Member Briefing December 18, 2024
U.S. Manufacturing Output Rebounds In November, But Less Than Expected
U.S. manufacturing production rebounded less than expected in November as the boost from motor vehicle output was partially offset by persistent weakness in the aerospace industry, despite the end of a crippling strike by factory workers at Boeing. Factory output increased 0.2% last month after a downwardly revised 0.7% decline in October, the Federal Reserve said on Tuesday. Economists polled by Reuters had forecast production rebounding 0.5% after a previously reported 0.5% decrease.
Manufacturing, which accounts for 10.3% of the economy, continues to tread water in the aftermath of the U.S. central bank's aggressive monetary policy tightening between March 2020 and July 2023. Growth is, however, expected next year against the backdrop of lower interest rates. Motor vehicle and parts output soared 3.5% last month. Production of aerospace and miscellaneous transportation equipment fell 2.6%, attributed to declines in the manufacturing of aircraft parts. That followed a 6.7% tumble in October. Durable manufacturing production increased 0.7%, also lifted by gains in machinery output. Nondurable manufacturing output dropped 0.3%, pulled down by decreases in the production of apparel and leather as well as petroleum and coal products, and paper.
Auto Sales and Ecommerce Drive Outsized Gain in Retail Sales
Retail sales rose 0.7% in November. Economists had expected a 0.6% rise in spending, according to Bloomberg data. Meanwhile, retail sales in October were revised up to a 0.5% increase from a prior reading that showed a 0.4% increase in the month, according to Census Bureau data. A 2.4% month-over-month increase in motor vehicle and auto parts sales, as well as a 1.8% increase in online sales, drove the gains.
November sales, excluding auto and gas, rose 0.2%, below consensus estimates for a 0.4% increase. The control group in Tuesday's release, which excludes several volatile categories and factors into the gross domestic product reading for the quarter, increased by 0.4%, in line with estimates. This comes as the FOMC is convened in Washington today for day one of their two-day meeting in the lead-up to tomorrow's rate decision. Financial markets widely expect another 25 basis point cut, but the impulse to remove restrictive policy could be growing less urgent.
NY Fed: Service Sector Activity Shrinks Slightly
Business activity fell slightly in the New York-Northern New Jersey region, according to the NY Fed’s December Business Leader survey. The headline business activity index declined five points to -5.2. Twenty-three percent of respondents reported that conditions improved over the month and 28 percent said that conditions worsened. The business climate index remained negative at -23.7, pointing to an ongoing worsening business climate.
- The employment index fell six points to -1.0, its lowest level in several months, suggesting employment levels were little changed.
- The wages index held steady at 29.4, indicating that wages increased at about the same pace as the past couple of months.
- The prices paid index was similar to last month at 47.7, a sign that input price increases were little changed,
- The prices received index fell five points to 11.7, a multiyear low, suggesting price increases moderated. Supply availability improved slightly.
- The index for future business activity climbed for a fifth consecutive month, rising four points to 28.0.
- The index for the future business climate remained positive at 11.9, suggesting firms expect activity to improve and the business climate to be better than normal in six months.
- A modest increase in employment is also expected in the months ahead.
Global Headlines
Middle East
- Gaza Ceasefire Talk Swirls As Officials Push For Deal – Reuters
- The Captagon Trafficking Ring: How Assad Turned Syria Into A Narco State – France 24
- U.S. Fears Military Buildup by Turkey Signals Preparations for Incursion Into Syria - WSJ
- Iran Faces Energy Crisis With Widespread Closures, Fuel Shortages - VOA
- Israel Plans An Extended Occupation Of Syrian Buffer Zone - AP
- Syria’s De Facto New Leader Ahmed Al-Sharaa Calls For Lifting Of Sanctions – France 24
- Israel approves plan to expand settlements on occupied Golan Heights – Washington Post
- France Returns Flag To Damascus Embassy As New Syria Authorities Build Contacts With West - Reuters
- U.S. State Department Sued by Palestinians Over Military Aid to Israel - Newsweek
- Interactive Map- Israel’s Operation In Gaza – Institute For The Study Of War
- Map – Tracking Hamas’ Attack On Israel – Live Universal Awareness Map
Ukraine
- Russian Lawmakers Approve New Bill Expanding Definition Of High Treason - VOA
- Ukraine Says It Uncovered 12 Agents Spying For Russia On F-16s, Air Defences - Reuters
- North Koreans Are 'Legitimate Targets' in Ukraine, US Says – Newsweek
- NATO Takes Over Coordination Of Military Aid To Kyiv From US, Source Says - Reuters
- UK Slaps New Sanctions On Russian Shadow Fleet - Politico
- Ukraine Says It Killed Senior Russian General in Moscow Scooter Bombing - WSJ
- Ukraine Says Russia Used North Korean Troops For ‘Intensive Offensive’ In Kursk Region – France 24
- Satellite Images Show Scale of Russian Losses As 'Outdated' Vehicles Used - Newsweek
- 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
- Why China Is Losing Interest In English – The Economist
- 14 Dead And Hundreds Injured After A Magnitude 7.3 Quake In Vanuatu Leaves Some Trapped In Rubble - AP
- China Wants To Dominate In AI — And Some Of Its Models Are Already Beating Their U.S. Rivals - CNBC
- China Plans Record Budget Deficit Of 4% Of GDP In 2025, Say Sources - Reuters
- 11 Things To Know About France’s New Prime Minister François Bayrou - Politico
- Bolivia Issues Arrest Warrant For Ex-President Morales Over Minor 'Trafficking' – France 24
- EU Opens Investigation Into TikTok And The Romanian Election - Politico
- US Targets North Korean Money Laundering Network With Sanctions - VOA
- The Housing Affordability Crisis Is Going Global – WSJ
Policy and Politics
Massive Defense Bill Sees Clear Path In Senate, Despite Transgender Measure
The Senate is on track to vote on the country’s massive annual defense spending bill Wednesday, with signs that it will pass smoothly despite Democratic objections to language involving transgender care for minors and its massive $895.2 billion top line. The National Defense Authorization Act (NDAA), which easily passed the House last week, is scheduled for a floor debate Wednesday, after a vote to invoke cloture planned for late Monday.
The House and Senate earlier this month unveiled their more than 1,800-page compromise version of the NDAA, which includes measures to boost the U.S. presence in the Indo-Pacific, support pay raises for troops, and fund new ships, aircraft and help the defense industrial base. But the legislation also includes language staunchly rejected by Democrats, including a provision that restricts coverage of gender-affirming care for transgender children of service members. A provision aimed at curtailing diversity, equity and inclusion (DEI) programs within the military also made it into the bill and would restrict the Defense Department from creating any new positions related to DEI for a year. Despite opposition from liberal Democrats and some apprehension from Republicans, the NDAA passed out of the House in a bipartisan 281-140 vote, with 81 Democrats voting in favor of it.
Republicans Fume Over Speaker's Spending Plan Days From Shutdown Deadline
Several House Republicans stormed out of Tuesday morning’s conference meeting furious over Speaker Mike Johnson’s handling of the government funding bill – which still isn’t ready and puts the federal government on the brink of a shutdown at the end of the week. Republicans had initially promised to release bill text over the weekend with the aim of holding a vote early in the week, but outspoken criticism from within their ranks has continually delayed negotiators from finalizing the legislation. Johnson denied that the evolving package amounts to a so-called “Christmas tree omnibus,” but confirmed that the measure is not a clean continuing resolution and will include a disaster relief package -- reported to be more than $100 billion -- as well as $10 billion for the agricultural community.
After relying on Democrats for bipartisan support to pass the past five continuing resolutions, Johnson brushed off the criticism bubbling up within his ranks, stressing that the bill has not been released. “I got a couple of friends who will just say that about any end of year funding measure,” Johnson said. “This is not an omnibus, OK? This is a small CR that we've had to add things to that were out of our control. These are not manmade disasters. These are things that the federal government has an appropriate role to do.”
Senate GOP Blocks Last-Ditch Votes On Biden Finance Nominees
The outgoing chair of the Senate Banking Committee is throwing in the towel on trying to confirm two key Biden administration appointees with just days before the upper chamber is set to leave for the year. Sen. Sherrod Brown (D-Ohio), who lost his reelection bid last month, set up Banking panel votes for Caroline Crenshaw, a commissioner at the Securities and Exchange Commission (SEC), to continue at the SEC, and for Gordon Ito to take a seat on the Financial Stability Oversight Council as its insurance expert.
But the committee canceled the executive session scheduled for Wednesday, which would have come before a general vote on the nominations on the Senate floor. The cancellation came after Republicans blocked the committee from meeting last week, the aide said. “Today, my Republican colleagues and I blocked Banking Democrats’ 11th-hour attempt to install an anti-crypto, climate activist at the SEC,” Sen. Bill Hagerty (R-Tenn.) said in a post on social media. If the executive session had gone through, it wasn’t clear that the nominations would have made it through the Senate anyway due to possible opposition from Sens. Joe Manchin (I-W.Va.) and Kyrsten Sinema (I-Ariz.), along with Sen. Adam Schiff (D-Calif.), who is viewed as an ally of Big Tech.
Health and Wellnes
Patients, Tired Of Waiting Years For A Transplant, Are Signing Up In Droves To Receive Vital Organs From Pigs
The calls and emails started coming into NYU Langone Health and Massachusetts General Hospital soon after doctors began experimenting with pig organs in humans. People worried they’ll never get a scarce human transplant asked: When could we get a pig kidney? Two U.S. companies aim to begin the world’s first clinical trials of xenotransplantation in 2025 – using pig kidneys or hearts to try to save human lives. Would-be volunteers are impatient to see if they’ll qualify as researchers fine-tune how best to test if the humanized pig organs they’ve designed might really work.
Anticipation is growing with news that an Alabama woman was faring well after a pig kidney transplant at NYU in late November. Towana Looney is the fifth American to receive a gene-edited pig organ, each case so far an emergency experiment for people out of options. None of the previous recipients — two given pig hearts and two kidneys — survived more than two months but that hasn’t deterred researchers hunting an alternative to the dire shortage of transplantable organs.
- Biden Administration Gas Export Report Could Upset Trump Energy Policy – Politico
- Inside Donald Trump's Shadow Diplomacy As Joe Biden Fades From World Stage - Newsweek
- What Trump’s Cabinet Picks Tell Us About His Agenda - WSJ
- Trump Suggests Pardoning Eric Adams, Jan. 6 Rioters—Here’s Who Else He Could Pardon - Forbes
- Trump's Transition Team Arrived At Pentagon Monday - Reuters
- Trump Sues Des Moines Register, Pollster Over Late ‘Outlier’ Poll – CNN
- Can Trump Privatize The Postal Service? What To Know As President-Elect Says He’s ‘Looking At’ USPS Changes - Forbes
- Keith Kellogg As Trump's Ukraine-Russia Envoy: Right Man For The Mission? - VOA
- Alexandria Ocasio-Cortez Defeated in Bid for Promotion - WSJ
- Jill Biden Says She’s Taught Final Class At Virginia Community College – The Hill
- Tracking Trump’s Cabinet Picks – Politico
Industry News
German Business Mood Hits Post Pandemic Low, Stoking Recession Jitters
Business confidence in Germany darkened this month as the government of Chancellor Olaf Scholz fell apart and the country’s manufacturers struggle to get back on their feet, raising fears of recession in Europe’s most important economy. The Ifo Institute’s business-climate index, released Tuesday, slipped to 84.7 in December from 85.6 in November, marking a sixth fall in seven months and the lowest point since May 2020, when Europe was in the throes of the global Covid-19 pandemic and widespread lockdowns. Economists had been expecting a lesser fall, to 85.5.
“In manufacturing, the index fell markedly [in December,]” the Ifo Institute said, pointing to weakening orders and production cutbacks that are damping expectations for the new year. The services sector also booked gloomier sentiment, Ifo said. In contrast, a sentiment indicator released by ZEW showed an improvement in the economic outlook as financial markets look forward to a new government in Berlin and further cuts to eurozone interest rates, ZEW said Tuesday. Earlier this week, however, closely watched purchasing managers’ surveys pointed to another month of slowdown in the German private sector.
Japan's Honda And Nissan To Begin Merger Talks
Japanese auto giants Honda Motor and Nissan Motor will start negotiations to merge as they face growing competition from bigger global electric vehicle makers, the Nikkei newspaper reported on Tuesday. The two companies have increased ties in recent months as they face heavy competition from Chinese EV makers that has added pressure on legacy brands struggling to make enough profit from their EV ventures.
"As announced in March of this year, Honda and Nissan are exploring various possibilities for future collaboration, leveraging each other's strengths," the companies said in separate statements, adding they will inform stakeholders of any updates at an appropriate time. Nissan and Honda, Japan's third and second biggest automakers after Toyota, have been losing market share in China. That nation accounted for almost 70% of global EV sales in November, with more than 1.27 million in purchases for the month.
Pfizer Forecasts 2025 Profit In Line With Expectations As It Seeks Turnaround
Pfizer on Tuesday forecast 2025 profits roughly in line with Wall Street expectations, offering some relief to investors after a tumultuous year during which it attracted criticism from activist hedge fund Starboard Value. The drugmaker also said it was expecting 2025 sales of its Covid-19 vaccine and drug to be consistent with 2024 levels. The company expects adjusted profit of $2.80 to $3 per share, compared with analysts’ average estimate of $2.88 per share, according to data compiled by LSEG.
Pfizer forecast 2025 revenue in the range of $61 billion to $64 billion, compared with the estimates of $63.26 billion. Pfizer has been reining in costs and shedding non-core businesses to pay down debt as it rebuilds itself after a sharp slump in sales of Covid-19 products. Its shares have fallen nearly 12% this year and trade at less than half their value during the peak of the Covid-19 pandemic.
While Most Employees Find Meaning At Their Job, 35% Say They Are Thinking About A Change
Although 8 in 10 workers say they find meaning in their current jobs, 1 in 3 also say they’re eyeing the exit, which reveals a paradox in the evolving workplace landscape, according to a November report based on ManpowerGroup’s inaugural Global Talent Barometer. Across 16 countries, the overall barometer sits at 67%, which is determined by employee scores for well-being (64%), job satisfaction (63%) and confidence (74%).
“The employee-employer relationship is at a crossroads. People expect work to offer them more. More balance. More options. More humanity. More than just a paycheck,” Becky Frankiewicz, chief commercial officer for ManpowerGroup, said in a statement. Overall, job security sentiment comes in at 71%, but trust in management for career development lags behind that at 63%, which could indicate a disconnect between leaders and workers, the report found.
U.S. Auto Industry At Competitive Risk Asserts Blunt Report From Execs
Threats from China, stalling vehicle sales, slower than expected electric vehicle adoption, inadequate lobbying, wasteful product development practices and aggressive regulatory pressures are all adding up to one thing—the U.S. automotive industry at risk. That’s the title of a blunt and revealing “white paper” created by senior auto industry officials at October’s 2024 SAE Detroit Section Global Leadership Conference, or GLC, but now seeing daylight as insiders begin to share the seven-page document.
The GLC is an annual, invitation-only, meeting held at The Greenbrier, a resort in White Sulphur Springs, West Virginia where top industry executives gather to discuss “thought provoking and challenging” topics, according to top organizer Renee’ Bovair, executive director, SAE Detroit Section, in an interview. “The bottom line is that the U.S. automotive industry is at risk,” the paper stated. “Our manufacturing capacity and industrial workforce is withering away. On its current path the automotive industry will end the decade as a much smaller and weaker economic engine than it is now.”
VW, Unions Likely To Strike Deal In Small Hours Or Break Off Till Next Year, Source Says
Volkswagen and German unions will most likely either reach a deal in the early hours of Wednesday or adjourn until the new year, a source familiar with discussions said on Tuesday, as the two sides strive to reach a cost-cutting pact before Christmas. After a 13-hour negotiation round on Monday ending after midnight, talks are expected to stretch even further into the early hours of Wednesday, the source said, declining to be named because discussions are private. Both sides had expected the talks to last several days in a last-ditch attempt to reach an agreement before Christmas and avoid the conflict, which ended the formerly peaceful relationship between works council chief Daniela Cavallo and Chief Executive Oliver Blume, from dragging into next year.
Europe's biggest automaker is struggling with falling demand, rising costs and cheap competition from China. If no deal is reached, labour leaders have threatened to escalate strike action in the new year. With the support of the union's board, which would meet on Friday if talks collapse, worker representatives at each plant could vote for 24-hour or open-ended strikes in January.
EPA Sets Reporting Rule For New Uses Of PFAS In Manufacturing
The Environmental Protection Agency finalized a rule this month requiring manufacturers to submit advance federal notice before adding any new PFAS chemicals or other toxic substances into their production processes. The new rule aims to bolster the EPA’s evaluation process for adding new chemicals and determining their manufacturing, distribution and disposal under the Toxic Substances Control Act.
The change, which aligns with a 2016 chemical safety amendment under TSCA, will also more strictly limit exemptions from the federal review process. Previously, manufacturers could get exemptions for new chemicals if they manufactured 10,000 kilograms a year or less or have low environmental release and human exposure, according to the EPA website. “The NAM believes this proposed rule will create unduly burdensome compliance requirements and increase costs for manufacturers and consumers as written,” NAM Vice President of Domestic Policy Chris Phalen said this month.
Read more at Manufacturing Dive
GM Plans to Overhaul Detroit’s Iconic Towers. A Battle Is Brewing With Taxpayers.
General Motors and billionaire developer Daniel Gilbert are planning to overhaul downtown Detroit’s iconic office complex Renaissance Center. The venture’s $1.6 billion plan would demolish two of RenCen’s five towers and retail podium in a 5.5 million square foot complex that is disconnected from the rest of downtown. In their place, GM and Gilbert aim to inject new vibrancy into the neighborhood by revamping RenCen’s hotel and one office tower while adding housing, a waterfront park and an entertainment district. GM plans to relocate its headquarters to a new building being developed by Bedrock, Gilbert’s real-estate company, which would leave the complex’s office space mostly empty.
Their proposal calls for $350 million in public subsidies. That is where the battle is heating up. Members of the state legislature have questioned why a billionaire and the largest auto manufacturer in the U.S. need public assistance. “People need [public funds] for roads more than the corporations need it,” said Republican state Rep. Matt Hall, the incoming Michigan House majority leader.
Hallmark’s Last New Christmas Movie Comes Out Saturday—Here’s A Supersized Guide To All 32 New Holiday Films
The Hallmark Channel’s “Countdown To Christmas” has been as well received as ever this year, and the network has cemented its annual seasonal dominance of TV ratings, regularly beating out even the most popular cable sports and news broadcasts with its line-up of romantic holiday hits. Hallmark will debut its last new holiday film of the season on Saturday at 8 p.m. EST with “Happy Howlidays,” the story of two dog lovers who come together just in time for Christmas.
Actress Jessia Lowndes will star in “Happy Howlidays” opposite Ezra Moreland, 31, a former Navy swimmer who won the "Finding Mr. Christmas” reality TV competition to become the next Hallmark leading man. The premiere will be the last of the “Countdown to Christmas” for the popular entertainment channel, which will have put out 32 new holiday movies this year including the much-anticipated “Chiefs Love Story” film said to be based on the real-life romance of pop star Taylor Swift and NFL tight end Travis Kelce. The Chiefs movie—which included a cameo from Kelce’s real-life mom, Donna Kelce, and Kansas City Chiefs head coach Andy Reid—was the 13th-most popular cable broadcast of the week of Thanksgiving with nearly 3 million live viewers, according to Nielsen, making it the most-watched cable movie of the year to date across all key demographics.