US Business

Industrial production in the United States slumped in November with “broad based” decreases, the Federal Reserve said Thursday, as output for bigger-ticket consumer products and manufacturing fell.

While tangled supply chains and surging costs which weighed on businesses are easing, in a boost to production, firms are now contending with weakening demand as interest rates rise.

The Fed has raised its benchmark lending rate seven times this year in an effort to cool the world’s biggest economy, making borrowing more expensive with policy effects rippling across sectors.

Total output dropped 0.2 percent in November, defying analysts’ expectations of an uptick, according to Fed data.

“Decreases were broad based across market groups,” the report said.

It added that the output of consumer durables fell about two percent, referring to products that do not have to be purchased very often. The decline was led by automotive goods.

Manufacturing output dropped 0.6 percent as well, while that of mining fell 0.7 percent, only partly offset by a rebound in utilities, the Fed added.

“Headline production was flattered by a weather-related… jump in utilities output, which is hugely volatile,” said economist Kieran Clancy of Pantheon Macroeconomics in a note.

The main factor bogging down manufacturing output is likely “softening capital spending, in the wake of higher borrowing costs,” he added.

“The next few months will be rough; the downturn in manufacturing output has further to run,” he said.

On Thursday, the New York Federal Reserve Bank’s Empire survey also saw a plunge in readings, with shipments and new orders worsening, analysts noted.

“Manufacturing conditions in the US are deteriorating as central banks continue to raise rates and the global economy weakens,” said economist Gurleen Chadha of Oxford Economics.

Heathrow Airport baggage handlers have suspended a planned strike, their union said on Thursday, as industrial action continues across the UK.

Around 400 members of the Unite union employed by private contractors Menzies had been due to walk out for 72 hours from 4:00 am (0400 GMT) on Friday in a months-long dispute over pay.

But the stoppage was halted as a “gesture of goodwill” after Menzies made an improved pay offer during talks held Thursday between Unite and Menzies, according to the union.

It will now ballot its members on the revised pay offer.

“Unite has been adamant that Menzies was able to offer an improved pay offer and that has proved to be the case,” the union’s regional officer Kevin Hall said in a statement.

Miguel Gomez Sjunnesson, of Menzies, said the firm was “hopeful” that the revised offer would be accepted.

He added the deal would allow the company “to give our employees their well-deserved pay increase and we can focus on delivering the best service during this busy holiday period”.

However, strike action scheduled to begin on December 29 remains in place pending the outcome of the ballot of members.

Britain has seen a growing number of public and private sector workers striking, amid decades-high inflation.

Nurses on Thursday staged an unprecedented walkout across England, Wales and Northern Ireland, while railway workers have this week started a series of 48-hour walk-outs.

Border Force staff checking passports at major airports including Heathrow and Gatwick are set to strike over Christmas.

Security guards employed by the contractor Mitie on the cross-Channel rail link Eurostar were due to strike on Friday and Sunday.

But they called off the walk-out late on Wednesday. Further planned action on December 22 and 23 was still due to go ahead.

Spanish tennis star Rafael Nadal on Thursday announced the launch of a new hotel brand with Spain’s Melia group that is planning to open some 20 hotels across the globe in the next five years. 

Inspired by the “Mediterranean lifestyle”, the new “Zel” chain is expected to open its first hotel in 2023 in Mallorca in the Balearic Islands where 36-year-old Nadal was born and where Melia Hotels International was founded in 1956.

Nadal, one of the world’s two top-ranked tennis players, and Melia, Spain’s leading hotel group which operates more than 400 establishments across the globe, will jointly own the company. 

They did not specify who would hold what percentage of the shares. 

The aim is that “over the next five years”, the chain will open “more than 20 hotels across the world”, Nadal told reporters in Madrid. 

Melia said the new chain would establish hotels “in destinations with a clear focus on premium leisure tourism”, such as Spain, France, Italy or Croatia but also the Caribbean, southeast Asia and the Middle East

It would also be present in the main tourist capitals with openings already planned in London, Paris and Madrid. 

Initially, 80 percent of the hotels will be set up in existing structures “which will undergo a radical transformation” to adapt them to Zel’s “Mediterranean character”, said Melia chairman Gabriel Escarrer.

The ultimate objective is that most hotels will be specially built for Zel, which means “sky” in the dialect of Catalan that is spoken in Mallorca, said Escarrer, who is also from the Balearic Islands. 

The idea, he said, was to put the emphasis on Mediterranean culture with “its good life, gastronomy and parties” — an idea which customers found “very appealing”. 

Nadal said his involvement in the hotel chain did not mean he was ending his sporting career. 

“I’m trying to make sure that my retirement is put off for as long as possible,” he told reporters. 

Global stocks sank Thursday as central banks hiked interest rates again and signalled they needed to go higher to tame inflation.

Meanwhile, downbeat economic data out of China and the United States fanned recession fears. 

Both the Bank of England and the European Central Bank mirrored the Fed’s half-point hike on Wednesday to tackle soaring inflation, with Norway and Switzerland raising rates as well.

Sentiment was already hammered on Wednesday after the Fed suggested that it saw US rates topping out next year at 5.1 percent, higher than markets had predicted. 

Meanwhile the BoE, which lifted its key rate to the highest level in 14 years, warned that labour market tightness and inflationary pressures justified “a further forceful monetary policy response”.

The ECB delivered a similar message.

ECB president Christine Lagarde warned that inflation in the 19-nation eurozone was still “far too high” and more action needed to be taken. 

The world’s major central banks are seeking to dampen red-hot inflation, which has been fuelled partly by fallout from Russia’s invasion of Ukraine.

“We have more ground to cover, we have longer to go and we are in for a long game,” Lagarde told reporters. 

Share prices headed south after the rate decisions and kept falling.

Wall Street’s main indices were all down more than two percent in late morning trading.

In Europe, both Frankfurt suffered losses of more than three percent.

“The collapse in equity valuations comes as traders face up to an impending economic collapse where central banks seem to exacerbate rather than remedy the situation,” said Joshua Mahony, senior market analyst at online trading platform IG.

– Fresh recession fears –

Rising rates fan recession concerns because they push up loan repayments for consumers and companies, denting expenditure, investment and economic activity.

Market analyst Patrick O’Hare at Briefing.com said “these (central bank) policy moves were expected, but that still hasn’t helped matters given the understanding that higher rates will inevitably weigh on economic activity.” 

Economic data released Thursday fed recession fears.

China’s retail sales plunged last month as Covid restrictions and a property market crisis hammered the world’s second-largest economy.

In the United States, retail sales slid by 0.6 percent in November from October, with industrial output dropping as well.

The Fed warned Wednesday that the world’s biggest economy would grow less than expected next year.

The ECB said Thursday the eurozone was likely in a shallow recession, as Britain’s economy is expected to continue contracting through next year.

Oil prices slid on the dimmer economic prospects.

“The raising of inflation forecasts and downgrading of growth forecasts with interest rates remaining higher for longer appear to be re-rating market expectations of the demand outlook over the course of the next few months,” said Michael Hewson at CMC Markets.

– Key figures around 1630 GMT –

New York – Dow: DOWN 2.2 percent at 33,207.78 points

EURO STOXX 50: DOWN 3. percent at 3,8

London – FTSE 100: DOWN 0.9 percent at 7,426.17 (close)

Frankfurt – DAX: DOWN 3.3 percent at 13,986.23 (close)

Paris – CAC 40: DOWN 3.1 percent at 6,522.77 (close)

Tokyo – Nikkei 225: DOWN 0.4 percent at 28,051.70 (close)

Hong Kong – Hang Seng Index: DOWN 1.6 percent at 19,368.59 (close)

Shanghai – Composite: DOWN 0.3 percent at 3,168.65 (close)

Euro/dollar: DOWN at $1.0648 from $1.0684 on Wednesday

Dollar/yen: UP at 137.65 yen from 135.45 yen

Pound/dollar: DOWN at $1.2221 from $1.2424

Euro/pound: UP at 87.13 pence from 85.96 pence

Brent North Sea crude: DOWN 2.0 percent at $81.02 per barrel

West Texas Intermediate: DOWN 2.3 percent at $75.49 per barrel

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Israeli scientists have created egg-laying hens that only produce females, a breakthrough that could help end the annual culling of around seven billion male chicks globally. 

The chicks, born from egg-laying, are destroyed en masse by suffocation or crushing because they are not suitable for meat production and do not lay eggs. 

Animal rights activists have denounced the practice as barbaric, and it has been banned in several European states. 

A German prohibition on male chick culling came into effect this year. French farmers have until year’s end to comply with new restrictions. 

A team at the Israeli Agricultural Research Organization-Volcani Center has used gene editing to develop hens that only gives birth to females. 

Except for this vital change, they are “completely identical to the breed of hens that lay edible eggs and are currently used in agriculture,” according to Huminn, the American-Israeli firm which partnered with the Volcani Center.

The researchers say this is the only option to substantially curb mass male chick culling around the world. 

“This is a world first and the only solution that is easy for industry players to implement,” team leader Yuval Cinnamon, a Volcani Center embryologist, told AFP. 

He said technologies that seek to identify whether an egg is carrying a male or female embryo are not reliable.

The Volcani Center, based in the Tel Aviv suburbs, developed the technique following seven years of research with Huminn, which in part specialises in commercially viable sustainable food production. 

– ‘Most serious problem’ –     

The technology involves genetically modifying egg-laying hens so that, when carrying male embryos, those do not progress and hatch. 

“After fertilisation the male embryos do not develop, and the female embryos develop normally without being genetically modified and hatch normally,” Cinnamon explained. 

“This will provide a real answer to what is probably the most serious animal welfare problem in the world today,” he added.

Beyond the animal rights benefits, the technology could offer poultry producers huge savings in terms of the space and energy required to operate incubators while reducing the significant culling costs. 

“It costs a dollar to cull each male chick, so that’s seven billion in savings a year,” Cinnamon said.

Huminn has forecast that commercial benefits from the technology could emerge within two years. 

At a meeting in October, European Union agriculture ministers said they would consider a bloc-wide ban on culling male chicks from egg-laying hens, pending the results of an impact assessment. 

The US Commerce Department on Thursday blacklisted 36 Chinese companies including top producers of advanced computer chips, severely restricting their access to American technology.

The move, which included semiconductor makers Cambricon and Yangtze Memory Technologies, aimed to limit China’s “efforts to obtain and leverage advanced technologies including artificial intelligence for its military modernization efforts and human rights violations,” the Commerce Department said.

The companies’ placement on the so-called Entity List makes it nearly impossible for them to legally acquire directly or indirectly US semiconductor manufacturing technology, designs and other intellectual property, hampering their production potential.

Of the 36 names, 21 are identified as major firms involved in the research and design, marketing and sales of artificial intelligence chips with close ties to the Chinese defense sector.

Seven are linked to the Chinese military’s efforts to develop hypersonic and ballistic missile systems.

One of the companies, Tianjin Tiandi Weiye Technologies, was placed on the Entity List for its alleged role in “China’s campaign of repression, mass arbitrary detention, and high-technology surveillance” against Uyghurs and other minorities in the western Xinjiang region.

The Entity List additions Thursday further the Biden administration’s efforts to deny China “access to advanced technologies for military modernization and human rights abuses,” Assistant Secretary of Commerce Thea Rozman Kendler said in a statement.

The announcement, the most recent in a series of US actions seeking to limit China’s access to sensitive US technologies, came just days after Beijing filed a dispute claim at the World Trade Organization against Washington’s restrictive policies.

China commerce ministry on Monday accused the United States of “obstructing normal international trade in products including chips and threatening the stability of the global industrial supply chain,” as well as violating international trade rules and engaging in “protectionist practices.”

Speaking on Tuesday, Chinese foreign ministry spokesman Wang Wenbin said the United States has “repeatedly used national security as an excuse to interfere in the normal operation of international trade.”

“All countries should stand up and not let Washington’s unilateralism and protectionism go unchecked,” Wang said. “This concerns the stability of the global trade system and more importantly, international justice.”

In October more than 30 Chinese high-tech companies were placed on the US Entity List, with officials saying they did not want American technology helping the Pentagon’s top rival, the Chinese military.

The Commerce Department’s rules require any US firm seeking to sell its technology to a Chinese company on the list to obtain a special permit, and getting those permits is almost impossible.

“With the latest rules, the US government is betting that it can so deeply undermine China’s semiconductor fabrication capabilities that it won’t matter how motivated or well-resourced China’s efforts are to create its own semiconductor industry — they simply won’t be able to catch up,” wrote Matt Sheehan, a global technology specialist at the Carnegie endowment for International Peace.