⚡️🇨🇳 Tesla Makes Investment in China
Hello and Happy Sunday / Easter,
I am spending the day watching the Masters golf tournament on TV! Hope you are having a wonderful Sunday.
Today’s Sunday Primer will take you through some key economic stats and the week ahead - enjoy!
— Humphrey, Tim, and Rickie
Market Report
Labor Market Still Strong
In March, the US labor market exhibited robust growth, with nonfarm payrolls increasing by 236,000 and the unemployment rate falling to 3.5%. This resilience in labor demand is remarkable given economic headwinds in other sectors. While annual wage growth has cooled, payrolls have risen by over 1 million since the beginning of the year.
These figures will be considered by the Federal Reserve at their May 2-3 policy meeting, as they continue to focus on addressing inflation concerns. Notably, average hourly earnings grew by a moderate 0.3% on a monthly basis. As the supply and demand for workers reach equilibrium, wage gains may further moderate, potentially alleviating some inflationary pressures.
The labor force participation rate has risen to 62.6%, the highest level in three years, indicating improvement for men and those aged 55 and older. Additionally, the unemployment rate for Black workers has reached a record low, with the gap between Black and White workers' jobless rates narrowing significantly.
However, there is a concerning decline in participation for workers with less than a high school diploma, whereas participation has increased for those with at least a bachelor's degree. The employment-to-population ratio for workers aged 25 to 54 has reached its highest level since 2001, at 80.7%.
Temporary job demand has dropped, suggesting potential future shifts in the labor market. In summary, the US labor market remains resilient, and this data may pave the way for the Federal Reserve to increase interest rates at its next meeting.
Tesla Builds New Chinese Factory
Tesla Inc. announced plans to build a new battery factory in Shanghai, where it will manufacture its Megapack large-scale energy-storage units. The new facility will complement Tesla's existing electric vehicle factory in the city. Construction is set to begin in Q3 2023, with production commencing in Q2 2024.
The initial production goal is 10,000 Megapacks per year, which will be sold worldwide. The investment comes as companies like Airbus SE expand their production capacity in China, even as tensions rise between the country and the United States.
China is an essential market for Tesla, with its Shanghai factory producing 52% of its global output in 2022. The Shanghai government has been supportive of Tesla's presence in the country, assisting with the establishment of its first plant outside the US in 2019 and helping to resume production following pandemic-related disruptions. Despite some challenges, including data concerns and bans on Tesla cars in military complexes, Elon Musk has expressed respect for Chinese automakers and acknowledged the competitiveness of the Chinese auto market.
Big Number: $1.5 Trillion
Almost $1.5 trillion of US commercial real estate debt comes due for repayment before the end of 2025. The big question facing those borrowers is who’s going to lend to them.
Adding to the headache, small and regional banks — the biggest source of credit to the industry last year — have been rocked by deposit outflows.
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