SkyView scoured the web for news that matters to self-storage owners—here’s what we found last week.
37,000 COVID Related Deaths (+57% m/m) in November: On Friday, December 4, nearly 230,000 Americans tested positive for coronavirus—a daily record. During November, new cases hit roughly 4.4 million, more than doubling the cases from October. Additionally, coronavirus related casualties rose by 57%. These casualty rates are the first month-over-month (m/m) increase since August. The total U.S. cases and deaths amounted to 14.7 million and 281,000, respectively, as of December 6.
Surging COVID Hospitalizations: As a result of this growth in cases, roughly 25% of U.S. intensive care beds are occupied by a coronavirus patient, up from 10% in September. On Friday, COVID hospitalizations hit another record of 101,276. This increase is the most significant case surge for the past couple of months. Due to skyrocketing hospitalizations, more than 1,000 hospitals have reported staffing shortages.
Slow Job Growth: November was the slowest month of job growth since the economic recovery began with only 245,000 added jobs. On Friday, the Bureau of Labor Statistics reported that last month’s unemployment level dipped by a mere 20 basis points (bps) from October to 6.7%. However, labor participation of 61.5% remained below the pre-pandemic level of 63.4%. Alternatively, the number of temporary layoffs fell as the number of part-time employees rose.
High Wage Jobs Remain Stable: The employment rate among high-wage workers (>$60,000) rose 20 bps in November, from January 2020. Because many high wage-workers can work from home, the recovery in employment has been mostly V-shaped. Alternatively, low-wage workers (< $27,000), mainly in service industries, employment remains low by 20%, as of November 19.
Bipartisan COVID Relief: After a lull in Congress’ stimulus negotiations, a $908 billion bipartisan COVID aid bill has begun to take shape. The spending deal would provide $160 billion to state and local governments, $300 billion to small businesses, and an additional $300/week in unemployment benefits. Economists estimate that job growth will slow and “go negative” in December, so these benefits should help the 12 million unemployed Americans through the holiday season.
Manufacturing PMI of 57.5: On Tuesday, the Institute for Supply Management (ISM) reported that its manufacturing index hit 57.5 in November. While manufacturing output increased (anything above 50 indicates expansion), the index was down 3% from October when activity hit a two-year high of 59.3. From February to October, consumer spending on goods grew by 8.4%, while manufacturing production declined by 4.6%.
Services PMI of 55.9: On Thursday, the ISM services purchasing managers index (PMI), which primarily covers activity in industries such as health care, real estate, restaurants, and hospitality, hit 55.9 last month, falling 1.2% from 56.6 in October. The non-manufacturing index grew for the sixth consecutive month in November, after contracting 41.8 in April and 45.4 in May. Year-to-date, the services PMI has averaged 54.1.
OECD Revising GDP Estimates Down: With the slump in manufacturing and service industries, “there is some concern […] about future demand,” according to Tim Fiore, who manages the ISM survey of supply and factory purchasing managers. The OECD (Organization of Economic Cooperation and Development) project that in 2021, consumers’ fear of infection and government restrictions will continue to weigh on economic activity, even with COVID vaccines’ rollout. On Tuesday, the OECD cut its 2021 GDP forecast for the global economy from 5.0% to 4.2%. For the U.S., the OECD dropped its 2021 forecast to 3.2% from 4.0%. However, the OECD’s forecasts assumed another round of fiscal stimulus in Europe and the United States, stating that consumer confidence would suffer without it.
China’s rise as an economic superpower: Looking at 4Q 2021 GDP estimates, the OECD projects that U.S. GDP will grow 10 bps from 4Q 2019 and China to grow 9.7%. Next year, OECD expects China’s GDP to comprise over 30% of global economic output, accelerating its economic superpower. Nonetheless, the OECD’s outlook remains highly uncertain. At best, quick deployment of vaccines will increase global growth to 5% next year and 5.5% in 2022. At worst, a slow rollout of COVID vaccines could drive GDP growth down to 1.5% in 2021 and 2.2% in 2022.
Economic Calendar: The Economic Calendar Thins Out this week. The pandemic and the prospects for fiscal stimulus are currently the focus of many investors. On December 10, the Consumer Price Index (CPI) will be released and expects a dip in gasoline prices (which usually rise in November). Services, which are under pressure, make up the majority of the CPI. Pandemic-related supply chain issues have increased input costs. Still, currently, there seems to be little pass-through to the consumer. The Producer Price Index will be released on December 11, and pipeline pressures will likely be more evident.