Economy

The ministry said in a published budget document that it expects the economy to expand by 3.5% in 2023.”The persistent impacts of the pandemic on supply and demand imbalances, and the escalation of the geopolitical conflict between Russia and Ukraine, have forced countries to adjust their growth expectations for this year,” the document says.The new figure compares to President Andres Manuel Lopez Obrador’s projection of 5% growth for the economy in 2022 and a prior government forecast for a 4.1% expansion. [nL1N2UD138]The budget document projected inflation at 5.5% by the end of 2022, slowing to 3.3% by the end of 2023.The exchange rate is seen at 20.7 pesos per U.S dollar for the end of 2022, and 20.9 pesos at the end of 2023, the ministry said, compared with 19.8 pesos on Friday.Mexico expects this year’s average oil price will be $92.90 per barrel, while crude production is estimated at 1.82 million barrels per day (bpd), rising to 1.85 million bpd in 2023.The ministry expects an average of 879,000 bpd of crude exports in 2022.The country will remain focused on promoting economic development and job creation through public spending, the document said, adding spending would not “jeopardize the continuation and completion of key infrastructure works or priority social programs.” More

LIMA (Reuters) – Peru, the world’s no. 2 copper producer, will target “excess profits” that mining firms have gained from soaring global metals prices for extra taxation, the country’s economy minister told Reuters.While President Pedro Castillo came to power last July pledging to increase taxes on the powerful mining sector, the current plan is far less ambitious than initial promises of sharp tax hikes that met fierce resistance from the industry and a divided Congress.”The focus is on the surplus profits,” Oscar Graham (NYSE:GHM), the country’s minister of economy and finance, said in an interview in Lima late on Friday, adding that the government was looking at an “adjustment” to taxes.Copper prices are currently trading at near record levels around $10,000 per tonne in the wake of Russia’s invasion of Ukraine.”The margins (of the adjustment) are being evaluated,” he said, but added it was important that the sector did not lose competitiveness and that mining investment was not discouraged.Graham said Peru needed better distribution of mining wealth to communities to quell mining protests that have rocked the sector and stalled production at key mines such as MMG Ltd’s Las Bambas and Southern Copper (NYSE:SCCO)’s Cuajone mine.”We have to look at the issue of the efficient use of resources provided by mining, otherwise we will have recurrent conflicts in the country,” he said. INFLATIONGraham also said Peru faced risk from any “prolongation” of the war in Ukraine, with domestic prices having risen at their fastest pace in a quarter of a century in March.”We are net importers of oil and corn, which form the chain of inputs that most affect the family basket,” he said, adding that the government was evaluating doubling the budget for social programs to mitigate inflation for the most vulnerable.Graham said projections of economic growth this year of between 3.5% and 4.0% were unchanged, but he did not rule out a revision given the global crisis.To rebuild investor confidence that has been dented by economic issues and political turmoil, Graham said he would present to Congress a plan to cut the deficit to 1% of gross domestic product (GDP) by 2026.The deficit was cut to 2.6% last year from 8.9% in 2020.”This is very important to provide certainty, especially to international rating agencies and investors,” he said.In mid-March, ratings agency Standard & Poor’s cut its rating for Peru, citing political uncertainty. President Castillo survived an impeachment vote in late March, the second time lawmakers have tried to remove him. Peru: Inflation spikes https://tmsnrt.rs/3NFT34cPeru: Inflation spikes (Interactive graphic) https://tmsnrt.rs/3iXZ1iO More

MEXICO CITY (Reuters) -Mexico will use the extra revenue it collects from higher oil prices to subsidize domestic gasoline and diesel prices, Deputy Finance Minister Gabriel Yorio told Reuters on Friday.While production has slid significantly in recent years, Mexico remains a major oil producer and exporter.Without the fuel subsidy, annual inflation, which hit 7.29% in the first half of March, would rise above 9% within four months, Yorio said in an interview at his office in downtown Mexico City.”I think that practically all the surplus that will be generated by higher prices will also be reflected in the cost of gasoline,” he said. “So we’re literally going to have to use the surplus to finance the additional subsidies.”Mexican motorists have largely been shielded from big spikes in fuel prices in recent weeks due to the subsidy policy championed by the government of President Andres Manuel Lopez Obrador, who has long promised to insulate consumers from sharp price hikes at the pump.The Bank of Mexico has hiked the key interest rate seven monetary policy meetings in a row to try to rein in inflation. The central bank’s target is 3% inflation with a 1-percentage-point tolerance range above and below that.”What we have calculated is that over a period of four months this measure avoids two percentage points of inflation. In other words, if over these four months annual inflation is around 7% more or less, this prevents it from rising to 9%,” said Yorio.Mexico’s government is just the latest globally to try to cushion the impact of soaring fuel prices following Russia’s invasion of Ukraine and one of the few that has the luxury of additional oil income to help finance those subsidies.Governments from Brazil to France are considering pumping up subsidies or trimming taxes to shield consumers from the financial strain of higher fuel prices, reflecting the economic and political risks governments see in the current energy spike.Yorio said investors’ view of Latin America, and Mexico specifically, has improved amid the fallout from the war, as the region is seen as far removed from the conflict.At a recent road show to New York and Europe, investors expressed interest in buying more Mexican debt, but Yorio said Mexico’s government had no plans to issue additional dollar- or euro-denominated bonds this year.He added that Mexico will likely, however, issue debt in Japan for refinancing purposes.”At some point this year we’re probably going to go to the Samurai market because we haven’t done so in two years and we have upcoming amortizations in yen.” More

It was a union organizing campaign that few expected to have a chance. A handful of employees at Amazon’s massive warehouse on Staten Island, operating without support from national labor organizations, took on one of the most powerful companies in the world.And, somehow, they won.Workers at the facility voted by a wide margin to form a union, according to results released on Friday, in one of the biggest victories for organized labor in a generation.Employees cast 2,654 votes to be represented by Amazon Labor Union and 2,131 against, giving the union a win by more than 10 percentage points, according to the National Labor Relations Board. More than 8,300 workers at the warehouse, which is the only Amazon fulfillment center in New York City, were eligible to vote.The win on Staten Island comes at a perilous moment for labor unions in the United States, which saw the portion of workers in unions drop last year to 10.3 percent, the lowest rate in decades, despite high demand for workers, pockets of successful labor activity and rising public approval.Critics — including some labor officials — say that traditional unions haven’t spent enough money or shown enough imagination in organizing campaigns and that they have often bet on the wrong fights. Some point to tawdry corruption scandals.The union victory at Amazon, the first at the company in the United States after years of worker activism there, offers an enormous opportunity to change that trajectory and build on recent wins. Many union leaders regard Amazon as an existential threat to labor standards because it touches so many industries and frequently dominates them.Amazon employees waited to vote in the parking lot of the JFK8 fulfillment center last week.DeSean McClinton-Holland for The New York TimesBut the win by a little-known, independent union with few ties to existing groups appears to raise as many questions for the labor movement as it answers: not least, whether there is something fundamentally broken with the traditional bureaucratic union model that can be solved only by replacing it with grass-roots organizations like the one on Staten Island.Amazon is likely to aggressively contest the union’s win. An unsigned statement on its corporate blog said, “We’re disappointed with the outcome of the election in Staten Island because we believe having a direct relationship with the company is best for our employees.”The Staten Island outcome followed what appears likely to be a narrow loss by the Retail, Wholesale and Department Store Union at a large Amazon warehouse in Alabama. The vote is close enough that the results will not be known for several weeks as contested ballots are litigated.The surprising strength shown by unions in both locations most likely means that Amazon will face years of pressure at other company facilities from labor groups and progressive activists working with them. As a recent string of union victories at Starbucks have shown, wins at one location can provide encouragement at others.Amazon hired voraciously over the past two years and now has 1.6 million employees globally. But it has been plagued by high turnover, and the pandemic gave employees a growing sense of power while fueling worries about workplace safety. The Staten Island warehouse, known as JFK8, was the subject of a New York Times investigation last year, which found that it was emblematic of the stresses — including inadvertent firings and sky-high attrition — on workers caused by Amazon’s employment model.“The pandemic has fundamentally changed the labor landscape” by giving workers more leverage with their employers, said John Logan, a professor of labor studies at San Francisco State University. “It’s just a question of whether unions can take advantage of the opportunity that transformation has opened up.”Standing outside the N.L.R.B. office in Brooklyn, where the ballots were tallied, Christian Smalls, a former Amazon employee who started the union, popped a bottle of champagne before a crowd of supporters and press. “To the first Amazon union in American history,” he cheered.Christian Smalls, a former Amazon worker who led union efforts on Staten Island, popped a bottle of champagne before a crowd of supporters and press on Friday.DeSean McClinton-Holland for The New York TimesAmazon said it was evaluating its options, including potentially filing an objection to “inappropriate and undue influence” by the N.L.R.B. for suing Amazon in federal court last month.In that case, the N.L.R.B. asked a judge to force Amazon to swiftly rectify “flagrant unfair labor practices” it said took place when Amazon fired a worker who became involved with the union. Amazon argued in court that the labor board abandoned “the neutrality of their office” by filing the injunction just before the election.Amazon would need to prove that any claims of undue influence undermined the so-called laboratory conditions necessary for a fair election, said Wilma B. Liebman, the chair of the N.L.R.B. under President Barack Obama.President Biden was “glad to see workers ensure their voices are heard” at the Amazon facility, Jen Psaki, the White House press secretary, told reporters. “He believes firmly that every worker in every state must have a free and fair choice to join a union,” she said.The near-term question facing the labor movement and other progressive groups is the extent to which they will help the upstart Amazon Labor Union withstand potential challenges to the result and negotiate a first contract, such as by providing resources and legal talent.“The company will appeal, drag it out — it’s going to be an ongoing fight,” said Gene Bruskin, a longtime organizer who helped notch one of labor’s last victories on this scale, at a Smithfield meat-processing plant in 2008, and has informally advised the Staten Island workers. “The labor movement has to figure out how to support them.”Sean O’Brien, the new president of the 1.3 million-member International Brotherhood of Teamsters, said in an interview on Thursday that the union was prepared to spend hundreds of millions of dollars unionizing Amazon and to collaborate with a variety of other unions and progressive groups.“We’ve got a lot of partners in labor,” Mr. O’Brien said. “We’ve got community groups. It’s going to be a large coalition.”A culture of fear created by intense productivity monitoring that was documented by The Times at JFK8 has been a key motivator for the unionization drive, which started in earnest almost a year ago. The Amazon facility offered a lifeline to laid-off workers during the pandemic but burned through staff and had such poor communication and technology that workers inadvertently were fired or lost benefits.For some employees, the stress of working at the warehouse during Covid outbreaks was a radicalizing experience that led them to take action. Mr. Smalls, the president of the Amazon Labor Union, said he became alarmed in March 2020 after encountering a co-worker who was clearly ill. He pleaded with management to close the facility for two weeks. The company fired him after he helped lead a walkout over safety conditions in late March that year.Amazon said at the time that it had taken “extreme measures” to keep workers safe, including deep cleaning and social distancing. It said it had fired Mr. Smalls for violating social distancing guidelines and attending the walkout even though he had been placed in a quarantine.After workers at Amazon’s warehouse in Bessemer, Ala., overwhelmingly rejected the retail workers union in its first election last spring, Mr. Smalls and Derrick Palmer, an Amazon employee who is his friend, decided to form a new union, called Amazon Labor Union.While the organizing in Alabama included high-profile tactics, with progressive supporters like Senator Bernie Sanders visiting the area, the organizers at JFK8 benefited from being insiders. For months, they set up shop at the bus stop outside the warehouse, grilling meat at barbecues and at one point even passing out pot. (The retail workers said they were hamstrung by Covid during their initial election in Alabama.)They also filed numerous unfair-labor-practice charges with the N.L.R.B. when they believed Amazon had infringed on their rights. The labor agency found merit in several of the cases, some of which Amazon settled in a nationwide agreement to allow workers more access to organize on-site.At times the Amazon Labor Union stumbled. The labor board determined this fall that the fledgling union, which spent months collecting signatures from workers requesting a vote, had not demonstrated sufficient support to warrant an election. But the organizers kept trying, and by late January they had finally gathered enough signatures.Amazon played up its minimum wage of $15 an hour in advertising and other public relations efforts. The company also waged a full-throated campaign against the union, texting employees and mandating attendance at anti-union meetings. It spent $4.3 million on anti-union consultants nationwide last year, according to annual disclosures filed on Thursday with the Labor Department.In February, Mr. Smalls was arrested at the facility after managers said he was trespassing while delivering food to co-workers and called the police. Two current employees were also arrested during the incident, which appeared to galvanize interest in the union.The difference in outcomes in Bessemer and Staten Island may reflect a difference in receptiveness toward unions in the two states — roughly 6 percent of workers in Alabama are union members, versus 22 percent in New York — as well as the difference between a mail-in election and one conducted in person.But it may also suggest the advantages of organizing through an independent, worker-led union. In Alabama, union officials and professional organizers were still barred from the facility under the settlement with the labor board. But at the Staten Island site, a larger portion of the union leadership and organizers were current employees.“What we were trying to say all along is that having workers on the inside is the most powerful tool,” said Mr. Palmer, who makes $21.50 an hour. “People didn’t believe it, but you can’t beat workers organizing other workers.”The independence of the Amazon Labor Union also appeared to undermine Amazon’s anti-union talking points, which cast the union as an interloping “third party.” On March 25, workers at JFK8 started lining up outside a tent in the parking lot to vote. And over five voting days, they cast their ballots to form what could become the first union at Amazon’s operations in the United States.Another election, brought also by Amazon Labor Union at a neighboring Staten Island facility, is scheduled for late April.Jodi Kantor More

(Reuters) – U.S. automakers on Friday reported a slump in first-quarter domestic sales, as the entire industry was slammed by chip shortages and disruptions to supply chains. Toyota , which in 2021 upstaged GM as the top-selling automaker in the United States, outsold the company in the first quarter on increased demand for its Lexus hybrid and electric vehicles. South Korea’s Hyundai Motor and Kia Motors and Japan’s Mazda Motor (OTC:MZDAY) Corp all posted a drop in overall U.S. quarterly auto sales. Hyundai said electrified vehicle retail sales surged 241% in the January-March period from a year earlier. “If gas prices remain high, that’s going to continue to push consumers toward green technology,” said Randy Parker, Hyundai’s senior vice president for U.S. sales. “Skyrocketing gas prices were top of mind for consumers in March, but the lack of inventory is what ultimately depressed new vehicle sales in the first quarter,” said Jessica Caldwell, Edmunds’ executive director of insights. She said inventory issues will persist well into the rest of the year as Russia’s invasion of Ukraine would add to supply chain challenges. Jack Hollis, senior vice president of automotive operations at Toyota Motor (NYSE:TM) North America, said he does not expect a major, long-term shift in the U.S. vehicle market – where about three-quarters of new vehicles sold are trucks and SUVs. Sales of some large SUVs and trucks held up. GM reported sales of its largest and most expensive SUVs, the Chevrolet Suburban, GMC Yukon and Cadillac Escalade, rose during the quarter from a year ago.Detroit-based GM said quarterly sales fell 20.1% to 512,846 vehicles and its shares fell 1.8%. GM said improved semiconductor supplies helped production in the quarter, but it expects inventory to remain relatively low throughout the year due to high demand. Automakers are encouraged by the strong U.S. job market. The company’s chief economist said in a statement that “ordinarily, a U.S. economy this strong would translate into light-vehicle sales in the 17-million range.” U.S. new-vehicle sales in March finished at 1.25 million, with an annual sales rate of 13.33 million, according to Wards Intelligence. More

Economy Minister Paulo Guedes pledged last month that a tax cut on industrialized products would be extended to 33% from 25%, amid record tax revenues that have been boosted by higher oil prices.Adopted in February, the initial 25% cut represents a fiscal loss of around 20 billion reais ($3.9 billion), with the federal government giving up 10 billion reais and the rest coming from state and municipal revenue.The tax cut was aimed at helping industry recover from the pandemic downturn and fighting inflation by stimulating price reductions.Officials had indicated that the additional reduction would come out this week, but Bolsonaro signed a decree published on Friday that only renews the rate cut of 25% for 30 days.Five Economy Ministry officials said, on condition of anonymity since the discussions are private, that the president decided late on Thursday to hold the additional tax reduction.Two of the sources said the reason was related to legal issues. An injunction filed by the Pros political party at the Supreme Court questions the constitutionality of the measure, arguing that it threatens the Manaus Free Trade Zone, in the state of Amazonas.Companies operating in the Manaus Free Trade Zone are exempt from paying IPI, and can generate credits equivalent to the industrial tax and make deductions from other tax obligations. The lower the IPI rate, the smaller their potential credits, which reduces their fiscal advantage.Politicians from Amazonas state said they would question the tax cut in court, saying it was an attempt to grant benefits in an election year. More

The pace of hiring remained strong last month.Monthly change in jobs More

WASHINGTON (Reuters) -Fear that the war in Ukraine would tilt the U.S. economy towards a 1970s-style bout of stagflation has given way to signs that Americans plan to keep traveling, returning to restaurants, and continuing a steady if still incomplete return to “normal.”The latest nonfarm payrolls report released Friday showed employers added 431,000 jobs in March and the unemployment rate fell to 3.6%, continuing a strong run of hiring that has left key aspects of the U.S. labor market “little different” from where they were before the pandemic, the Bureau of Labor Statistics reported. An additional nearly 600,000 people were employed or looking for work in March compared to the month before, adding to a recent steady rise in labor supply that Fed officials see as key to helping ease inflation, keeping hiring on track, and avoiding a joint run-up in both wages and prices. “The labor supply concerns of last year continue to fade,” wrote Nick Bunker, economic research director at job site Indeed. “The job market is on a solid trajectory as robust demand pulls more workers into employment with strong and increasingly stable wage growth.”There remain major gaps in the post-pandemic economy. Downtown office buildings are still underused in what may be one of the more persistent changes as workers and employers realized many jobs could be done from home. Businesses still struggle to find supplies and hire workers at a time of record job openings.But following a winter in which war, a new coronavirus surge, and already high inflation painted a potentially grim picture of even faster rising prices and slowing growth, recent government and high-frequency data show an expansion seemingly poised to roll on.The number of people teleworking continues to fall, as does the number of people saying they were kept out of the labor force by the pandemic, which fell below a million in March, according to the BLS. Gasoline consumption did edge down in March as prices nationally topped $4 a gallon, but Energy Information Administration data still shows gasoline use remains around 95% of pre-pandemic levels, roughly where it has been since the start of 2022.Air travel is nearing 90% of pre-pandemic levels. Data from restaurant reservation site OpenTable shows in-person dining at 95% of pre-pandemic levels on 15 of the last 18 days through March 30.Inflation, which is running at three times the Federal Reserve’s 2% target, may mean consumers are getting less for their money. Spending data for February showed consumption actually declined on an inflation-adjusted basis, and energy sapped a larger share of household budgets.The drop, however, came after a spending surge in January, and analysts and Fed policymakers this week agreed that neither global events nor the ongoing pandemic have put much of a dent in the U.S. economy.”To this point, high gasoline prices have not led to demand destruction,” analysts from RBC Capital Markets wrote this week. Between rising wages and savings still flush for many households from pandemic assistance payments, “the average American has never been more financially able to absorb $4 gasoline than today.”The outbreak of war in Eastern Europe threatened to further fan inflation, currently running at a four-decade high. The prospect of a more aggressive Fed response to the surge in prices amplified talk of a “hard landing” – a recession sparked by rising interest rates, tighter credit, and a subsequent pullback in business and household spending.One closely watched part of the bond market this week showed continued concern about that outcome when yields on 10-year Treasury notes briefly fell below those for 2-year Treasury notes – a sign of sagging faith in future economic growth.Still, what economists and Fed officials regard as more telling signals from the bond market remained healthy.”It’s premature to start the recession countdown,” wrote Jefferies analysts Aneta Markowska and Thomas Simons. “This does not look like a late-cycle economy … It’s a mid-cycle economy and the business cycle has room to run.”RETURN TO NORMALFar from hitting the brakes on the economy, the Fed’s target policy rate remains far below the level that would discourage spending or investment. The U.S. central bank increased its federal funds rate by a quarter of a percentage point on March 16, lifting it from the near-zero level set in March 2020 to offset the economic impact of the pandemic.Interest rates are expected to rise steadily from here, with Fed officials projecting increases of at least a quarter of a percentage point at each of their six remaining policy meetings this year – with the potential for even larger increases that could, by the end of the year, remove any remaining Fed support for economic growth.Fed policymakers this week said they will carefully watch how those anticipated rate hikes impact inflation and economic growth, and be poised either to raise borrowing costs faster if prices don’t respond or pause them if it is appropriate. But they emphasized the economy seems resilient at this point, with companies perhaps struggling to find workers and supplies but also filling record demand, booking strong profits, and lifting wages.By some measures the return to normal is here. Oxford Economics recently “retired” its weekly economic recovery tracker because the data it indexed, measuring employment, financial conditions, mobility and other issues, were “essentially back to pre-pandemic levels,” Oxford analyst Oren Klachkin wrote. There are signs also that larger changes, expected by economists as part of a “normalizing” economy, are beginning to take shape.Spending on services jumped in February while declining for goods, a rotation Fed officials have been expecting and which may be helpful in the inflation fight. Consumers bought record amounts of goods during the pandemic, when service spending options were limited by social-distancing rules and measures that shuttered many businesses. High demand for cars, bikes, appliances and other goods clashed with a global supply system unable to keep pace, resulting in rising prices.Foot traffic data from cellphone tracking firm Unacast showed visits to home goods and electronics stores as well as auto dealers are down significantly in 2022 compared with last year, while the hotel sector was rebounding quickly.There are even some tentative signs inflation may be moving in the right direction.Data for February showed year-over-year prices continuing to increase, but a key measure of month-to-month inflation fell one-tenth of a percentage point.One month does not make a trend, but at a news conference following the end of the March 15-16 policy meeting, Fed Chair Jerome Powell said that sort of month-to-month decline is “really what we’re looking for.” More