Tag Archives: remote working

Sticking with remote work? Businesses are betting on it

By Ann Saphir

SAN FRANCISCO (Reuters) – U.S. businesses have been spending more on technology than on bricks and mortar for more than a decade now, but the trend has accelerated during the pandemic, one more sign that working from home is here to stay.

As spending on home-building has risen, spending on nonresidential construction has dropped, with that on commercial, manufacturing and office space slumping to under 15% of total construction outlays in March, Commerce Department data showed Monday.

Business spending on structures fell in the first quarter, data from the Bureau of Economic Analysis showed last week. It was the sixth straight quarterly decline, showcasing one of the few weak spots in the economy as it regains steam amid a receding pandemic.

Meanwhile, spending on technology rose, with investments in software and information processing equipment contributing more than 1 percentage point to the economy’s overall 6.4% annualized rise in economic output in the quarter, the BEA data showed. Technology spending has added to growth in all but two of the past 32 quarters, back to 2013. Spending on structures has pulled GDP downward in 14 of those quarters.

The implications of the shift are broad: the economy emerging from the depths of the pandemic will be more technology-driven and less reliant on in-person transactions, leaving jobs permanently changed and potentially fewer in number.

Accelerated by the pandemic, the divergence between the two types of business spending is here to stay, says Stanford economics professor Nicholas Bloom.

“This is the surge in (work-from-home) which is leading firms to spend heavily on connectivity,” Bloom said.

He and colleagues have been surveying 5,000 U.S. residents monthly, and found that from May to December about half of paid work hours were done from home.

Workers’ own spending to equip their home offices with computer connectivity, desks and other necessities comes to the equivalent of 0.7% of GDP, their surveys found, suggesting the business investment data likely underestimates what’s actually being spent on technology.

Those sunk costs are one reason that on average Americans will work one day a week from home even after the pandemic, up from about one day a month before, Bloom says.

American firms’ reliance on hybrid working should continue to lift business spending on technology for the foreseeable future, said ING chief international economist James Knightley.

Spending on office buildings particularly will likely remain weak at least until the end of the summer, he predicted, when the return of most kids to school should allow more parents to return to work.

Even then, he said, businesses will need to continue to spend more than ever on connectivity and computers to support the remote, or partially remote, workforce.

“I think there’s still a lot more to do there,” he said.

(Reporting by Ann Saphir, Howard Schneider, Dan Burns; Editing by Chizu Nomiyama)

IEA says oil demand recovery set to slow for rest of 2020

By Noah Browning

LONDON (Reuters) – The International Energy Agency (IEA) trimmed its 2020 oil demand forecast on Tuesday, citing caution about the pace of economic recovery from the pandemic.

The Paris-based IEA cut its 2020 outlook by 200,000 barrels per day (bpd) to 91.7 million bpd in its second downgrade in as many months.

“We expect the recovery in oil demand to decelerate markedly in the second half of 2020, with most of the easy gains already achieved,” the IEA said in its monthly report.

“The economic slowdown will take months to reverse completely … in addition, there is the potential that a second wave of the virus (already visible in Europe) could cut mobility once again.”

Renewed rises in COVID-19 cases in many countries and related lockdown measures, continued remote working and a still weak aviation sector are all hurting demand, the IEA said.

China – which emerged from lockdown sooner than other major economies and provided a strong prop to global demand – continues a strong recovery, while a virus upsurge in India contributed to the biggest demand drop since April, the IEA said.

Increasing global oil output and the downgraded demand outlook also mean a slower draw on crude oil stocks which piled up at the height of lockdown measures, it added.

The agency now predicts implied stock draws in the second half of the year of about 3.4 million barrels per day, nearly one million bpd less than it predicted last month, with July storage levels in developed countries again reaching record highs.

However, preliminary data for August showed industry crude oil stocks fell in the United States, Europe and Japan.

As output cuts eased among producers from the Organization of the Petroleum Exporting Countries (OPEC) and allies such as Russia, global oil supply rose by 1.1. million bpd in August.

After two months of increases, recovery among countries outside the OPEC+ pact stalled, with production in the United States falling 400,000 bpd as Hurricane Laura forced shut-ins.

(Reporting by Noah Browning; editing by Jason Neely)

Some Samsung, Hyundai workers self-quarantine as Korea Inc braces for virus impact

Some Samsung, Hyundai workers self-quarantine as Korea Inc braces for virus impact
By Hyunjoo Jin and Joyce Lee

SEOUL (Reuters) – Some South Korean workers at Samsung Electronics <005930.KS> and Hyundai Motor <005380.KS> are staying home as a precautionary measure as corporate Korea scrambles to prevent the coronavirus outbreak from causing widespread disruption in its home market.

The country’s third-largest conglomerate SK Group, which controls memory chip maker SK Hynix <000660.KS> and mobile carrier SK Telecom, advised its employees to work remotely starting from Tuesday due to the coronavirus outbreak.

About 1,500 workers of Samsung Electronics’ phone complex in the southeastern city of Gumi have self-quarantined after one of its workers was infected with the disease, a person familiar with the matter said. They include 900 workers who commute to Gumi from neighboring Daegu city, the person said.

The southeastern city of Daegu – the epicenter of the virus outbreak in South Korea- and nearby cities are an industrial hub in South Korea, Asia’s fourth-biggest economy, and home to factories of Samsung Electronics, Hyundai Motor and a number of others.

South Korea on Monday reported 161 new cases of the coronavirus, bringing the total number of infected patients in the country to 763, a day after the government raised its infectious disease alert to its highest level.

Samsung Electronics shares fell 4.1% and Hyundai Motor ended down 4.3%, tracking the wider market’s <.KS11> 3.9% fall, as the spike in new coronavirus cases intensified fears about the epidemic’s fallout on the economy and businesses.

Samsung said it has restarted production at its phone factory complex in Gumi on Monday, after closing it over the weekend, adding that the floor where the infected employee worked will resume production on Tuesday.

“As of 1 p.m. KT (0400 GMT) Feb. 24, the Gumi Complex has started normal operations and we expect no impact on production,” Samsung said in a statement, without elaborating further.

Samsung’s Gumi factory accounts for a small portion of its total phone production, but it produces premium phones and foldable phones, research firm Counterpoint said.

Six employees at Hyundai Motor’s factories in the southeastern city of Ulsan are also at home, with four of them linked to a church at the center of the virus outbreak, a union spokesman said in a statement.

“We are walking on ice,” one Hyundai factory worker told Reuters.

A factory run by Hyundai supplier Seojin Industrial was closed over the weekend after the death of a virus-infected worker, an official at the supplier said. He said that authorities disinfected the factory, located in the city of Gyeongju, and it is unclear when production will resume.

Seojin declined to comment when contacted by Reuters.

Any disruption would be a fresh blow to Hyundai, which has restarted most of its domestic factories’ production after being hit by suspensions due to parts shortages from China.

Ulsan is home to Hyundai’s biggest car factories, and there are a number of suppliers in the city and surrounding areas, which cater not only to the automaker, but export to the United States, Japan and other markets.

A Hyundai Motor spokesman said there has been no production disruption so far as the automaker has inventory.

With virus fears spreading nationwide, Hyundai set up thermal cameras at all of its operations across the nation, including its headquarters in Seoul, to check temperatures.

(Reporting by Hyunjoo Jin and Joyce Lee; Additional reporting by Heekyong Yang; Editing by Raju Gopalakrishnan and Muralikumar Anantharaman and Kirsten Donovanh)