy rising at a 3.7% annual rate after a 2.0% pace in the fourth quarter of 2023.
Yellen downplayed the inflation jump and said she did not see that as indicating that unemployment needed to increase or other areas of the economy needed to cool to return inflation to the Fed's 2% target.
"The fundamentals here are in line with inflation continuing back down to normal levels," Yellen said.
Fighting inflation remained President Joe Biden's top priority, Yellen said, highlighting his administration's efforts to reduce healthcare, energy and housing costs.
But Biden, a Democrat, has struggled to translate U.S. economic strength into voter support ahead of the November presidential election.
Republican challenger Donald Trump led Biden by seven percentage points in a recent Reuters/Ipsos poll when voters were asked which candidate would be better for the economy.
"What I focus on most is the strength of consumer spending and investment spending," Yellen said.
"Those two elements of final demand came in in line with last year's growth rate ... so this is the underlying strength of the U.S. economy that showed continuing robust strength."
"The headline figure was off a little bit but for reasons that are peculiar and not really indicative of underlying strength," she added.
Indeed, a number of private economists said the GDP data likely overstated any weakness in an economy that had grown at above the rate most see as its potential for nearly two years, despite aggressive interest rate hikes over that span by the U.S. Federal Reserve aimed at quashing inflation.
Yellen said dollar strength has been another byproduct of U.S. growth and tight monetary policy.
She acknowledged that this has put some pressure on other countries, but said currency interventions should occur only in "very rare and exceptional circumstances," when markets are disorderly with excessive volatility.
She declined to comment on the Japanese yen's value when asked whether it was out of line with fundamentals.
Last week, the U.S., Japan and South Korea agreed to consult closely on currencies, acknowledging concerns from Tokyo and Seoul over their currencies recent sharp declines against the dollar.
CHINA OVERCAPACITY
Yellen told Reuters no option was "off the table" for dealing with one threat to the U.S. economy - overproduction in China, which was hurting manufacturers in numerous countries.
She said that while Chinese policymakers have acknowledged they have a problem with excess industrial capacity for electric vehicles, solar panels and other clean energy goods, they need to address it.
The issue was "discussed intensively" last week at a U.S.-China meeting on the sidelines of the International Monetary Fund and World Bank spring meetings in Washington, she said.
Asked about potential for new tariffs or other actions to protect U.S. producers from an expected flood of Chinese exports, Yellen said she would not eliminate any options as a possible response.
She said Chinese overproduction threatens the viability of manufacturers in the U.S., Europe, Japan, Mexico and India but the problem won't be resolved "in a day or a week."
"So it's important that China recognize the concern and begin to act to address it," Yellen said.
"But we don't want our industry wiped out in the meantime, so I wouldn't want to take anything off the table."
The Biden administration is completing a review of the "Section 301" unfair trade tariffs on Chinese imports imposed by former President Donald Trump in 2018, which U.S. officials have said could lead to higher tariffs on some products.
Biden last week called for the review to triple the Section 301 duties on Chinese steel to 25%.
U.S. Trade Representative Katherine Tai also told senators that the U.S. needed to take "early action, decisive action" to protect the fledgling American EV sector from Chinese imports.
U.S. tariffs on Chinese vehicle imports are now about 27.5%, and few Chinese EVs are sold in the U.S. at the moment.
RUSSIAN ASSET PLANS
Yellen said that a proposal under discussion by finance ministers from the Group of Seven (G7) industrial democracies to harness earnings from frozen Russian central bank assets to aid Ukraine can be achieved without an outright confiscation of those assets, allaying the concerns of some countries.
Yellen welcomed what she called a "very constructive step" taken by the European Union to segregate the proceeds from assets held by Brussels-based Euroclear and transfer them to Ukraine, noting future interest could also be pulled forward to back loans to Ukraine.
"This is an approach that could be broadly supported by countries that are concerned about the seizure of assets, and some of the interest could be brought forward through, for example, a loan," Yellen said.
Yellen said the approach was among several options being discussed by G7 countries ahead of a leaders summit in June, adding, "it certainly belongs on the list."
The U.S. approach, led by deputy national security adviser Daleep Singh, is gaining momentum among the G7 nations, two officials from the group told Reuters earlier on Thursday.
Most of the Russian assets held by Euroclear have now been converted to cash, Yellen told Reuters. G7 officials say the assets could generate around $5 billion a year in interest.
Reporting by Alessandra Galloni, David Lawder and Andrea Shalal; Additional reporting by Dan Burns and Lindsay Dunsmuir; Writing by David Lawder, Andrea Shalal and Dan Burns; Editing by Andrea Ricci
https://www.reuters.com/markets/us/yell ... 024-04-25/
Re: THE ECONOMY
REUTERS
"Intel forecasts second-quarter revenue below estimates, shares fall"
By Arsheeya Bajwa and Max A. Cherney
April 25, 2024
April 25 (Reuters) - Intel forecast second-quarter revenue and profit below market estimates on Thursday, as it faces weak demand for its traditional data center and personal computer chips amid efforts to build its contract manufacturing business.
Shares of the Santa Clara, California-based company fell close to 6% in extended trading.
The company expects second-quarter revenue in the range of $12.5 billion to $13.5 billion, compared with analysts' average estimate of $13.57 billion, according to LSEG data.
Intel forecast second-quarter adjusted earnings of 10 cents per share, also below expectations.
Enterprises have prioritized spending on advanced and speedy AI server chips, hurting demand for Intel's central processing units (CPUs), which have been the mainstay chip powering data centers for decades.
According to analysts, surging demand for graphics processing units (GPUs) useful for AI applications has also reduced the appetite for CPUs, which are Intel's main product.
Intel's total revenue of $12.72 billion in the first quarter marginally missed expectations of $12.78 billion.
Sales at its data center business rose 5% to $3 billion during the period.
Nvidia's powerful GPUs dominate the AI market, as large and small companies have sought to acquire tens of billions of dollars worth of its processors.
Still, constrained supply for these advanced and speedy processors has left Intel with the opportunity to capitalize on the towering demand, though it is a late entrant in the market.
Intel forecasts more than $500 million in revenue from its Gaudi AI chips this year, CEO Patrick Gelsinger told Reuters on Thursday.
Preliminary results from IDC showed the PC market returned to growth in the first quarter after about two years of declines.
Revenue from the client computing segment, which houses Intel's PC chips, rose 31% during the quarter.
Intel's contract manufacturing business, or foundry, is working to catch industry leader TSMC, but its profitability is years away.
Revenue from the foundry business fell 10% in the first quarter.
The company recorded an adjusted gross margin of 45.1% for the first quarter, compared with analysts' expectation of 44.3%.
Inter-segment eliminations of $4.4 billion were made to prevent double-counting of revenue.
Reporting by Arsheeya Bajwa in Bengaluru; Editing by Shilpi Majumdar
https://www.reuters.com/technology/inte ... 024-04-25/
"Intel forecasts second-quarter revenue below estimates, shares fall"
By Arsheeya Bajwa and Max A. Cherney
April 25, 2024
April 25 (Reuters) - Intel forecast second-quarter revenue and profit below market estimates on Thursday, as it faces weak demand for its traditional data center and personal computer chips amid efforts to build its contract manufacturing business.
Shares of the Santa Clara, California-based company fell close to 6% in extended trading.
The company expects second-quarter revenue in the range of $12.5 billion to $13.5 billion, compared with analysts' average estimate of $13.57 billion, according to LSEG data.
Intel forecast second-quarter adjusted earnings of 10 cents per share, also below expectations.
Enterprises have prioritized spending on advanced and speedy AI server chips, hurting demand for Intel's central processing units (CPUs), which have been the mainstay chip powering data centers for decades.
According to analysts, surging demand for graphics processing units (GPUs) useful for AI applications has also reduced the appetite for CPUs, which are Intel's main product.
Intel's total revenue of $12.72 billion in the first quarter marginally missed expectations of $12.78 billion.
Sales at its data center business rose 5% to $3 billion during the period.
Nvidia's powerful GPUs dominate the AI market, as large and small companies have sought to acquire tens of billions of dollars worth of its processors.
Still, constrained supply for these advanced and speedy processors has left Intel with the opportunity to capitalize on the towering demand, though it is a late entrant in the market.
Intel forecasts more than $500 million in revenue from its Gaudi AI chips this year, CEO Patrick Gelsinger told Reuters on Thursday.
Preliminary results from IDC showed the PC market returned to growth in the first quarter after about two years of declines.
Revenue from the client computing segment, which houses Intel's PC chips, rose 31% during the quarter.
Intel's contract manufacturing business, or foundry, is working to catch industry leader TSMC, but its profitability is years away.
Revenue from the foundry business fell 10% in the first quarter.
The company recorded an adjusted gross margin of 45.1% for the first quarter, compared with analysts' expectation of 44.3%.
Inter-segment eliminations of $4.4 billion were made to prevent double-counting of revenue.
Reporting by Arsheeya Bajwa in Bengaluru; Editing by Shilpi Majumdar
https://www.reuters.com/technology/inte ... 024-04-25/
Re: THE ECONOMY
REUTERS
"Biden announces preliminary deal with Micron for up to $6.14 bln in chip grants"
By Jarrett Renshaw and Nandita Bose
April 25, 2024
WASHINGTON, April 25 (Reuters) - U.S. President Joe Biden traveled to Syracuse, New York, on Thursday and announced a preliminary agreement with memory chip maker Micron Technology for up to $6.14 billion in subsidies for two chip factories.
The agreement signed by the U.S. Commerce Department will fund facilities in New York and Idaho under the 2022 CHIPS and Science Act, which aims to boost domestic manufacturing of chips and reduce reliance on supplies from China and Taiwan.
Biden said the United States used to have 40% of the chips market but over time production moved outside the country and the pandemic exposed weaknesses in the U.S. supply chain that hurt critical industries.
"I'm determined that I'm never going to let us be vulnerable to wait lines again, what is essential is we're going to make it here in America together," Biden said.
The Commerce Department said the federal grants would support the construction of a fabrication plant, or fab, in Clay, New York, a first step toward Micron's plans to invest about $100 billion in New York and create 13,500 jobs.
The grants also provide initial funding for a facility in Boise, Idaho, unlocking a planned $25 billion investment in a fab to be co-located with Micron's research and development facilities there and should create 6,500 jobs, Commerce said.
Micron's investment will be the "largest private investment in New York and Idaho's history," and will create over 70,000 jobs, including 20,000 direct construction and manufacturing jobs and tens of thousands of indirect jobs," the White House said.
Biden, who is running for re-election in November's presidential election, used his visit to Syracuse to tout his administration's efforts to revitalize U.S. manufacturing and strengthen national security.
"American manufacturing is back, new factories are going up all across the country, and communities like Syracuse are writing the great American comeback story," Biden said.
In the evening, the president will speak at a campaign event in Westchester County, New York.
Biden signed the $52.7 billion CHIPS bill in August 2022 to subsidize U.S. semiconductor production and research.
Semiconductors were invented in the United States, but domestic companies produce only about 10% of the world's chips and none of the most advanced ones.
The White House said Thursday's announcement also included at least $40 million in funds for training and workforce development, as well as creation of four more workforce hubs in upstate New York, Milwaukee, Philadelphia and Michigan.
Under the agreement, Micron committed to providing affordable high-quality childcare for its workers across its facilities.
The company also affirmed "workers' rights to organize, to share feedback without fear of reprisal, and to collectively bargain," the White House said.
Reporting by Jarrret Renshaw, Nandita Bose and Andrea Shalal; Editing by Tom Hogue and Diane Craft
https://www.reuters.com/technology/bide ... 024-04-25/
"Biden announces preliminary deal with Micron for up to $6.14 bln in chip grants"
By Jarrett Renshaw and Nandita Bose
April 25, 2024
WASHINGTON, April 25 (Reuters) - U.S. President Joe Biden traveled to Syracuse, New York, on Thursday and announced a preliminary agreement with memory chip maker Micron Technology for up to $6.14 billion in subsidies for two chip factories.
The agreement signed by the U.S. Commerce Department will fund facilities in New York and Idaho under the 2022 CHIPS and Science Act, which aims to boost domestic manufacturing of chips and reduce reliance on supplies from China and Taiwan.
Biden said the United States used to have 40% of the chips market but over time production moved outside the country and the pandemic exposed weaknesses in the U.S. supply chain that hurt critical industries.
"I'm determined that I'm never going to let us be vulnerable to wait lines again, what is essential is we're going to make it here in America together," Biden said.
The Commerce Department said the federal grants would support the construction of a fabrication plant, or fab, in Clay, New York, a first step toward Micron's plans to invest about $100 billion in New York and create 13,500 jobs.
The grants also provide initial funding for a facility in Boise, Idaho, unlocking a planned $25 billion investment in a fab to be co-located with Micron's research and development facilities there and should create 6,500 jobs, Commerce said.
Micron's investment will be the "largest private investment in New York and Idaho's history," and will create over 70,000 jobs, including 20,000 direct construction and manufacturing jobs and tens of thousands of indirect jobs," the White House said.
Biden, who is running for re-election in November's presidential election, used his visit to Syracuse to tout his administration's efforts to revitalize U.S. manufacturing and strengthen national security.
"American manufacturing is back, new factories are going up all across the country, and communities like Syracuse are writing the great American comeback story," Biden said.
In the evening, the president will speak at a campaign event in Westchester County, New York.
Biden signed the $52.7 billion CHIPS bill in August 2022 to subsidize U.S. semiconductor production and research.
Semiconductors were invented in the United States, but domestic companies produce only about 10% of the world's chips and none of the most advanced ones.
The White House said Thursday's announcement also included at least $40 million in funds for training and workforce development, as well as creation of four more workforce hubs in upstate New York, Milwaukee, Philadelphia and Michigan.
Under the agreement, Micron committed to providing affordable high-quality childcare for its workers across its facilities.
The company also affirmed "workers' rights to organize, to share feedback without fear of reprisal, and to collectively bargain," the White House said.
Reporting by Jarrret Renshaw, Nandita Bose and Andrea Shalal; Editing by Tom Hogue and Diane Craft
https://www.reuters.com/technology/bide ... 024-04-25/
Re: THE ECONOMY
"Biden in Syracuse to celebrate Micron's $6.1 billion CHIPS grant - President's visit comes after two law enforcement officers were slain in a shootout in Salina, eight miles from Micron's campus"
By Larry Rulison, Albany, New York Times Union
April 25, 2024
ALBANY – President Joe Biden landed in Syracuse on Thursday to celebrate a $6.1 billion grant awarded to Micron Technology, the memory chipmaker that is building a $100 billion manufacturing campus in the town of Clay, just north of the city.
Biden was joined by Gov. Kathy Hochul and U.S. Senate Majority Leader Charles Schumer of New York at the Milton J. Rubenstein Museum of Science & Technology in Syracuse's Armory Square.
In addition to touting the Micron award, being awarded through the $52 billion CHIPS and Science Act, the president was planning to meet with the families of the two police officers killed in a shootout on April 14 in the town of Salina, about six miles north of where Biden was speaking.
Funerals for the two men, Lt. Michael Hoosock of the Onondaga County Sheriff's Department, and Syracuse police Officer Michael Jensen, were held last week.
Both departments and their members were still reeling from the tragedy.
As a result, State Troopers were tasked with providing security for the president's visit instead of local law enforcement, which criticized the White House for not rescheduling the trip.
The $6.1 billion grant Micron will receive is coming from the $52 billion CHIPS and Science Act, the chip industry subsidy program that was authored by Schumer and designed to revitalize the domestic chip sector in the face of China seeking to dominate the industry and its supply chain.
Micron's award, which also includes $7 billion in federal loans, is the third CHIPS grant to be announced for large manufacturers.
The Micron event in Syracuse comes a month after Schumer and Hochul celebrated a $1.5 billion CHIPS grant that was awarded to GlobalFoundries to assist the company's construction of a second factory at the site, which supplies chips to the military, automakers and telecommunications companies among other industries.
The grant would also go toward an expansion at GlobalFoundries' chip factory in Essex Junction, Vt. outside Burlington.
The $6.1 billion grant for Micron will be in addition to $7.5 billion in loans that the company can access.
The funding is not only for the Syracuse-area project but also a new fab, or factory, that Micron is planning in its home state of Idaho.
https://www.timesunion.com/business/art ... 0headlines
By Larry Rulison, Albany, New York Times Union
April 25, 2024
ALBANY – President Joe Biden landed in Syracuse on Thursday to celebrate a $6.1 billion grant awarded to Micron Technology, the memory chipmaker that is building a $100 billion manufacturing campus in the town of Clay, just north of the city.
Biden was joined by Gov. Kathy Hochul and U.S. Senate Majority Leader Charles Schumer of New York at the Milton J. Rubenstein Museum of Science & Technology in Syracuse's Armory Square.
In addition to touting the Micron award, being awarded through the $52 billion CHIPS and Science Act, the president was planning to meet with the families of the two police officers killed in a shootout on April 14 in the town of Salina, about six miles north of where Biden was speaking.
Funerals for the two men, Lt. Michael Hoosock of the Onondaga County Sheriff's Department, and Syracuse police Officer Michael Jensen, were held last week.
Both departments and their members were still reeling from the tragedy.
As a result, State Troopers were tasked with providing security for the president's visit instead of local law enforcement, which criticized the White House for not rescheduling the trip.
The $6.1 billion grant Micron will receive is coming from the $52 billion CHIPS and Science Act, the chip industry subsidy program that was authored by Schumer and designed to revitalize the domestic chip sector in the face of China seeking to dominate the industry and its supply chain.
Micron's award, which also includes $7 billion in federal loans, is the third CHIPS grant to be announced for large manufacturers.
The Micron event in Syracuse comes a month after Schumer and Hochul celebrated a $1.5 billion CHIPS grant that was awarded to GlobalFoundries to assist the company's construction of a second factory at the site, which supplies chips to the military, automakers and telecommunications companies among other industries.
The grant would also go toward an expansion at GlobalFoundries' chip factory in Essex Junction, Vt. outside Burlington.
The $6.1 billion grant for Micron will be in addition to $7.5 billion in loans that the company can access.
The funding is not only for the Syracuse-area project but also a new fab, or factory, that Micron is planning in its home state of Idaho.
https://www.timesunion.com/business/art ... 0headlines