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Asia Manufacturing Outlook Marks Five-Year Low as Tariff Concerns Linger

Asia Manufacturing Outlook Marks Five-Year Low as Tariff Concerns Linger

Sentiment among Southeast Asian manufacturers fell to its lowest level since the pandemic, with confidence slipping to a five-year low amid trade policy uncertainty and subdued demand.
This came as the region's manufacturing sector saw its first rise in output since March. The Asean PMI gauge returned to expansion in July at 50.1, slightly above the neutral mark of 50.0, compared with 48.6 in June.
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Trade School Stocks Soar as Demand for Skilled Labor Rises
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(Bloomberg) -- A skilled worker shortage and the federal government's push to increase manufacturing in the U.S. are turning two for-profit vocational school operators — Lincoln Educational Services and Universal Technical Institute — into two of the hottest small cap stocks on Wall Street. PATH Train Service Resumes After Fire at Jersey City Station Mayor Asked to Explain $1.4 Billion of Wasted Johannesburg Funds Chicago Curbs Hiring, Travel to Tackle $1 Billion Budget Hole All Hail the Humble Speed Hump Both companies are among the 100 best-performing firms in the Russell 2000 Index over the last two years, with Universal Technical Institute's shares leaping around 335% and Lincoln Educational Services climbing 220%, compared with the index's 12% advance in that time. Investors and industry insiders expect the run to continue as the economy increasingly needs the skilled trade workers these companies produce. 'I just point to the 150,000 job openings for electricians, welders, and HVAC,' said John Barr, portfolio manager of the Needham Aggressive Growth Fund, which holds both stocks. Attitudes on vocational schools started changing during the pandemic, when many skilled trades were deemed essential services. This need for skilled trade workers is now becoming palpable, with the number of trade worker retirements rising sharply and the spending bill Congress recently passed encouraging capital investments and factory construction. 'There's a cultural shift going on,' said Alexander Paris, president of Barrington Research Associates. 'For 50 years, the trades have been out of favor for a number of reasons, including educational barriers, the reduction of trade school programs in high school, and every parent saying, 'No son of mine's gonna be an auto mechanic.'' The demand for skilled labor is elevating the status of trade workers, said Lincoln Educational Services Chief Executive Officer Scott Shaw, which means growth for the schools that train them. In the past, much of this education took place at local community colleges. But with federal funding for higher education being squeezed, for-profit trade schools are well-positioned to capitalize. Appealing Economics Universal Technical Institute has opened three campuses since 2018, and the company is planning to open at least 10 more in the next five years, Chief Executive Officer Jerome Grant said. But that isn't close to enough to meet the need for skilled workers. Even if the company's five-year expansion goes according to plan, 'we will not have made a dent in the supply and demand issue,' he said. The economies of scale in vocational education are particularly appealing, analysts say. Unlike traditional colleges that require dormitories, dining halls, and a host of other facilities to pay for and maintain, these trade schools run on relatively lean operations. 'The flow-through margins are high,' Barr said. 'It's like 60% to 70% for a new student,' he added. 'You can see double or more of the EBITDA in just a handful of years.' Lincoln Educational Services and Universal Technical Institute have 'excellent' balance sheets to manage expansion, said Texas Capital Securities analyst Raj Sharma, who has buy ratings on both stocks. 'We have opened two [campuses] a year and we know we can do it well,' Grant said. Both firms report their second-quarter earnings over the next week. In the first quarter, Lincoln Educational Services posted a 14% increase in revenues and raised its earnings guidance for the year, while Universal Technical Institute's revenues climbed 13% in their most recent earnings report in May. Shifting Priorities Beyond the dollars and cents, the strength these two companies are showing speaks to something larger that appears to be happening in the U.S. — a potential structural shift in the way Americans approach post-secondary education and career training. During the pandemic, the essential worker status of Lincoln Tech graduates kept many of them employed, Shaw said. That is not lost on many parents and educators, who are now encouraging their children and students to pursue careers in the skilled trades. 'We're having high schools come to us asking how can we get some of our programs into their high schools because students and parents are asking for it,' Shaw said. 'Pre-Covid, that never happened.' While the trade school education boom has potential to run for a while, it isn't risk-free for Lincoln and Universal. Both companies face execution challenges in several forms, analysts warn. Expanding too quickly could pressure margins. 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India accuses EU and US of ‘indulging' in trade with Russia
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India has accused the EU and US of 'indulging' in trade with Russia after Donald Trump criticised New Delhi for propping up Vladimir Putin's war machine by buying its oil. The country's foreign ministry said it was forced to buy 'predictable and affordable' Russian oil after other supplies were diverted to Europe after the invasion of Ukraine in 2022. It comes after the US president threatened to 'substantially raise' tariffs on India, adding the country was buying discounted Russian oil and 'selling it on the open market for big profits.' India called the attack 'unjustified and unreasonable' in a statement, arguing that its dealings with Russia were 'a necessity' for the country's economic prospects. It added: 'It is revealing that the very nations criticising India are themselves indulging in trade with Russia. Unlike our case, such trade is not even a vital national compulsion.' While Brussels has vowed to wean itself off Russian oil by 2027, it still imported €22.3bn (£19.3bn) worth of fossil fuels in 2024, with Moscow its third largest trading partner. India said the EU's trade with Russia, at €67.5bn (£58.6bn) of goods last year, 'is significantly more' than India's total trade with Russia, which stood at £51.7bn in the financial year ending in April. India's imports are dominated by oil, with total trade with Russia now six times higher than before the pandemic. By contrast, Brussels has reduced its trade with Moscow from €257bn in 2021. 'Europe-Russia trade includes not just energy, but also fertilisers, mining products, chemicals, iron and steel and machinery and transport equipment,' the Indian government said. India's government also accused the US of continuing 'to import from Russia uranium hexafluoride for its nuclear industry, palladium for its EV industry, fertilisers as well as chemicals'. Mr Trump has repeatedly criticised Mr Modi's administration in the past fortnight, both for the imbalance in trade between the nations and for purchasing Russian energy and weaponry. Last year, the US imported $87.3bn-worth of goods from India, according to official US data, while exporting $41.5bn-worth in the other direction. That leaves a deficit for the US of $45.8bn, an imbalance which Mr Trump regards as a sign that Americans are getting a raw deal. Services trade is more closely balanced, with flows of just under $42bn in each direction. Overnight, the US president ramped up his threat to increase taxes on trade with India. 'India is not only buying massive amounts of Russian oil, they are then, for much of the oil purchased, selling it on the open market for big profits,' he posted on his Truth Social site. 'They don't care how many people in Ukraine are being killed by the Russian war machine. Because of this, I will be substantially raising the tariff paid by India to the USA.' On Friday, the White House announced a raft of new tariffs on goods imports, including a 25pc tax on products arriving from India. However, the president said he will also impose 'a penalty' on top of that rate because of India's purchases from Russia. 'While India is our friend, we have, over the years, done relatively little business with them because their tariffs are far too high, among the highest in the world, and they have the most strenuous and obnoxious non-monetary trade barriers of any country,' Mr Trump posted online last week. The spat risks undoing years of work in Washington to forge closer links with New Delhi, potentially undermining efforts to prevent a rising titan on the world stage from falling into China's orbit. Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more. Solve the daily Crossword

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