Member Briefing August 25, 2025
U.S. Manufacturing Is Rebounding—But So Are Price Pressures
U.S. business activity picked up pace in August, led by a resurgent manufacturing sector that saw the strongest growth in orders in 18 months, a purchasing managers survey showed on Thursday. S&P Global's Flash U.S. Composite PMI Output Index, which tracks the manufacturing and services sectors, increased to 55.4 this month, the highest level since December, from 55.1 in July. A reading above 50 indicates expansion in the private sector. The improvement came largely from the manufacturing sector, where the flash PMI surged to 53.3 - the highest since May 2022 - from 49.8 in July and defying economists' expectations for a second month of contraction.
- The survey's measure of prices paid by businesses for inputs edged up to a three-month high of 62.3 from 61.3 last month, with both the services and manufacturing sectors reporting higher costs and companies citing tariffs as the key driver behind the increase. "Companies across both manufacturing and service sectors collectively reported the steepest rise in input prices since May and the second-largest increase since January 2023," the report said.
- The survey's measure of prices charged by businesses for goods and services rose to a three-year high of 59.3 in an indication that companies are increasingly passing along the costs from higher tariffs to consumers.
- Employment also improved, the survey showed. The composite employment index for both manufacturing and services rose to 52.8, the highest since January, from 51.5 in July.
Fed's Powell Says Monetary Policy Framework Back On More Traditional Footing
Federal Reserve Chair Jerome Powell on Friday announced an updated operating framework more oriented toward traditional efforts of promoting price stability, supplanting what had been a troubled effort that biased central bank policy toward its job mandate over its inflation target. The 2020 language was among the most poorly timed in the history of U.S. monetary policy. It came amid the pandemic lockdowns and shortly before what would become the worst burst of inflation since the 1970s. The Fed at that time adopted what it called “flexible average inflation targeting.” That’s Fed-speak for saying the central bank would tolerate inflation higher than its 2% target for a time to compensate for inflation that was lower than 2% for a period.
Powell said in the new framework "we removed language" about the low-rate environment and "we returned to a framework of flexible inflation targeting and eliminated the 'makeup' strategy" featured in the 2020 framework, the last time the Fed updated its overall operating principles. Joe Brusuelas, chief economist at RSM US LLP, said the framework would likely orient the central bank toward higher interest rates. "By returning to a focus on price stability and a 2% inflation target, this implies that all concerned should prepare for higher rates for longer despite a rising probability of near-term rate cuts," he said.
Cutting Tool Orders Show Weakening Demand
Shipments of cutting tools to U.S. machine shops and other manufacturers totaled $204.1 million during June 2025, -1.8% less than the May total and -3.9% less than the June 2024 figure. It was the third consecutive month for falling shipment volumes in this index to U.S. manufacturing activity, and the fourth month/month drop of 2025. During the period from January to June 2025, the CTMR shows cutting tool shipments totaled $1.23 billion, a -4.9% decrease versus the first half of 2024.
“As we continue to wait for clarity on tariffs, demand for cutting tools has stagnated and cooled,” stated Steve Boyer, president of USCTI. “The tariffs that have been implemented have increased raw material costs, and the ongoing challenge of finding talented workers remains concerning.” Boyer continued: “Orders for cutting tools have declined month over month and year over year in April, May, and June. Key markets such as aerospace, automotive, and heavy equipment continue to drive demand, but they have remained stagnant so far this year.”
Read more at American Machinist
Global Headlines
Middle East
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Israel Strikes On Yemeni Capital Sanaa Kill Six, Wound Dozens - Reuters
- Israel Begins Bombing Gaza City After Expanded Offensive Gets Green Light – France 24
- Israel Pounds Gaza City Suburbs, Vows To Press On With Offensive - Reuters
- Famine Confirmed In Part Of Gaza For First Time And Expected To Spread, IPC Says - Euronews
- Netanyahu Says Israel To Resume Gaza Negotiations To End War And Free Hostages - Reuters
- Battling Power Outages and Heat Wave, Iran Orders More Shutdowns - NYT
- Dutch Foreign Minister Resigns After Failing To Secure Sanctions Against Israel - CNN
- Interactive Map- Israel’s Operation In Gaza – Institute For The Study Of War
- Map – Conflicts in the Middle East – Live Universal Awareness Map
Ukraine
- Pentagon Has Quietly Blocked Ukraine’s Long-Range Missile Strikes on Russia – WSJ
- With No Ukraine Peace Deal, Trump Again Threatens Russia Sanctions - Reuters
- Ukraine Drone Hits Russian Nuclear Plant, Sparks Huge Fire At Novatek's Ust-Luga Terminal - AP
- Putin's Demand To Ukraine: Give Up Donbas, No NATO And No Western Troops, Sources Say - Reuters
- Russia Trying To Stop Meeting On Peace And Prolong War, Says Zelensky - BBC
- How Trump’s Ukraine Peace Push Stalled Out - WSJ
- 34 Years Ago, The Making Of An Independent Ukraine – France 24
- Interactive Map: Assessed Control Of Terrain In Ukraine – Institute For The Study Of War
- Map – Tracking Russia’s Invasion Of Ukraine – Live Universal Awareness Map
Other Headlines
- China Puts On Show of Force in Disputed Waters Amid High Tensions – Newsweek
- WHO Plans Relocations And Dropping Some Work In Budget Squeeze - Reuters
- Can Germany’s Merz Revive the Economy? Voters Are Running Out of Patience - WSJ
- At Least 18 Killed And Dozens Injured In Separate Colombia Attacks - BBC
- Argentina's Milei Dealt Congressional Blow As Senate Approves Spending Increases - Reuters
- The McWages Index: Which Countries Earn The Most Big Macs? – The Economist
- Decades After Genocide, Rwanda Emerges as Aggressive Regional Power -WSJ
- North Korea's Kim Decorates 'Heroes' Who Fought For Russia Against Ukraine – France 24
Policy and Politics
Healthcare Costs to Increase 9% in 2026
Employers have faced steep, beyond expectation rises in healthcare costs over the last two years with a further 9% rise predicted for next year. This will put costs a whopping 62% higher than in 2017, the Business Group on Health’s 2026 Employer Health Care Strategy Survey found. This is being triggered by increasing use of existing services and the addition of new medications and treatments driving further demand, according to the 121 multinational organisations covering 11.6 million employees who responded. According to this year’s findings, employers predict healthcare cost trend increases for 2026 will come in at a median of 9%, offset to 7.6% where plan design changes are made.
In response to these cost concerns, more than four out of 10 employers (41%) are either changing pharmacy benefit managers (PBMs) or conducting a request for proposal (RFP), while 51% are either changing or conducting an RFP for other health and wellbeing vendor relationships. Almost eight in 10 (79%) of employers have seen an uptick in the use of GLP-1s, while an additional 15% anticipate seeing such an increase in the future. In 2024, a quarter of all employer healthcare spend (24%) went to pharmacy expenses and employers see no relief on the horizon, with a forecast of an 11% to 12% increase in pharmacy costs heading into 2026.
Read More at Health & Protection
Hochul Meets With Legislative Leaders On Redistricting; Heastie Says IRC 'Needs To Be Changed'
With the news that lawmakers in the Texas House of Representatives passed a new congressional map at the urging of President Donald Trump, intended to boost Republicans in the 2026 midterm elections, Gov. Kathy Hochul posted on social media: Game on. It appears she’s wasting no time trying to figure out a game plan with legislative leaders, though there is little New York can do in the short term, given constitutional limitations, which would require an amendment to be passed by two consecutive legislatures before being sent to voters.
While the amendment is technically in the hands of Heastie and Stewart-Cousins, it’s Hochul who has been at the center of the issue on the national stage, and earlier in the week, she criticized the 2014 amendment that birthed the 10-member commission. “In 2014, my predecessor and the good government groups and the legislature decided there should be an independent redistricting commission, take the politics out of politics. You can decide whether that was a good idea or not, but a lot of states were not doing that,” she said. “As a result, we’ve been, by my judgment, disadvantaged.”
Read the more at NY State of Politics
Ghost In The Grid: Cuomo’s Indian Point Shutdown Haunts New York’s Electric Mix
Former Gov. Andrew Cuomo’s successful quest to shut down the Indian Point nuclear plant spiked electricity costs and dirtied the energy grid of the city he’s now running to lead. The closure, once hailed by some fellow Democrats as a bold safety move, is now under heavier scrutiny as New York confronts surging electricity demand, rising emissions and lagging renewable projects. Key Democrats including Gov. Kathy Hochul and Rep. Ritchie Torres have voiced regrets or pointed to poor planning. And the city’s mayoral front-runner, democratic socialist Zohran Mamdani, has been largely silent — leaving Cuomo’s energy legacy newly relevant as nuclear power gains ground in national climate politics.
Key Democrats including Gov. Kathy Hochul and Rep. Ritchie Torres have voiced regrets or pointed to poor planning. And the city’s mayoral front-runner, democratic socialist Zohran Mamdani, has been largely silent — leaving Cuomo’s energy legacy newly relevant as nuclear power gains ground in national climate politics. Cuomo still defends the decision to close the plant because of major safety concerns. Campaign spokesperson Rich Azzopardi said the plant was on a fault line with no evacuation plan for residents if something happened. “At the time it was decommissioned, there were projects in the pipeline that would have replaced the power ... but they fell behind,” Azzopardi said.
Political Headlines
- How GOP Lawmakers Are Privately Distancing Themselves From Trump’s Tariffs – WSJ
- 5 Things To Know About FBI Search Of John Bolton’s Home, Office – The Hill
- Texas Senate Passes New Republican-Drawn Congressional Map - NBC
- 5 Things To Know About California’s Special Election On Redistricting – The Hill
- Federal Judge Orders ‘Alligator Alcatraz’ To Be Shut Down Within 60 Days—No New Detainees - Forbes
- State Senator Peter Oberacker to Challenge Riley in NY-19
- Trump’s ‘Law and Order’ Push in D.C. Looks a Lot Like an Immigration Raid - WSJ
- Supreme Court Allows Trump To Cut Millions In DEI-Related Health Grants - Forbes
- All 55 Million Active Immigrant Visas Under Review, Trump Admin Says - Newsweek
- US Defense Department To Buy Cobalt For Up To $500 Million - Reuters
- Trump Tracker: Keep Tabs On The Latest Announcements And Executive Orders - WSJ
Health and Wellness
Employers Let Workers Trade-In PTO For Cash, Student Loan Payments
By letting workers convert unused PTO into cash, student loans or 401(k) contributions, more employers are giving workers choice. Goldman Sachs Ayco’s 2025 Benefits and Compensation Trends report, published earlier this year, showed some employers even permit workers to convert their time into health savings account contributions; into charitable giving, including donating time off to co-workers; and into 529 plan, or qualified tuition, programs. Jonathan Barber, vice president and head of compensation and benefits solutions at Goldman Sachs Ayco, called the benefits situation a “perfect storm.”
Workers, often in hybrid and remote roles, are taking less PTO and want flexibility, and companies are willing to offer flexibility using dollars they’ve already set aside, Barber said. “We’re seeing that across the board with employee benefits,” Barber said. However, it’s not a free-for-all, they warned. The benefits and compensation trends report shows that most companies limit how many hours can be converted annually; the limit typically is 40 hours per year.
Industry News
Trade Wars
- U.S. And EU Reveal Trade Deal Details—Here’s How Tariffs Will Affect Cars, Drugs And Other Goods – Forbes
- The Biggest Retailers Are Thriving in the Tariff Economy - WSJ
- US Tariffs Behind Surge In Global Arabica Prices, Brazil Exporters Group Says - Reuters
- Higher Tariffs Are Kicking In. Here’s What Walmart And Other Retailers Said About Their Impact - CNBC
- Subaru Forecasts A 50% Profit Decline For FY2026 – Automotive Dive
- European Postal Services Suspend Shipment Of Packages To US Over Tariffs - AP
- The Likely Winners And Losers From Trump's Threatened 300% Chip Tariff – Nikkei Asia
- Canada Dropping Many Retaliatory Tariffs, But Not Auto, Steel And Aluminum – Automotive News
- The Weaponized World Economy: Surviving the New Age of Economic Coercion – Foreign Affairs
Inside Texas Instruments’ $60 Billion U.S. Megaproject, Where Apple Will Make Iphone Chips
When Texas Instruments announced a $60 billion manufacturing megaproject in July, it was a bold bet that companies would want to mass produce foundational microchips on U.S. soil. In August, Apple vowed to do just that. During the same Oval Office press conference where President Donald Trump announced a 100% tariff on chips from companies not manufacturing in the U.S., Apple CEO Tim Cook upped his companies’ U.S. spending commitment to $600 billion over the next four years, up from an original $500 billion announcement in February. Part of that spending, Cook said, will go toward making “critical foundation semiconductors” for iPhones and other devices at Texas Instruments’ new chip fabrication plants in Utah and Texas.
CNBC became the first news organization to see the inside of TI’s newest fab in Sherman, Texas. There, full production is on schedule to start by the end of 2025. It’s one of seven new factories the chipmaker is building in the U.S. to provide chips to major customers like Nvidia, Ford Motor, Medtronic and SpaceX. Although Texas Instruments doesn’t make the world’s most advanced chips, its essential components are found almost everywhere, from smartphones to the graphics processing units powering generative AI.
Trump Says U.S. Will Take Nearly 10% Equity Stake in Intel
President Trump said the government is taking a nearly 10% stake in Intel, capping a two-week frenzy in Washington over the future of the company and fueling speculation about what else might be done to help the troubled chip maker. Trump said in the Oval Office Friday that the company has agreed to give the government the stake as part of discussions about the company’s future and billions of dollars in grants it has received from the 2022 Chips Act.
As part of the deal, the government won’t be on the board or play a major role in the company’s governance, Commerce Secretary Howard Lutnick said in a CNBC interview earlier this week about the continuing conversations. Intel has about $8 billion in grants from the Chips Act that could be converted to part of the 9.9% equity stake. The company is losing about $1 billion a month and needs customers or deals for its chip design and manufacturing businesses to get back on track, industry analysts say.
J&J To Invest $2 Billion To Boost US Manufacturing
Johnson & Johnson said on Thursday it would invest $2 billion in North Carolina as it aims to expand its U.S. manufacturing presence amid looming drug import duties proposed by President Donald Trump's administration. Major drugmakers, including Eli Lilly and AstraZeneca have also committed to shell out billions of dollars to scale up their U.S. footprint in response to Trump's efforts, including tariff threats. Earlier this month, Trump said he plans to impose phased-in tariffs for the pharmaceutical sector, which could start small and eventually rise to 250%.
J&J said on Thursday it has reached a 10-year agreement with Tokyo-based contract drug developer Fujifilm Diosynth for its more than 160,000-square-foot manufacturing facility in Holly Springs, North Carolina, which would create about 120 new jobs. J&J would also announce plans for additional manufacturing facilities in the U.S. and the expansion of current U.S. sites in the coming months. The healthcare conglomerate had said in March it would raise U.S. investments by 25% to more than $55 billion over the next four years, including a separate plant in Wilson, North Carolina.
Existing Home Sales Climb in July, Price Growth Slows
Sales of previously owned homes rose 2% in July compared with June to 4.01 million units, on a seasonally adjusted, annualized basis, according to the National Association of Realtors. Sales were 0.8% higher than July 2024. These sales are counted by closings, so contacts likely signed in May and June, when the average rate on the 30-year fixed mortgage was in decline. That rate exceeded 7% briefly in May and then ended June at 6.67%. There were 1.55 million homes for sale at the end of July, an increase of 15.7% from the same month last year. At the current sales pace, that represents a 4.6-month supply. A six-month supply is considered balanced between buyer and seller.
It is now taking longer for homes to sell. The average home in July sold in 28 days, up from 24 days the year before. First-time buyers also fell off slightly, representing 28% of sales, down from 30% in June and 29% in July 2024. Investors made up 20% of all transactions, up from 13% in July 2024. This could be due to the increase in supply. With mortgage rates still relatively high, the share of all-cash buyers increased to 31% of transactions from 27% the year before.
Boeing in Talks to Sell China Hundreds of Planes as Part of U.S. Trade Deal
Beijing and Washington are discussing a trade deal that could include fresh orders totaling hundreds of Boeing, people familiar with the matter said. The purchase is envisioned as a component of a more expansive trade deal if the world’s two largest economies can reach an agreement in the next few months, they said. The purchase discussions were earlier reported by Bloomberg News, which said China could buy as many as 500 jets from the American plane maker. U.S. passenger jet orders are becoming a favored concession for countries looking to improve tariff terms from American authorities. Qatar’s state-owned airline in May agreed to buy up to 210 wide-body 787 and 777X jets from Boeing as part of a broader bilateral agreement. Announced trade deals with the U.K., Japan and Indonesia have also tacked on pledges to buy a certain number of the American airplanes.
Talks between the two superpowers are significantly more complex. The two sides are at odds over a range of trade and national-security considerations that cover everything from the supply of precious minerals to the delivery of artificial-intelligence chips. The timeline of the craft deal is still fluid and subject to the progress of the broader trade talks, some of the people said. Boeing must first work through a deep backlog of undelivered jets before it can start taking new orders, let alone fulfilling them. The plane maker reported more than 100 unfilled orders for Chinese customers through July.
Energy Department To Boost Critical Mineral Supply With $1B Funding
The Energy Department will offer nearly $1 billion in funding for projects that advance and expand mining, processing and manufacturing technologies within the critical minerals and materials supply chains, according to an Aug.13 press release. The funding stems from President Donald Trump’s January executive order instructing the Energy Department to ensure federal support for critical mineral projects.
“For too long, the United States has relied on foreign actors to supply and process the critical materials that are essential to modern life and our national security,” Energy Secretary Chris Wright said in the release. “Thanks to President Trump’s leadership, the Energy Department will play a leading role in reshoring the processing of critical materials and expanding our domestic supply of these indispensable resources.”
Read more at Supply Chain Dive
Hadrian Invests $200M To Build Advanced Manufacturing Facility In Arizona
Hadrian has announced plans to build a large-scale manufacturing and software hub, known as Factory 3 (F3), in Mesa, Arizona. The company, which develops AI-powered factories for the aerospace and defense sectors, invested $200 million into the project, which will create 350 new jobs. The 270,000-square-foot facility will support manufacturing operations that convert raw materials into components and mission-critical systems. Powered by Opus, Hadrian’s proprietary software stack for production autonomy, the factory is expected to be fully operational by early 2026. The software enables rapid factory deployment in under six months and supports scalable, precision production that strengthens aerospace and defense supply chains.
Hadrian also announced a broader $260 million capital investment that includes expanded operations in both California and Arizona. The funding will allow the company to scale its production and research footprint. These expansions include a 400,000-square-foot corporate and R&D headquarters and the launch of Hadrian Maritime—a new division focused on applying Hadrian’s autonomous factory model to shipbuilding and naval defense.
Front Line Reports Reinforce Why Manufacturing Is a Top Cyber Target
Nation-state cyber threats are no longer confined to government networks or utility grids. Manufacturing environments have become high-value objectives for adversaries seeking to disrupt economies, create geopolitical leverage, or steal intellectual property. The reason is simple. Manufacturing networks sit at the intersection of physical production and digital control and they're often poorly defended. In recent conversations with CISOs, OT engineers, and plant managers, a common theme surfaces; while digital transformation is reshaping operations, cybersecurity hasn't kept pace. Manufacturing systems remain uniquely vulnerable, and most organizations are struggling to close the gap.
Ransomware remains a dominant tactic, particularly variants tailored to disrupt physical operations. We’ve seen increasing attempts by well-resourced adversaries to gain a foothold in manufacturing networks via insecure remote access tools. In some cases, these intrusions remain undetected for weeks. In others, the attack escalates quickly, halting production and causing reputational and financial damage.
Read more at Manufacturing Business Technology