Бізнес

The European Union is under increasing pressure to further ease rules on airport take-off and landing slots to cut the number of “ghost flights” airlines are running to retain them.

Carriers say the requirement for them to use 50% of their slots — down from 80% in pre-pandemic days — or lose them is forcing them to operate empty or half-empty flights.

A sluggish return to air travel, as travelers shrink away from the omicron COVID variant and quickly changing rules for passengers, is dragging out the practice longer than they planned.

Belgium’s Brussels Airlines, for instance, says it will have to operate 3,000 under-capacity flights up to the end of March.

Its parent company Lufthansa warned last month it expected it would have to run 18,000 “pointless flights” over the European winter.

Belgium’s transport minister, Georges Gilkinet, has written to the European Commission urging it to loosen the slot rules, arguing the consequences run counter to the EU’s carbon-neutral ambitions.

The current reduced quotas were introduced in March last year in a nod to the hardship airlines faced as COVID washed over Europe for a second year running, shriveling passenger numbers.

In December, the commission said the 50% threshold would be raised to 64% for this year’s April-to-November summer flight season.

“Despite our urgings for more flexibility at the time, the EU approved a 50%-use rule for every flight schedule/frequency held for the winter. This has clearly been unrealistic in the EU this winter against the backdrop of the current crisis,” a spokesperson for the International Air Transport Association (IATA) told AFP.

He said the commission needed to show more “flexibility … given the significant drop in passengers and impact of omicron numbers on crewing planned schedules.”

But a commission spokesperson on Wednesday said the EU executive believed “the overall reduced consumer demand… is already reflected in a much-reduced rate of 50% compared to the usual 80%-use rate rule.”

The spokesperson, Daniel Ferrie, said: “The Commission expects that operated flights follow consumer demand and offer much needed continued air connectivity to citizens.” 

 
…

U.S. employers added 199,000 new jobs in December, 50,000 fewer than November, the Labor Department reported Friday, as business continue to struggle to fill vacancies due to American workers’ reluctance to return to the workforce during the ongoing coronavirus pandemic.

Despite the hiring slowdown, December’s jobless rate fell to a healthy 3.9% — a 22-month low — from November’s 4.2%.

December’s modest jobs gains belie the fact that 2021 was one of the best years for U.S. workers in decades, even though the pandemic caused the previous year to be one of the job market’s worst since the government began tracking hiring in 1939.

A monthly average of 537,000 jobs were added to the economy in 2021, the Labor Department said Friday, and a record 6.4 million jobs were created”America is back to work,” President Biden declared Friday before reporters at the White House. “The increase in Americans joining the labor force was the fastest this year of any year since 1996.”

Companies posted a record high number of job vacancies in 2021 and offered sharply higher pay to try to attract and retain employees, a record number of whom quit their jobs in search of higher-quality positions.

Biden said U.S. workers saw their wages increase last year by nearly 16%, “the highest in history.”

“Wage gains for all workers who are not supervisors went up more in 2021 than any year in four decades. There’s been a lot of press coverage of people quitting their jobs,” Biden said. “Well, today’s report tells you why: Americans are moving up to better jobs with better pay, with better benefits. That’s why they’re quitting their jobs.”

December’s report reflects the state of the economy early in the month, before the highly contagious omicron variant sickened millions of people in the U.S., forcing the cancellation of thousands of commercial flights and leading to reduced traffic at bars and restaurants and some school closures.

Many economists believe job growth may slow in January and possibly in February because of the omicron outbreak, which has forced millions of sick workers to quarantine at home, potentially disrupting employers, including hospitals, airlines and ski resorts.

Some information for this report came from The Associated Press and Reuters.
…

First-time claims for U.S. unemployment compensation remained near a five-decade- low level last week, with employers retaining their workers and searching for more as the United States continues its rapid economic recovery from the coronavirus pandemic.

The Labor Department said Thursday that 207,000 jobless workers made first-time claims for unemployment compensation, up 7,000 from the revised figure of the week before. The weekly total of new claims has hovered around 200,000, for a month now.

Even with the increase in claims last week, the figures from the last several weeks were well below the 256,000 total in mid-March 2020, when the pandemic first swept into the United States and employers started laying off workers by the hundreds of thousands.

The diminished number of claims for unemployment benefits, down from a 2021 high of 900,000 in one week last January, shows that many employers are hanging on to their workers, even as millions have quit jobs to move to other companies offering higher pay and more benefits.

Many employers are looking for more workers, despite about 6.9 million workers remaining unemployed in the United States.

At the end of November, there were 10.4 million job openings in the U.S., but the skills of available workers often do not match what employers want, or the job openings are not where the unemployed live. In addition, many of the available jobs are low-wage service positions that the jobless are shunning.

U.S. employers added only 210,000 new jobs in November, a lower-than-expected figure. But overall, the U.S. has added 6.1 million jobs through the first 11 months of the year in a much quicker recovery than many economists had originally forecast a year ago. The unemployment rate dropped in November to 4.2%, a figure some experts had projected would not be reached until mid-2024.

Information on job growth in December and the unemployment rate is set for release on Friday.

The U.S. economic advance is occurring even as President Joe Biden and Washington policy makers, along with consumers, voice concerns about the biggest increase in consumer prices in nearly four decades – 6.8% at an annualized rate in November.

The surging inflation rate has pushed policy makers at the country’s central bank, the Federal Reserve, to move more quickly to end their asset purchases they had used to boost the country’s economic recovery, by March rather than in mid-2022 as originally planned.

On Wednesday, minutes of the Fed board’s most recent meeting showed that policy makers are eyeing a faster pace for raising the benchmark interest rate that they have kept at near zero percent since the pandemic started.

The Federal Reserve has said it could raise the rate, which influences the borrowing costs for loans made to businesses and consumers, by a quarter of a percentage point three times this year to tamp down inflationary pressures.
…

Royal Caribbean and Norwegian Cruise Line on Wednesday canceled sailings amid rising fears of omicron-related coronavirus infections that have dampened the nascent recovery of the pandemic-ravaged cruise industry.

Royal Caribbean Cruises Ltd. called off its Spectrum of the Seas cruise for January 6 after nine guests on its January 2 trip were identified as close contacts to a local Hong Kong COVID-19 case.

The contacts have tested negative, but the cruise ship will return to Kai Tak Cruise Terminal in Hong Kong on January 5 to test all guests and crew who must take a second test on January 8, the company said.

A similar decision to cancel trips by Norwegian Cruise Line Holdings Ltd. was made against the backdrop of the United States reporting the highest daily tally of any country for new coronavirus infections on Monday.

“Due to ongoing travel restrictions, we’ve had to modify a few sailings and unfortunately have had to cancel,” the 17-ship strong cruise operator said, with the embarkation dates for a few canceled sailings as far out as late April.

The cruise line, which requires everyone on board to be vaccinated, has also had to cut short a 12-day round trip from Miami on its Norwegian Pearl ship, citing “COVID-related circumstances.”

The U.S. Centers for Disease Control and Prevention had last week advised people to avoid cruise travel after launching investigations into onboard cases on more than 90 ships. The health agency starts a scrutiny if at least 0.1% of the guests test positive.

Norwegian Cruise said guests, who were supposed to embark on the canceled sailings on the eight ships, will receive full refunds and bonus credits for future bookings.

The omicron-led travel uncertainty is also causing guests on other sailings to cancel their bookings as a few ships have also had to skip ports due to onboard infections.

“We booked the cruise last March and assumed that things would be getting back to normal… by mid-December, I was mentally prepared for a change of plans,” said Holly Bromley, a consulting arborist, who canceled her booking on Norwegian Epic.

Meanwhile, bigger rival Carnival Corp. said it has not canceled any upcoming voyages, but its shares fell on Wednesday to close down 2.6%. Royal Caribbean lost 2.1% and Norwegian Cruise Line Holdings 3.6%.

 
…

U.S. human rights and trade groups on Tuesday blasted Tesla’s New Year’s Eve announcement that it had opened a showroom in Xinjiang, the latest foreign firm caught up in tensions related to the far-western Chinese region where detention camps have drawn heavy criticism. 

The Council on American-Islamic Relations, the largest U.S. Muslim advocacy organization, said Tesla was “supporting genocide.” Similar criticism came from a U.S. trade group, the Alliance for American Manufacturing, and U.S. senator Marco Rubio. 

“Elon Musk must close Tesla’s Xinjiang showroom,” the Council on American-Islamic Relations said on its official Twitter account, referring to Tesla’s founder. 

Xinjiang has become a significant point of conflict between Western governments and China in recent years. U.N. experts and rights groups estimate more than a million people, mainly Uyghurs and members of other Muslim minorities, have been detained in camps there. 

U.S. President Joe Biden and members of the U.S. Congress have pressed companies to distance themselves from Xinjiang. On December 23, Biden signed a bill barring imports of goods made in the region.

White House spokeswoman Jen Psaki said she would not comment directly on Tesla’s action, but generally the “private sector should oppose the PRC human rights abuses and genocide in Xinjiang,” she said. “The international community, including the public and private sectors, cannot look the other way when it comes to what is taking place in Xinjiang.” 

The United States has labeled China’s treatment of ethnic Uyghurs and other Muslims in Xinjiang as genocide. The United States and a few other countries plan a diplomatic boycott of the Beijing Winter Olympics in February over the issue. 

China has rejected accusations of forced labor or any other abuses there, saying that the camps provide vocational training and that companies should respect its policies. 

Tesla, the world’s most valuable automaker, announced on December 31 that it was opening a showroom in Xinjiang’s regional capital, Urumqi.

“On the last day of 2021 we meet in Xinjiang,” Tesla said in a post on its official Weibo account. 

Other U.S. and European automakers or their Chinese partners have showrooms in Urumqi, a city of some 3 million people. German automaker Volkswagen AG has a car factory near Urumqi.

Tesla did not immediately respond to a request for comment for this story. The carmaker operates a factory in Shanghai and is ramping up production there amid surging sales in China. China has also become an export hub for Teslas headed to Europe and other markets. 

Musk last year had to smooth over relations with Chinese authorities after Teslas were banned from government properties because of concerns that data collected by the vehicles’ cameras was being transferred out of China. 

A number of foreign firms in recent months have been tripped up by tensions between the West and China over Xinjiang, as they try to balance Western pressure with China’s importance as a market and supply base. 

“There is this tension between global investors and the Chinese government. The global investors want market access. And the Chinese government says the cost of access is acquiescence,” said Michael Dunne, chief executive of Zo Zo Go, an investment adviser that works with automotive and technology companies doing business in China. 

In July, Swedish fashion retailer H&M reported a 23% drop in local currency sales in China for its March-May quarter after it was hit by a consumer boycott in March for stating publicly that it did not source products from Xinjiang. 

Last month, U.S. chipmaker Intel faced similar calls after telling its suppliers not to source products or labor from Xinjiang, prompting it to apologize for “the trouble caused to our respected Chinese customers, partners and the public.” 

Although some have been trying to reduce their supply chain exposure to the region, especially as Washington bans imports such as Xinjiang cotton and blacklists Chinese companies that it says have aided Beijing’s policy there, many foreign brands operate stores there.

 
…

U.S. manufacturing activity slowed in December amid a cooling in demand for goods, but supply constraints are starting to ease and a measure of prices paid for inputs by factories fell by the most in a decade. 

The Institute for Supply Management (ISM) survey on Tuesday also suggested some improvement in labor supply, with a gauge of factory employment rising to an eight-month high. Still, Timothy Fiore, chair of the ISM manufacturing business survey committee, noted that “shortages of critical lowest-tier materials, high commodity prices and difficulties in transporting products continue to plague reliable consumption.” 

The survey does not fully capture the impact of the Omicron COVID-19 variant, which is rapidly spreading across the United States and abroad. Sky-rocketing infections could force workers to stay home and halt the tentative supply-chain progress. 

“There’s still a lot of ground to make up before supply chains fully normalize, but cooling prices and increased employment are positive signs,” said Will Compernolle, a senior economist at FHN Financial in New York. 

The ISM’s index of national factory activity fell to a reading of 58.7 last month, the lowest level since January 2021, from 61.1 in November. A reading above 50 indicates expansion in manufacturing, which accounts for 11.9% of the U.S. economy. 

Economists polled by Reuters had forecast the index would fall to 60.1. 

All of the six biggest manufacturing industries — chemical products, fabricated metal products, computer and electronic products, food, transportation equipment, and petroleum and coal products — reported moderate-to-strong growth. 

Manufacturers of fabricated metal products expressed optimism that “we have reached the top of the hill to start down a gentle slope that lets us get back to something that resembles normal.” Their counterparts in the chemical products industry said the “gut feeling says it’s getting easier to source chemical raw materials.” 

Machinery makers reported that “costs for steel seem to be coming down some.” They also noted improvements in “performance by suppliers” and “on-time deliveries.” But transportation equipment manufacturers said capacity remained “limited due to the global chip shortage.” 

The ISM survey’s measure of supplier deliveries declined to a reading of 64.9 from 72.2 in November. A reading above 50% indicates slower deliveries to factories. 

The ISM’s Fiore said transportation networks, a harbinger of future supplier delivery performance, were still performing erratically, but there are signs of improvement. 

Raw materials have been in short supply as global economies rebounded from the coronavirus pandemic. Shortages have also been exacerbated by the shift in demand to goods from services early in the pandemic. Millions of workers needed to produce and move raw materials remain sidelined. 

U.S. stocks were trading mixed, with the Dow Jones Industrial Average and the S&P 500 index having hit fresh record highs earlier in the session. The dollar was flat against a basket of currencies. U.S. Treasury prices were mostly lower. 

Price gauge falls 

The nascent signs of improvement in supply chains suggest inflation at the factory gate could soon begin to subside. The survey’s measure of prices paid by manufacturers tumbled to 68.2 last month, the lowest level since November 2020, from 82.4 in November. The 14.2-point plunge was the biggest since October 2011. 

This supports the Federal Reserve’s long-held view that the current period of high inflation is transitory. Inflation is well above the U.S. central bank’s flexible 2% target. 

“The report is consistent with our expectation that inflation will hit an inflection point probably in the first quarter of this year,” said Tim Quinlan, a senior economist at Wells Fargo in Charlotte, North Carolina. 

The ISM survey’s forward-looking new orders sub-index fell to a still-high reading of 60.4 from 61.5 in November. With customer inventories remaining depressed, the slowdown in new order growth is likely to be temporary or limited. 

Factories hired more workers, but turnover rates remained high, a trend which manufacturers said started in August. 

Indeed, a separate report from the Labor Department on Tuesday showed a record 4.5 million Americans voluntarily quit their jobs in November, which will put pressure on businesses to raise wages to attract workers. 

“Replacing those workers is proving unusually challenging,” said Julia Pollak, chief economist at ZipRecruiter. “This is the tightest labor market ever.”

There were 10.6 million job openings at the end of November. The high number of vacancies meant there was a 0.65 unemployed person per job opening, an all-time low. Before the pandemic, there were normally about 2.3 unemployed people per job opening. 

The ISM’s measure of manufacturing employment rose to an eight-month high of 54.2 from 53.3 in November. This, together with very low first-time applications for unemployment benefits, supports the view that job growth accelerated in December. 

According to a preliminary Reuters survey of economists, nonfarm payrolls likely increased by 400,000 jobs in December after rising by 210,000 in November. The Labor Department is scheduled to publish December’s employment report on Friday. 

 
…

China’s economy will increasingly rely on state investment, high-tech development and domestic consumption – with less input from its past staple of export manufacturing – as it stands to overtake the United States in the coming decade, analysts predict. 

China’s GDP should grow 5.7% per year through 2025 and then 4.7% annually until 2030, British consultancy Centre for Economics and Business Research (CEBR) forecasts. Its forecast says that China, now the world’s second-largest economy, would overtake the No. 1-ranked U.S. economy by 2030. Credit insurance firm Euler Hermes made a similar forecast. 

Chinese leaders have pushed over the past decade to rely more on value-added services over traditional factory exports, state media have said.  The Sino-U.S. trade dispute and early 2020 workplace closures due to COVID-19 have added pressure on manufacturing. 

Reducing factory output in China, foreign multinationals have been expanding outside China, targeting places such as Vietnam to avoid rising wages and environmental compliance costs. By offshoring in multiple countries they hope to head off any repeat of China’s early 2020 COVID-19 lockdowns that shut down factories.

China’s economy totaled $15.92 trillion in 2020, and market research firm IHS Markit estimates that it reached $18 trillion last year on export manufacturing growth and capital for new projects. The U.S. economy reached about $23 trillion last year, the market research firm said.

State investment

The country that’s already known for fast economic growth over the past 20 years would see the state take more control over key sectors after intervening in several, including the internet, in 2021, economists expect.

“Beijing has the funds and the unfettered domestic political power to use China’s large public treasury to make strategic investments in the service of the leadership’s national and global objectives,” said Denny Roy, senior fellow at the East-West Center think tank in Honolulu.

China scored 2.98 in 2018, up from 2.45 eight years earlier and approaching about three times the world average, on the Organisation for Economic Co-operation Development policy forum’s Direct Control Over Enterprises index. 

That means the government’s direct control over enterprises “well exceeded the open economy average” and “reflects China’s increasing emphasis on the role of the state in the economy under Xi Jinping,” the think tank Atlantic Council says in its October report China Pathfinder: Annual Scorecard .

Growth in tech hardware

Chinese leaders will probably prioritize tech, especially hardware that does not require constant innovation, as a growth engine, economists say.

State intervention in the internet sector won’t hobble expansion in semiconductors and infrastructure software, said Zennon Kapron, founder and director of the Shanghai-based financial industry research firm Kapronasia.

“If the country does become self-sufficient in terms of technology and then is able to sell and export those products and services that are based on the technology, then that would be a huge bump to its economy, because [that] is a key driver certainly of the U.S. GDP now,” Kapron said.

The U.S. economy will keep growing but without spurts through 2030, Kapron predicts.

China has a “huge base of engineers,” albeit less creativity than it needs to foster the “zany ideas” that drive development of new technology, said Douglas McWilliams, founder and executive deputy chairman of CEBR.

Consumer spending

Domestic spending has driven most of China’s economic growth before 2021 as the country reduced its exposure to the world in view of the Sino-U.S. trade dispute, McKinsey & Co. says in its China consumer report 2021. Supply chains have “matured and localized, and its innovation capabilities were enhanced” in turn, McKinsey & Co says.

That trend is likely to continue despite hits to income under lockdowns during the first year of COVID-19, analysts say. China’s population exceeds that of the United States by 3.5 times, though American consumers are wealthier on average.

“In the past five years, domestic consumption has … become a more significant growth driver as China’s domestic consumer market has grown dramatically in size,” said Rajiv Biswas, Asia-Pacific chief economist with IHS Markit.

Beijing’s leadership “aims to create more than 11 million new urban jobs and expand domestic demand and effective investment,” the official Xinhua News Agency said in mid-2021. Those measures, it said, “are expected to put the economy firmly back to pre-pandemic vibrancy.”

What if China overtakes US economy?

Status as the world’s largest economy does not confer any automatic advantages over others, economists said, but countries dependent on the Chinese economy would take note.

“There is no gold medal or anything like that,” CEBR’s McWilliams told VOA. “But when you’ve got more money to spend, you do have the ability to influence things, and China will have that ability to influence things.”

China would be better placed, he said, to advance its Belt and Road Initiative, a 9-year-old effort aimed at building land and sea trade routes through Asia, Europe and Africa in the form of infrastructure projects and investments.

Officials in Beijing are already leveraging their economy in disputes with other countries, said Roy of the East-West Center. China vies with four Southeast Asian governments over maritime sovereignty, contests a group of islets with Japan and has gotten into territorial standoffs with India since 2017.

“The result of that expectation (China surpassing the United States economically) has been a bolder PRC (People’s Republic of China) foreign policy that seeks to settle regional disputes in China’s favor and to de-legitimize U.S. regional and global leadership under the assumption that China is destined to set the new rules of international relations,” Roy said. 
…

Global stocks began 2022 in bullish fashion, with major bourses notching records and Apple’s valuation briefly hitting $3 trillion as investors monitor the COVID-19 pandemic and looming central bank rate decisions. 

The CAC 40 index in Paris kicked off the rally with new intraday and closing records while Frankfurt’s DAX rose 0.9 percent in thin holiday trading. London and Tokyo were among global markets that were shuttered for holidays. 

On Wall Street, both the Dow and S&P 500 ended at records as indices pushed higher. 

Apple briefly climbed to $3 trillion in value, becoming the first U.S. company to hit that benchmark. The tech giant’s valuation later retreated, though its share price was 2.5 percent higher at the close. 

“Welcome to 2022, which is looking like 2021 so far for the equity market,” market analyst Patrick O’Hare at Briefing.com said. 

The market “looks as if it will keep riding the rails with the help of new inflows that are typically seen on the first trading day of a new month,” he added. 

Monday’s landmarks come on the heels of a series of all-time highs in December as markets continue to bet the latest surge in COVID-19 cases won’t derail economic growth. 

Comments from health experts characterizing the omicron variant as less lethal than earlier COVID-19 strains have boosted markets. 

A bigger question mark is the shift in monetary policy, with investors now betting that the Federal Reserve will raise interest rates later this year.

The yield on the 10-year U.S. Treasury note vaulted above 1.6 percent Monday, the latest indication of this expectation.

A note from Briefing.com said the rise in yields may also reflect “an improving perspective on the economy.” 

Oil prices

Elsewhere, oil prices finished a volatile session higher as eyes turn to the meeting of OPEC and other major producers on Tuesday. 

So far OPEC+ has resisted pressure by top oil-consuming nations, such as the United States, to more aggressively boost production.

The 23 members of OPEC+ are expected to continue to stay the course and modestly boost output at their monthly meeting to be held via videoconference. 

 
…

The United States will issue new rules and $1 billion in funding this year to support independent meat processors and ranchers as part of a plan to address a lack of “meaningful competition” in the meat sector, President Joe Biden said on Monday. 

The initiative comes amid rising concerns that a handful of big beef, pork and poultry companies have too much control over the American meat market, allowing them to dictate wholesale and retail pricing to profit at the expense of their suppliers and customers. 

“Capitalism without competition isn’t capitalism. It’s exploitation,” Biden said. “That’s what we’re seeing in meat and poultry industries now.” 

A recent White House analysis found that the top four meatpacker companies – Cargill, Tyson Foods Inc., JBS SA and National Beef Packing Co. – control between 55% and 85% of the market in the hog, cattle and chicken sectors. 

The Department of Agriculture (USDA) will spend the $1 billion from the American Rescue Plan to expand the independent meat processing sector, including funds for financing grants, guaranteed loans and worker training, said Agriculture Secretary Tom Vilsack, who was speaking at an event with Biden. 

USDA will also propose rules this year to strengthen enforcement of the Packers and Stockyards Act and to clarify the meaning of “Product of USA” meat labels, which domestic ranchers have said unfairly advantage multinational companies that raise cattle abroad and only slaughter in the United States. 

Attorney General Merrick Garland, also speaking at the event, said “too many industries have become too consolidated over time,” and that the antitrust division of the Department of Justice has been chronically underfunded. 

The Biden administration issued an executive order last year that advocated a whole of government approach to antitrust issues. 

A central concern in agriculture has been meat prices, which have risen at a time when the White House is fighting inflation. An analysis in December by the White House economic council found a 120% jump in the gross profits of four top meatpackers since the pandemic began. 

Reaction to plan

The meat industry has said the White House analysis was inaccurate and criticized the new plan. 

National Chicken Council President Mike Brown called the plan “a solution in search of a problem.” 

North American Meat Institute spokesperson Sarah Little said staffing plants remains the biggest issue for meatpackers and that the White House plan would not address it. 

“Our members of all sizes cannot operate at capacity because they struggle to employ a long-term stable workforce,” she said. “New capacity and expanded capacity created by the government will have the same problem.” 

Eric Deeble, policy director at the National Sustainable Agriculture Coalition, cheered the plan, calling it a “very positive step to ensure farmers and ranchers receive fair prices.” 

The anticipated rulemaking under the Packers and Stockyards Act “could have a significant impact,” said Peter Carstensen, emeritus professor of law at University of Wisconsin-Madison and former antitrust attorney at the Department of Justice. But he noted that investment in independent processing itself would not address market concentration. 

Austin Frerick, deputy director of the Thurman Arnold Project at Yale University, an antitrust research center, said the plan does not go far enough to tackle the power of the top meatpackers. 

“I do not believe this (plan) will meaningfully change the concentration numbers,” he said. 

 
…

U.S. premium electric vehicle maker Tesla said on Sunday it delivered nearly 1 million vehicles in 2021, almost twice as many as 2020, doing better than expected despite global supply challenges.

Tesla delivered more than 936,000 cars of all models in 2021, representing growth of 87.4% from the previous year. The manufacturer is thus doing much better than the objective announced last January, to increase its deliveries by 50% on average per year for several years.

The group, which chose to move its headquarters from Palo Alto (California) to Austin (Texas), sold 911,208 vehicles of its 3 and Y models, and 24,964 vehicles of its luxury S and X models.

In the fourth quarter alone, 308,600 cars were delivered, up 0.9% compared to the same quarter last year. Earlier in the year, in the second quarter, Tesla had crossed, for the first time, the threshold of 200,000 cars delivered (201,250).

Tesla has managed to sidestep the global logistics issues that have plagued the entire auto industry. Elon Musk previously said he was able to get around much of the semiconductor shortage by using new chip designs and rewriting software accordingly. 

In October, Tesla was boosted by a mega-order of 100,000 electric vehicles from the rental company Hertz, by the end of 2022. This announcement brought the automaker into the very select club of companies worth more than $1 trillion on the stock market.

The manufacturer is, however, in the crosshairs of the American road safety agency (NHTSA) for its controversial driver assistance system called “Autopilot.” 

The automaker has also agreed to update its software to prevent drivers from playing video games on the car’s system while the car is in motion, after an investigation was opened.
…

Egypt’s Suez Canal Authority said the key waterway netted record revenues last year, despite the coronavirus pandemic and a six-day blockage by a giant cargo ship, the Ever Given.

Connecting the Red Sea and the Mediterranean, the canal accounts for roughly 10% of global maritime trade and is a source of much-needed foreign currency for Egypt.

In 2021, some 1.27 billion tons of cargo were shipped through the canal, earning $6.3 billion (5.5 billion euros) in transit fees, 13% more than the previous year and the highest figures ever recorded, Suez Canal Authority (SCA) chief Osama Rabie said.

The number of ships using the canal rose from 18,830 in 2020 to 20,694 in 2021, or more than 56 ships per day, the SCA said in a statement.

In March, the Ever Given super tanker — a behemoth with deadweight tonnage of 199,000 — got stuck diagonally across the canal during a sandstorm.

A round-the-clock salvage operation took six days to dislodge it and one employee of the SCA died during the rescue operation. Egypt lost some $12 million to $15 million each day during the canal closure, according to the SCA.

The Ever Given safely returned back through the canal without a hitch in August.

In November, the SCA said it will hike transit tolls by six percent starting in 2022, but tourist vessels and liquefied natural gas carriers are to be exempted.
…

More than 3,000 flights were canceled around the world on Sunday, more than half of them U.S. flights, adding to the toll of holiday week travel disruptions due to adverse weather and the surge in coronavirus cases caused by the omicron variant. 

Over 3,300 flights had been canceled by noon GMT on Sunday, including over 1,900 entering, departing from or within the United States, according to a running tally on the tracking website FlightAware.com. Including those delayed but not canceled, more than 4,800 flights were delayed in total. 

The Christmas and New Year holidays are typically a peak time for air travel, but the rapid spread of the highly transmissible omicron variant has led to a sharp increase in COVID-19 infections, forcing airlines to cancel flights as pilots and crew quarantine. 

Transportation agencies across the United States were also suspending or reducing services due to coronavirus-related staff shortages. 

Omicron has brought record case counts and dampened New Year festivities around much of the world. 

The rise in U.S. COVID-19 cases had caused some companies to change plans to increase the number of employees working from their offices Monday. 

Chevron Corp was to start a full return to office from Jan. 3 but told employees in late December it was postponing the move indefinitely. 

U.S. authorities registered at least 346,869 new coronavirus cases on Saturday, according to a Reuters tally. The U.S. death toll from COVID-19 rose by at least 377 to 828,562. 

U.S. airline cabin crew, pilots and support staff were reluctant to work overtime during the holiday travel season, despite offers of hefty financial incentives. Many workers feared contracting COVID-19 and did not welcome the prospect of dealing with unruly passengers, some airline unions said. 

In the months preceding the holidays, airlines were wooing employees to ensure solid staffing, after furloughing or laying off thousands over the last 18 months as the pandemic hobbled the industry. 
…

The United States on Saturday cut Ethiopia, Mali and Guinea from access to a duty-free trade program, following through on President Joe Biden’s threat to do so over accusations of human rights violations and recent coups.

“The United States today terminated Ethiopia, Mali and Guinea from the AGOA trade preference program due to actions taken by each of their governments in violation of the AGOA Statute,” the U.S. Trade Representative’s office said in a statement.

Biden said in November that Ethiopia would be cut off from the duty-free trading regime provided under the U.S. African Growth and Opportunity Act (AGOA) because of alleged human rights violations in the Tigray region, while Mali and Guinea were targeted because of recent coups.

The suspension of benefits threatens Ethiopia’s textile industry, which supplies global fashion brands, and the country’s nascent hopes of becoming a light manufacturing hub. It also piles more pressure on an economy reeling from the conflict, the coronavirus pandemic, and high inflation.

“The Biden-Harris administration is deeply concerned by the unconstitutional change in governments in both Guinea and Mali, and by the gross violations of internationally recognized human rights being perpetrated by the government of Ethiopia and other parties amid the widening conflict in northern Ethiopia,” the trade office statement said.

The AGOA trade legislation provides sub-Saharan African nations with duty-free access to the United States if they meet certain eligibility requirements, such as eliminating barriers to U.S. trade and investment and making progress toward political pluralism.

“Each country has clear benchmarks for a pathway toward reinstatement and the administration will work with their governments to achieve that objective,” it added.

The Washington embassies of the three African countries did not immediately respond to requests for comment.

Ethiopia’s Trade Ministry said in November it was “extremely disappointed” by Washington’s announcement, saying the move would reverse economic gains and unfairly impact and harm women and children.
…

Tesla has recalled 675,000 cars in the United States and China over issues with the trunk and front hood of two models, raising new questions about the safety of the popular electric vehicle. 

Chinese regulators announced the recall of almost 200,000 cars on Friday, hours after some 475,000 Tesla vehicles were flagged in the United States. 

The problems with the trunk and hood increase the risk of crashes, according to U.S. and Chinese regulators. 

Authorities said the repeated opening and closing of the trunk of the Model 3 can damage a cable for the rearview camera. 

An issue with the latch assembly for the front hood of the Model S could cause it to open without warning and obstruct the driver’s visibility, according to the U.S. National Highway Traffic Safety Administration (NHTSA). 

Tesla estimates that the problems affect 1% of Model 3 and 14% of Model S vehicles recalled in the United States, without causing any accidents so far. 

Mass recalls are not rare in the auto industry.

Volkswagen had to take 8.5 million cars out of circulation in 2015 due to the Dieselgate scandal, in which the German company admitted tampering with millions of diesel vehicles to dupe emissions tests. 

At least 100 million vehicles were recalled by car companies across the world in recent years due to a defect with airbags made by bankrupt Japanese group Takata. 

Tesla’s recall represents a quarter of the number of cars Elon Musk’s young company has produced so far. 

“It is a reality wake-up call for Tesla though, with a slap-in-the-face welcome to the automotive world that is perhaps more complex than the smartphone industry that many like to compare it to,” said German auto analyst Matthias Schmidt. 

“After all, a dysfunctional car on four wheels can do a lot more potential damage than a dysfunctional iPhone,” Schmidt said. 

Other incidents 

In June, Tesla recalled more than 285,000 cars in China over issues with its assisted driving software that could cause accidents. 

The company also recalled thousands of Model 3 and Model Y vehicles earlier that month to inspect brake calipers for loose bolts. 

In November, the NHTSA recalled nearly 12,000 Tesla cars due to errors with their communication software. 

U.S. safety officials are also investigating Tesla’s Autopilot after identifying 11 crashes involving the driver assistance system. 

The previous month, U.S. highway safety regulators demanded details from Tesla on issues with its new autonomous system, building on a previously announced probe. 

Tesla executives have downplayed the regulatory inquiries, saying they were to be expected with “cutting edge” technology and that they were cooperating “as much as possible.” 

Banner year 

The issues have been blights to an otherwise banner year for Tesla, as it joined the exclusive club of companies with a market capitalization of $1 trillion. 

The company delivered a record 240,000 vehicles in the third quarter, and Tesla’s billionaire chief Elon Musk was named Time magazine’s person of the year. 

Tesla’s good fortune contrasted with other, traditional automakers that were heavily affected by the coronavirus pandemic and a shortage of semiconductors that are key components in cars. 

Trip Chowdhry, analyst at Global Equities Research consultancy, said the latest Tesla recall is a “non-event” as the company still holds a big advantage over its competitors. 

 
…

More canceled flights frustrated air travelers on the final day of 2021 and appeared all but certain to inconvenience hundreds of thousands more over the New Year’s holiday weekend. 

Airlines blamed many of the cancellations on crew shortages related to the spike in COVID-19 infections, along with wintry weather in parts of the United States. 

United Airlines, which suffered the most cancellations among the biggest U.S. carriers, agreed to pay pilot bonuses to fix a staffing shortage.

By early evening Friday on the East Coast, airlines had scrubbed more than 1,550 U.S. flights — about 6% of all scheduled flights — and roughly 3,500 worldwide, according to tracking service FlightAware.

That pushed the total U.S. cancellations since Christmas Eve to more than 10,000 and topped the previous single-day peak this holiday season, which was 1,520 on December 26. 

The disruptions come just as travel numbers climb higher going into the New Year’s holiday weekend. Since December 16, more than 2 million travelers a day on average have passed through U.S. airport security checkpoints, an increase of nearly 100,000 a day since November and nearly double last December. 

Led by Southwest and United, airlines have already canceled 1,500 U.S. flights on Saturday — about 700 at Chicago’s O’Hare Airport, where the forecast called for a winter storm — and 700 more on Sunday. 

Canceled flights began rising from a couple hundred a day shortly before Christmas, most notably for United Airlines, Delta Air Lines and JetBlue Airways. 

On Friday, United canceled more than 200 flights, or 11% of its schedule — and that did not include cancellations on the United Express regional affiliate. CommutAir, which operates many United Express flights, scrubbed one-third of its schedule, according to FlightAware. 

United decided to spend more money to fill empty cockpits. The airline reached a deal with the pilots’ union to pay 3.5 times normal wages to pilots who pick up extra trips through Monday and triple pay for flights between Tuesday and January 29, according to a memo from Bryan Quigley, United’s senior vice president for flight operations. 

JetBlue canceled more than 140 flights, or 14% of its schedule, and Delta grounded more than 100, or 5% of its flights by midday Friday. Allegiant, Alaska, Spirit and regional carriers SkyWest and Mesa all scrubbed at least 9% of their flights. 

FlightAware reported fewer cancellations at Southwest, 3%, and American, 2%. 

The virus is also hitting more federal air traffic controllers. The Federal Aviation Administration said that more of its employees have tested positive – it didn’t provide numbers Friday – which could lead controllers to reduce flight volumes and “might result in delays during busy periods.” 

While leisure travel within the U.S. has returned to roughly pre-pandemic levels, international travel remains depressed, and the government is giving travelers new cause to reconsider trips abroad. On Thursday, the State Department warned Americans that if they test positive for coronavirus while in a foreign country it could mean a costly quarantine until they test negative.

Since March 2020, U.S. airlines have received $54 billion in federal relief to keep employees on the payroll through the pandemic. Congress barred the airlines from furloughing workers but allowed them to offer incentives to quit or take long leaves of absence – and many did. The airlines have about 9% fewer workers than they had two years ago. 

Kurt Ebenhoch, a former airline spokesman and later a travel-consumer advocate, said airlines added flights aggressively, cut staff too thinly, and overestimated the number of employees who would return to work after leaves of absence. It was all done, he said, “in the pursuit of profit … and their customers paid for it, big time.” 

Many airlines are now rushing to hire pilots, flight attendants and other workers. In the meantime, some are trimming schedules that they can no longer operate. Southwest did that before the holidays, JetBlue is cutting flights until mid-January, and Hong Kong’s Cathay Pacific is suspending cargo flights and reducing passenger flights because it doesn’t have enough pilots. 

Other forms of transportation are also being hammered by the surge in virus cases. The U.S. Centers for Disease Control and Prevention said Thursday that it is monitoring more than 90 cruise ships because of COVID-19 outbreaks. The health agency warned people not to go on cruises, even if they are fully vaccinated against the virus. 

The remnants of the delta variant and the rise of the new omicron variant pushed the seven-day rolling average of new daily COVID-19 cases in the U.S. above 350,000, nearly triple the rate of just two weeks ago, according to figures from Johns Hopkins University. 

 
…

Applications for state unemployment benefits fell by 8,000 from 206,000 applications last report to 198,000 for the week ending December 25, the U.S. Labor Department reported Thursday.

Economists had predicted 205,000 applications.

The number of applications was near a 50-year low, but concerns over COVID-19, low labor market participation rates and rising inflation continue to add to economic uncertainty.

Labor participation, the number of people working or actively seeking a job, continues to hover at rates not seen since the early 1970s

“The claims data may be more volatile in the upcoming weeks due to the seasonal adjustment process, but looking past that noise, we expect claims to remain around 200,000 as layoffs remain low amid tight labor market conditions,” said Nancy Vanden Houten, lead economist at Oxford Economics, according to CBS News.

Continuing claims reportedly were 1.72 million for the week ending December 18, which is the lowest since March of 2020, when the pandemic began to peak.

n October, the U.S. had nearly 11 million job openings, a near record.

The news sent the stock market slightly higher on low, pre-holiday volume.
…

The U.S. trade deficit in goods mushroomed to the widest ever in November as imports of consumer goods shot to a record ahead of the second straight COVID-19-distorted holiday shopping season along with industrial supplies, while exports slipped after a historic gain a month earlier.

The goods trade gap reported Wednesday by the Commerce Department is likely to remain historically high as long as the coronavirus pandemic continues, economists said. The emergence of the fast-spreading omicron variant of COVID-19 that has driven U.S. and global caseloads to a record this week may exacerbate it further in the near term if it limits American consumers’ spending on services and restokes demand for imported goods.

Omicron also stands as a downside risk in the housing market. A reading of pending home sales also out Wednesday showed an unexpected drop in November, and while that data largely predated omicron’s ascendance in the United States, the highly contagious new variant could further limit home sales in the near term, the National Association of Realtors (NAR) said.

The goods trade deficit widened last month by 17.5% to $97.8 billion from $83.2 billion in October, Census Bureau data showed. That exceeds the previous record deficit set in September of $97 billion and may damp optimism that trade might finally add to U.S. economic growth this quarter for the first time in more than a year.

Imports rose by 4.7% with industrial supplies leading the way with an increase of $5.7 billion to $63.2 billion, followed by consumer goods rising by $2.9 billion to just shy of $67 billion as retailers rushed to fill store shelves ahead of Christmas. Both were record highs.

“The emergence of the omicron variant may further ignite demand for imported goods if services activity is restricted” in the first quarter of 2022, Nancy Vanden Houten, lead economist at Oxford Economics, wrote after Wednesday’s report.

Goods exports, meanwhile, declined 2.1%, with weakness across the board outside of a 4.3% increase in food exports. The drop was led by declines of $1.4 billion in industrial supplies and $1.3 billion in capital goods.

The worldwide surge of coronoavirus cases to a record in recent days – including a record U.S. caseload – may weigh on global demand in the months ahead, risking an even wider trade gap, Vanden Houten said.

The so-called Advance Indicators report also showed wholesale inventories climbed 1.2% last month, while retail inventories increased 2.0%. Retail inventories, excluding autos, which go into the calculation of gross domestic product, edged up by 1.3% to $465.2 billion, the latest in a string of record-high readings.

The economy grew at a 2.3% annualized rate in the third quarter, a step-down from earlier in the year, but activity has rebounded in the fourth quarter with a consensus among economists building around a growth rate of 6% to 7% in the final three months of 2021.

Trade has been a drag on gross domestic product growth for five straight quarters, while inventories added to output in the third quarter.

Earlier this month, the Commerce Department reported a sharp reduction in the overall trade deficit – including services – for October, which had generated some optimism that trade may contribute to the improvement in output in the final quarter of the year. The big reversal to a record goods trade gap in November may prompt a rethinking of that.

Economists at Action Economics have dialed back their fourth-quarter GDP growth estimate to 6.5% from 7.0%, with exports now seen subtracting from growth rather than adding to it as had been previously expected. Economists at JPMorgan and Goldman Sachs, meanwhile, left their estimates intact at 7%.

Meanwhile, contracts to buy U.S. previously owned homes fell unexpectedly in November as limited housing stock and lofty prices crimped activity, and the explosion of new coronavirus cases poses a risk to the housing market headed into 2022.

NAR said its Pending Home Sales Index, based on signed contracts, fell 2.2% last month to 122.4. Pending home sales were lower in all four regions.

Economists polled by Reuters had forecast contracts, which typically become final sales after a month or two, would rise 0.5% in November.

“There was less pending home sales action this time around, which I would ascribe to low housing supply, but also to buyers being hesitant about home prices,” said Lawrence Yun, NAR’s chief economist.

Looking ahead, Yun said Omicron poses a risk to the housing market’s performance, as buyers and sellers are sidelined, and home construction is delayed.
…