Study reveals Pa. unemployment rate to be good news/bad news

Pennsylvania’s unemployment rate rose one-tenth of a percentage point in February, but the state’s total nonfarm jobs reached a record high, according to the Pennsylvania Department of Labor & Industry (L&I). 

The L&I’s preliminary employment situation report revealed that the state’s unemployment rate rose one-tenth of a percentage point to 4.4% in February, matching its level from February 2022. 

The U.S. unemployment rate increased two-tenths of a percentage point from January to 3.6 but was down 0.2 percentage points from February 2022. 

According to the L&I report, Pennsylvania has recovered more than 100% of the 1.1 million jobs lost in the first two months of the pandemic. As of January 2023, the state’s civilian labor force – the estimated number of residents working or looking for work – increased 8,000 over the month due to increases in both employment and unemployment. 

The state’s nonfarm jobs were up 5,600 over the month to a record high of 6,094,400 in February. Six of the 11 industry super sectors reported job increases from January, the largest increase being in leisure and hospitality with gains of more than 3,000. Trade, transportation, and utilities jobs remained at a record high level. 

Total nonfarm jobs were up 164,800 over the year with gains in all 11 super sectors. Education and health services saw the largest volume gain over the year with more than 53,600 jobs, while three other super sectors each saw increases of more than 19,000.

Pottstown keg maker wins approval from U.S. Dept. of Commerce in antidumping investigation

The U.S. Department of Commerce is investigating a local manufacturer’s bid to have the government place tariffs on imported kegs from Mexico.

American Keg, based in Pottstown, won approval from the U.S. Department of Commerce for the federal agency to investigate the potential for placing tariffs on imported kegs from Mexico. (Submitted) –

American Keg Co., a manufacturer of American steel kegs from Pottstown, petitioned the federal department in 2018 seeking action.

In a response this week, Commerce said exporters from Mexico have sold refillable steel kegs at less than fair value in the U.S.

Once the Dept. of Commerce issues an affirmative final decision, the U.S. International Trade Commission, an independent agency, examines whether a U.S. industry has been injured because of the practice of subsidized imports, said Vanessa Ambrosini, a spokesperson for the International Trade Administration, in a statement.

American Keg filed the petition in September 2018. Company officials did not respond to requests for comment.

The trade commission makes its final injury determination about 45 days after the commerce department makes its final decision, which would be about Sept. 26, she said.

If the trade commission reaches a final decision, the commerce department will issue an antidumping order on Oct. 3 and collect taxes for those imported items, Ambrosini said.

If it reaches a final decision, it will collect taxes on imported steel kegs. If it does not reach a final decision, that would end the investigation, she said.

Upon publication of the final tariff determination, the department will instruct U.S. Customs and Border Protection to collect cash deposits equal to the applicable final weighted-average dumping rate.

In 2018, imports of refillable stainless steel kegs from Mexico were valued at an estimated $13.4 million.




Trade war continues to roil manufacturers

Last year, as the U.S. imposed tariffs on a growing number of products and materials, manufacturers found themselves struggling with the uncertainties of how an emerging trade conflict could affect their business.

Now, about a year and a half later, uncertainty lingers for some, yet the feeling is mixed with a desire to level the playing field in what many people in the industry view as an unequal playing field.

While many oppose tariffs, others say that to ensure have fair trade, nations have to play fair, and nations such as China have not been, they argue.

Chris Dybach works in the production area at ATAS International in Upper Macungie Township. The manufacturer of metal roofing, panels and other products has seen steel prices fluctuate over the last 18 months. (Submitted) –

They hope that tariffs can result in better trade arrangements.

“For too long, manufacturers have paid the price while China has reaped the rewards of its unfair trade practices, intellectual property theft and exploitation of existing trade agreements,” Jay Timmons, president and CEO of the National Association of Manufacturers, said in a statement.

Still, he added, “The effects of tariffs and retaliatory tariffs are further weighing on our confidence and our ability to hire and grow. With a more level playing field, we will be better equipped to reach our full potential.”

Though tariffs have created uncertainty for manufacturers, in Pennsylvania, the industry grew faster than the national average in the last quarter, said David Taylor, president of Pennsylvania Manufacturers Association, a manufacturing trade group based in Harrisburg.

Tariffs have been, in fact, a moving target and changing often, with some tariffs appearing to be on hold as the U.S. and China resume negotiations.

In a statement, Darlene Robbins, president of the Northeast Pennsylvania Manufacturers and Employers Association in Pottsville, said tariffs on $250 billion of Chinese imports, steel and aluminum have weighed on businesses for the past year.

The Schuylkill County-based organization serves more than 345 member companies in 20 counties.

The duties and the uncertainty have slowed investment in new factories as executives grapple with how the situation affects their supply chains and profit margins.

“The tariffs did increase the cost of domestic aluminum and steel that some of our companies source from Canada for products,” Robbins said. “Companies lost margins on existing projects and could only pass through some of the costs on future projects. It did force companies to be more active at limiting internal wastes, vendor accountability and overall efficiencies.”

When tariffs were first introduced in 2018, it inflated the metal costs for ATAS International, a manufacturer that produces metal roofing, panels and other products in Upper Macungie Township, said Dick Bus, the company’s president.

But prices have retreated since then, he added.

As an example, when steel tariffs of 25 percent were introduced a year and a half ago, Bus said his steel prices went up 20 percent. Now, it’s back down to the level it was before the tariffs were in place.

“I think the reason it’s come back down is the demand has slowed down,” Bus said.

Another reason is that China was taking America’s recycled materials, but now it is not, he added.

“Because the demand is low for our scrap material and China will not import scrap material from the United States that drives down the price of steel that I buy and the price of aluminum,” Bus said.

Bus said he is not concerned about the tariffs.

“I don’t think people should panic,” Bus said.

If a manufacturer does not like the price of steel one day, it will likely change tomorrow, downward and upward, he said.





Hopes running high for trade-war resolution

As the trade war continues with China, observers in Central Pennsylvania and the Lehigh Valley hope the latest stalemate might budge if and when President Donald Trump meets with Chinese leaders at the international G-20 conference in late June and agree that both countries can resolve their disputes sooner rather than later.

An agreement was supposed to have been reached this spring, but it was delayed after China tried to make last-minute changes that were rebuffed by U.S. negotiators. Trump has since signaled that he would meet with Chinese President Xi Jinping at the economic conference of 20 nations to see if the talks can stay on track for possible resolution this year.

“Tariffs drive up costs,” said Darlene J. Robbins, president of the Northeast PA Manufacturers and Employers Association, which is based in Pottsville. “We want to see the administration be successful for bringing China back to the table.”

Robbins, like others, said that an agreement shouldn’t be made without careful thought, as China has not been playing by the rules for decades.

“No tariff is good,” Robbins said. “But we certainly need a fair and level playing field.”

Pennsylvania observers – from farm interests to manufacturers – note that the strength of the U.S. economy has allowed growth to continue, despite the trade disputes have not undermined growth, at least not yet. Several experts pointed out that the tariffs have helped some and hurt others, so opinions vary. But, they add, a resolution would be in everyone’s best interests.

In a May 15 article, Wall Street Journal reporter Greg Ip, explained how the tariffs are rippling through the economy:
“As with any tax, the person paying the tariff doesn’t necessarily bear its burden,” Ip wrote. “If the tariff is simply passed along to the importer, American businesses or consumers bear the burden. If Chinese exporters cut prices to avoid losing sales, they bear the burden.”

“If imports shift to another country, no one pays the tariff — but Chinese are burdened by lost jobs and Americans by a higher price,” he continued. “And if production shifts to the U.S., some of what Americans pay in higher prices goes to other Americans as wages and profits.”

Some shifting of production already is helping in western Pennsylvania, said David N. Taylor, president & CEO of the Pennsylvania Manufacturers’ Association, which is based in Harrisburg. He pointed to a May announcement, reported by the Pittsburgh Post-Gazette, that U.S. Steel will be investing about $1 billion in western Pennsylvania facilities.

Gordon Denlinger, Pennsylvania director of the National Federation of Independent Business or NFIB, said such news is good for small businesses in the Pittsburgh area. Such a huge investment could create opportunities for new businesses to open and existing businesses to grow, as steel mills ramp up construction and then hire new workers.

“Certainly, small businesses will be benefiting,” he said.

Those positive improvements are important for everyone to recognize, said Taylor, who has been outspoken about how U.S. negotiators have a duty to make sure that any deal with China is fair. For decades, China has been cheating on trade, stealing intellectual property, limiting access to its own markets and conducting espionage – none of which should be accepted by a trade partner, Taylor said.

“Trade is for allies,” he said, adding that he fully supports free trade and open markets. “The principle of reciprocity stands above all others. Our national interest matters. Trade is necessary, but trade is for allies.”

Taylor credits Trump for making sure that any deal addresses the issues head on, though he said the implementation of Trump’s plans “has been messy.”

“He actually has defended our country and our economy against a hostile foreign power,” Taylor said. He isn’t confident that a deal will be reached soon, only because China hasn’t shown a willingness to change.

Mark O’Neill, media and strategic communications director for the Pennsylvania Farm Bureau, agrees that any agreement needs to be “fair and equitable.”

But for farmers, a deal needs to be reached as soon as possible, he said.

Pennsylvania farmers have been struggling for more than five years, predating the tariff crisis. But freer markets had helped, and farmers generally support open markets, he added. The tariffs are hurting farmers, but many farmers agree that there are important principles that need to be worked out with China.

The tensions with Mexico and Canada have had more of an impact on Pennsylvania, O’Neill also said. As long as the deal worked out to revise NAFTA is ratified by all three countries, the agreement will help the state’s farmers, particularly with opening dairy markets in Canada, he said.

“Our famers are very supportive of the current deal and would like to get it signed,” he said. “The political parties need to come together and hopefully they can.”

The North American Free Trade Agreement, which deepened trade among the United States, Canada and Mexico, took effect on Jan. 1, 1994. The Trump Administration sought to renegotiate the deal, saying it was outdated and unfair to U.S. workers. The new deal, called USMCA, was reached late last year but Democrats and Republicans in Congress need to ratify it. In late May, Trump threatened to add new tariffs to goods coming from Mexico unless Mexican authorities do more to stem the flow of people emigrating illegally from Central America into the United States.

Unlike counterparts in other parts of the country, Pennsylvania farmers export very little soybeans, pork and dairy to China. But those who raise such crops still are affected because prices are worldwide, so any changes globally will affect local operations, O’Neill said.

For soybeans, in particular, China cut imports by 97 percent, which means there is an oversupply – and lower prices – “everywhere,” he added.

The administration’s plan to offer financial payments to aid farmers for the duration of the trade talks will help, he said.

“But farmers don’t want payments. They would rather earn the money on an open market,” O’Neill said.

One concern is that supply chains are changing and that could hurt businesses long-term, as well as China’s latest threat to increase the costs of raw materials, said Tom Palisin, executive director of The Manufacturers’ Association, based in York County.

“Once you lose a market, it is hard to get that back,” Palisin said.

So far, a lot of consumers might not have noticed higher costs because some businesses have been holding off on price increases or had been stockpiling supplies until the trade tensions eased, several observers noted.

“But the hope was that the tensions would be short-lived,” Palisin said. “As it drags on, that isn’t always going to be possible.”

Survey of local businesses shows sizable drop in economic outlook

Despite low unemployment levels, local businesses showed a considerable drop in enthusiasm about the economy in a recent survey.

That’s the conclusion drawn by local economist Kamran Afshar, who shared the results of a survey that polled more than 200 Lehigh Valley businesses.
The April survey showed a sizeable 6.7 percent drop in business sentiment about the local economy since October, Afshar said, noting it was the second drop in a row for the index.

In October, the index rose to 69.4, but in January, it dropped a few points to 66.9. April showed a drop to 62.5.

If the number drops to 50 or below, that signals the economy could be in a recession.

He released the data earlier this month during an event at DeSales University Center in Upper Saucon Township.

As part of the Lehigh Valley Business Sentiment Index, Afshar gathers data four times per year. He has been conducting the quarterly surveys locally since 1998. Afshar also serves as an economist for the Greater Lehigh Valley Chamber of Commerce and director of the Kamran Afshar Data Analytics Center at DeSales.

Initially, Afshar thought the drop came from the aftereffect of the business tax breaks under the 2017 Tax Cuts and Jobs Act, which boosted last year’s economic outlook. However, with a nearly 7 percent drop in April in the business sentiment index, Afshar said the drop potentially goes beyond the tax breaks.

Afshar said it’s possibly related to the uncertainty surrounding U.S. trade disputes, which are starting to become more serious.

“The impression to people is, they can’t predict where they are going,” Afshar said. “That’s the biggest problem for businesses: Being able to have an educated guess about where you are going to be a year, two years from now.”

However, Afshar said the local economy appears good overall, despite the drop in business sentiment. If there were another drop in July, that could be a concern, he added.

The survey includes data on business projections, including purchases, hiring, and revenues for the next six months, and compares them with data from the prior six months. Participating companies include those in health care, education, retail, manufacturing and finance.

Health care companies hired the most over the last six months, followed by construction companies in the valley, Afshar said. However, retail and other services reported net layoffs.

Still, the rate of layoffs among businesses in the survey is well below what it was even during the boom years of 2004-06, Afshar said.

Initial unemployment claims also dropped, which is associated with a tight labor market. In general, the valley’s pool of labor is thinning in total numbers and expertise in particular, he added.

“The only thing which has not totally materialized is a strong increase in local wages, something that is starting to become measurable,” Afshar said.

As for revenue, businesses surveyed have been experiencing slight drops since last summer. However, their expectations of future revenues are higher than they were last summer, he said.

While Afshar said he does not see a recession ahead, he does see slower economic growth over the next year.

Tony Iannelli, president and CEO of the Greater Lehigh Valley Chamber of Commerce, said local businesses appear to be confident about the economy.

But there are sources of uncertainty, such as the rhetoric heating up over the 2020 presidential election is.

“Some of the rhetoric…doubling the minimum wage, potential costs that would increase taxes … it creates a little uncertainty which tends to make businesses a little uncertain,” Iannelli said. “In this ever-fluid world, there’s always something that could impact business confidence. In an election cycle, that goes up dramatically.