Tag Archives: labor shortages

More shortages are coming

Important Takeaways:

  • Food shortages we could see in 2022
  • Bloomberg found a shortage of milk going to public schools in places like Denver, and it turns out that’s not an isolated incident
  • U.S. Foods reported that prices were going to be on the rise, largely due to supply chain difficulties and labor shortages that were causing a bottleneck in the chain.
  • In October 2021, Sky News reported that U.K. dairy farmers had been forced to dump tens of thousands of liters of milk — with one farmer disposing of 40,000 liters over the course of two months

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U.S. economy slows sharply in third quarter; weekly jobless claims at new 19-month low

By Lucia Mutikani

WASHINGTON (Reuters) – The U.S. economy grew at its slowest pace in more than a year in the third quarter as COVID-19 infections flared up, further straining global supply chains and causing shortages of goods like automobiles that almost stifled consumer spending.

Gross domestic product increased at a 2.0% annualized rate last quarter, the Commerce Department said in its advance GDP estimate on Thursday. That was slowest since the second quarter of 2020, when the economy suffered a historic contraction in the wake of stringent mandatory measures to contain the first wave of coronavirus cases.

The economy grew at a 6.7% rate in the second quarter. The Delta variant of the coronavirus worsened labor shortages at factories, mines and ports, gumming up the supply chain. Economists polled by Reuters had forecast GDP rising at a 2.7% rate last quarter.

Strong inflation, fueled by the economy-wide shortages and pandemic relief money from the government over the course of the public health crisis, cut into growth. Ebbing fiscal stimulus and Hurricane Ida, which devastated U.S. offshore energy production in late August, also weighed on the economy.

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, grew at a 1.6% rate after a robust 12% growth pace in the April-June quarter. Though automobiles accounted for a chunk of the stagnation, the Delta variant also curbed spending on services like air travel and dining out.

But there are signs that economic activity picked up as the turbulent quarter ended. The summer wave of COVID-19 infections has subsided, with cases declining significantly in recent weeks. Vaccinations have also picked up. The improving public health situation helped to lift consumer confidence this month.

Fewer Americans are filing new claims for unemployment benefits. That improving trend in labor market conditions was confirmed by a separate report from the Labor Department on Thursday showing initial claims for state unemployment benefits dropped 10,000 to a seasonally adjusted 281,000 last week, the lowest level since mid-March 2020.

It was the third straight week that claims remained below the 300,000 threshold. Economists polled by Reuters had forecast 290,000 applications in the latest week.

(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)

‘Wither away and die:’ U.S. Pacific Northwest heat wave bakes wheat, fruit crops

By Julie Ingwersen

CHICAGO (Reuters) – An unprecedented heat wave and ongoing drought in the U.S. Pacific Northwest is damaging white wheat coveted by Asian buyers and forcing fruit farm workers to harvest in the middle of the night to salvage crops and avoid deadly heat.

The extreme weather is another blow to farmers who have struggled with labor shortages and higher transportation costs during the pandemic and may further fuel global food inflation.

Cordell Kress, who farms in southeastern Idaho, expects his winter white wheat to produce about half as many bushels per acre as it does in a normal year when he begins to harvest next week, and he has already destroyed some of his withered canola and safflower oilseed crops.

The Pacific Northwest is the only part of the United States that grows soft white wheat used to make sponge cakes and noodles, and farmers were hoping to capitalize on high grain prices. Other countries including Australia and Canada grow white wheat, but the U.S. variety is especially prized by Asian buyers.

“The general mood among farmers in my area is as dire as I’ve ever seen it,” Kress said. “Something about a drought like this just wears on you. You see your blood, sweat and tears just slowly wither away and die.”

U.S. exports of white wheat in the marketing year that ended May 31 reached a 40-year high of 265 million bushels, driven by unprecedented demand from China.

But farmers may not have as much to sell this year.

“The Washington wheat crop is in pretty rough shape right now,” said Clark Neely, a Washington State University agronomist. The U.S. Agriculture Department this week rated 68% of the state’s spring wheat and 36% of its winter wheat in poor or very poor condition. A year ago, just 2% of the state’s winter wheat and 6% of its spring wheat were rated poor to very poor.

On top of the expected yield losses, grain buyers worry about quality. Flour millers turn to Pacific Northwest soft white wheat for its low protein content, which is well-suited for pastries and crackers.

But the drought is shriveling wheat kernels and raising protein levels, making the some of the crop less valuable. “The protein is so high that you can’t use (it) for anything but cattle feed,” Kress said.

Low-protein “soft” wheats have lower gluten content than the “hard” wheats used for bread, producing a less-stretchy dough for delicate cakes and crackers.

The Washington State Agriculture Department said it was still too early to estimate lost revenue from crop damage.

The heat peaked in late June, in the thick of the harvest of cherries. Temperatures reached 118 degrees Fahrenheit (48 Celsius) on June 28 at The Dalles, Oregon, along the Washington border, near the heart of cherry country.

Scientists have said the suffocating heat that killed hundreds of people would have been “virtually impossible” without climate change and such events could become more common.

The National Weather Service posted weekend heat advisories for eastern Washington.

NIGHTTIME CHERRY HARVEST; SUN NETS FOR APPLES

On the hottest days last month, laborers who normally start picking cherries at 4 a.m. began at 1 a.m., armed with headlamps and roving spotlights to beat the daytime heat that threatened their safety and made the fruit too soft to harvest.

The region should still produce a roughly average-sized cherry harvest, but not the bumper crop initially expected, said B.J. Thurlby, president of the Northwest Cherry Growers, a grower-funded trade group representing top cherry producer Washington and other Western states.

“We think we probably lost about 20% of the crop,” Thurlby said, adding that growers simply had to abandon a portion of the heat-damaged cherries in their orchards.

The heat wave’s impact on Washington’s $2 billion apple crop – the state’s most valuable agricultural product – is uncertain, as harvest is at least six weeks away. Apple growers are used to sleepless nights as they respond to springtime frosts, but have little experience with sustained heat in June.

“We really don’t know what the effects are. We just have to ride it out,” said Todd Fryhover, president of the Washington Apple Commission.

Growers have been protecting their orchards with expansive nets that protect fruit against sunburn, and by spraying water vapor above the trees. Apples have stopped growing for the time being, Fryhover said, but it is possible the crop may make up for lost time if weather conditions normalize.

The state wine board in Oregon, known for its Pinot Noir, said the timing of the heat spike may have benefited grapes. Last year, late-summer wildfires and wind storms forced some West Coast vineyards to leave damaged grapes unharvested.

Washington’s wine grapes also seem fine so far, one vineyard manager said. “I think wine grapes are situated well to handle high heat in June,” said Sadie Drury, general manager of North Slope Management.

(Reporting by Julie Ingwersen in Chicago; Editing by Caroline Stauffer and Matthew Lewis)

U.S. job growth far below expectations in April amid labor shortages

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. employers hired far fewer workers than expected in April, likely frustrated by labor shortages, leaving them scrambling to meet booming demand as the economy reopens amid rapidly improving public health and massive financial help from the government.

Nonfarm payrolls increased by only 266,000 jobs last month after rising by 770,000 in March, the Labor Department said in its closely watched employment report on Friday.

Economists polled by Reuters had forecast payrolls advancing by 978,000 jobs.

The jobs report, the first since the White House’s $1.9 trillion COVID-19 pandemic rescue package was approved in March, will probably do little to change expectations that the economy entered the second quarter with strong momentum and was on track for its best performance this year in almost four decades.

Twelve months ago, the economy purged a record 20.679 million jobs as it reeled from mandatory closures of nonessential businesses to slow the first wave of COVID-19 infections. New claims for unemployment benefits have dropped below 500,000 for the first-time since the pandemic started.

Americans over the age of 16 are now eligible to receive the COVID-19 vaccine, leading states like New York, New Jersey and Connecticut to lift most of their coronavirus capacity restrictions on businesses.

But the resulting burst in demand, which contributed to the economy’s 6.4% annualized growth pace in the first quarter, the second-fastest since the third quarter of 2003, has triggered shortages of labor and raw materials.

From manufacturing to restaurants, employers are scrambling for workers. A range of factors, including parents still at home caring for children, coronavirus-related retirements and generous unemployment checks, are blamed for the labor shortages. The moderate pace of hiring could last at least until September when the enhanced unemployment benefits run out.

The labor market remains supported by very accommodative fiscal and monetary policy. President Joe Biden plans to spend another $4 trillion on education and childcare, middle- and low-income families, infrastructure and jobs. The Federal Reserve has signaled it intends to leave its benchmark interest rate near zero and continue to pump money into the economy through bond purchases for a while.

The unemployment rate rose to 6.1% in April from 6.0% in March. The jobless rate has been understated by people misclassifying themselves as being “employed but absent from work.” Millions of Americans remain out of work and many have permanently lost jobs because of the pandemic.

(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)

U.S. factories desperate for workers, even as ranks of jobless remains high

By Timothy Aeppel

(Reuters) – Matt Arnold just spent $5,000 to run help-wanted ads for his company’s five trailer factories scattered from Pennsylvania to Utah.

“We hired two from the ads,” said Arnold, just a fraction of the 125 he needs to get back to full strength of 673 workers. Half the welding jobs at his Texas plant are open, for instance, creating a bottleneck in an operation that builds trailers on metal frames.

U.S. manufacturers have long grumbled about labor shortages, but the past year has proven particularly frustrating.

As the pandemic pushed millions out of work, most from service industries such as hotels and restaurants, many factories were pushed into overdrive by surging demand for everything from pickup trucks to plastic bags. And yet high jobless rates have not translated into workers flocking to open positions on assembly lines.

On Friday, the Labor Department said 916,000 jobs were created last month, the most since last August, including 53,000 manufacturing positions. That was the highest number of new factory jobs in six months.

The report’s manufacturing diffusion index, a measure of the breadth of hiring across some 75 goods-producing industries, registered one of its highest readings ever.

Manufacturing employment suffered a much less severe blow than service sector jobs last spring when COVID-19 first brought the economy effectively to a standstill. About one of every 10 factory jobs were eliminated in the shutdowns versus roughly one of every six service jobs. Factory employment is 4% below pre-pandemic levels, a deficit of 515,000 jobs, versus 5.5% for overall U.S. employment, with a total shortfall from February 2020 of 8.4 million positions.

Other indicators also point to a tight labor market at factories. Earlier this week, the Institute for Supply Management said its index for national factory activity jumped to its highest reading in 37 years in March, with its gauge of manufacturing employment rising to its highest level since February 2018.

One fabricated metal company quoted in the report said, “A lack of qualified machine and fabrication shop talent” has made it hard to keep up with demand.

UKG, which provides time management for small and mid-sized companies, said employee shift work at U.S. manufacturers was up 3.4% in mid-March from mid-February, outpacing a 2.6% increase across all industries.

‘IT ISN’T HOME DEPOT’

The shortage comes at a time when U.S. President Joe Biden’s administration has vowed to ramp up domestic manufacturing as part of a broader economic revival plan aimed at creating more blue-collar jobs.

“If we pass this plan, the economy will create 19 million jobs. Good jobs. Blue collar jobs. Jobs that pay well,” Biden said on Friday after the monthly payrolls report. “This is a blue collar blueprint for increasing the opportunity for people.”

For the moment, though, factories around the country are seeing vacancies go unfilled.

“I’ve never seen it this bad,” said Arnold, president of Look Trailers, based in Middlebury, Indiana. Look builds utility trailers, which are in heavy demand from small businesses such as landscapers and plumbers as well as hobbyists who use them to haul motorcycles or other bulky sports equipment.

The lack of workers means lost business for Arnold and his customers. One of his dealers normally has about $2 million in inventory on his lot, but right now only has about $200,000. The average price of a trailer is $3,400.

Wages at his trailer factories are already far above state or federal minimums. The average starting pay is $19 an hour, while workers with skills such as welders make $24 an hour or more. “People talk about the oil boom in the Dakotas – how workers would get in their car and drive out to get jobs,” he said. “We have the same thing here, a jobs boom. But nobody’s coming.”

Many employers see a mismatch between those now out of work and the jobs in their plants.

“It isn’t Home Depot, or Starbucks, or a hotel,” said Kevin Kelly, chief executive of Emerald Packaging Inc. in Union City, California. He estimates one in five new workers quit within days and complain about the environment.

“They’re not used to machines that need to be greased,” he said, “and the smell of things like ink.” Emerald produces plastic bags for precut vegetables, which are custom printed with images and product information.

Kelly said he has better luck hiring people who have already worked in a factory. One small printing plant just closed near him, and the owner called to ask if he wanted to buy machinery. He sent a manager who ended up handing out job applications instead. They have so far hired five of the other company’s employees and are trying to get two more. Yet even with those hires, Emerald is still short 14.

(Reporting by Timothy Aeppel; Additional reporting by Howard Schneider; Editing by Dan Burns and Chizu Nomiyama)

U.S. housing starts fall, but prior months revised up

FILE PHOTO: Single family homes being built by KB Homes are shown under construction in San Diego, California, U.S., April 17, 2017. REUTERS/Mike Blake/File Photo

WASHINGTON (Reuters) – U.S. homebuilding unexpectedly fell in May, but data for the prior two months was revised higher and building permits increased, suggesting that the housing market was drawing some support from a sharp decline in mortgage rates.

Housing starts dropped 0.9% to a seasonally adjusted annual rate of 1.269 million units last month amid a drop in the construction of single-family housing units, the Commerce Department said on Tuesday.

Data for April was revised up to show homebuilding rising to a pace of 1.281 million units, instead of increasing to a rate of 1.235 million units as previously reported. Housing starts in March were also stronger than initially estimated.

Economists polled by Reuters had forecast housing starts edging up to a pace of 1.239 million units in May. Single-family housing starts fell in the Northeast, the Midwest and West, but rose in the South, where the bulk of homebuilding occurs.

Building permits rose 0.3% to a rate of 1.294 million units in May. It was the second straight monthly increase in permits. Building permits have been weak this year, with much of the decline concentrated in the single-family housing segment. The housing market hit a soft patch last year and has been a drag on economic growth for five straight quarters.

The sector is being constrained by land and labor shortages, which are making it difficult for builders to fully take advantage of lower borrowing costs. As a result, the housing market continues to struggle with tight inventory, leading to sluggish sales growth.

(Reporting By Lucia Mutikani; Editing by Andrea Ricci) ((Lucia.Mutikani@thomsonreuters.com; 1 202 898 8315; Reuters Messaging: lucia.mutikani.thomsonreuters.com@reuters.net)