Member Briefing February 18, 2025
US Industrial Production Rises Largely on Boost To Utilities From Colder Temperatures. Mfg Off
US industrial production came in better than expected last month, the Federal Reserve said Friday, as aircraft manufacturing continued to rebound following a strike at aviation giant Boeing. Industrial output increased by 0.5 percent in January after rising by a revised 1.0 percent a month earlier, the Fed said in a statement. The increase was largely the result of the utilities index which rose 7.2 percent, "as cold temperatures boosted the demand for heating," the Fed said in its statement, adding that the mining index had fallen 1.2 percent.
Manufacturing output fell 0.1 percent, the Fed said. Most of the manufacturing weakness stemmed from auto & parts production specifically, which slipped 5.2% last month. Excluding autos, manufacturing production rose 0.2%. Elsewhere, a continued strike-related pick up in aircraft manufacturing helped offset weakness, with aerospace production posting its second 6%+ monthly gain. The two largest U.S. manufacturing industries, chemicals and food & beverages, were flat and modestly down last month.
January Jobs Report Shows Mostly Stable Manufacturing Job Growth
Employment in manufacturing rose slightly in January 2025 while the overall unemployment rate fell by 0.1 points. According to the last week’s preliminary figures from the Bureau of Labor Statistics, durable-goods manufacturing actually lost some jobs last month, but the loss was offset by larger gains in the smaller nondurable-goods sector.
January was overall a quiet month for manufacturing-related jobs growth. While employment in the related field of mining and petroleum extraction fell by 8,000 jobs, most other manufacturing-adjacent sectors saw only slight increases or decreases in employment, including transportation and warehousing.
- Transportation equipment manufacturers, particularly automotive manufacturers, saw the most dramatic change for manufacturing employment last month. The number of people employed in producing transportation equipment fell by 12,700 in January, including 9,700 in automotive manufacturing.
- The durable goods sector as a whole lost 3,000 jobs, but small, across-the-board increases in nondurable-goods production of 6,000 more jobs led to a net increase in manufacturing employment last month by about 3,000 jobs. Paper manufacturing and printing saw the highest increase there, with growth of about 1.5 thousand jobs
- The average wages for manufacturing workers rose 12 cents to $34.64 an hour.
- Durable-goods wages kept up with average overall wages, increasing an average of 17 cents to $36.74,
- Nondurable goods production wages rose just 3 cents to $31.11.
Retail Sales See Biggest Drop In A Year To Start 2025
New data out Friday showed retail sales declined more than expected in the first month of 2025. Headline retail sales fell 0.9% in January, more than the 0.2% decline economists had expected, according to Bloomberg data. This marked the largest month-over-month decline in retail sales since January 2024. Retail sales in December were revised up to 0.7% from a prior reading that showed a 0.4% increase in the month, according to Census Bureau data.
The control group in Thursday's release, which excludes several volatile categories and factors into the gross domestic product (GDP) reading for the quarter, declined by 0.8%. Economists had expected a 0.3% increase. January sales, excluding auto and gas, fell 0.5%, also below consensus estimates for a 0.3% increase. A 4.6% decline in sporting goods and hobby sales led the declines, while sales at motor vehicle and parts dealers fell 2.8%.
Global Headlines
Middle East
- Freed Hostages Dekel-Chen, Troufanov And Horn Back In Israel After 498 Days In Captivity - Times Of Israel
- Released Gaza Hostages Face Long, Wrenching Recoveries – WSJ
- US Says It Killed Senior Al-Qaeda Affiliate Official In Syria – France 24
- Israelis And Gazans Fear Ceasefire Collapse - BBC
- Netanyahu And Top US Diplomat Rubio Affirm ‘Common Strategy’ To Eliminate Hamas In Gaza – France 24
- Hamas Rejects Disarmament, Vows To Fight ‘Israel’s Agents’ In Gaza After The War - CNN
- Israel Receives Shipment Of Heavy Bombs Cleared By Trump - Reuters
- Netanyahu Says "We Can Finish The Job" Against Iran After Meeting Rubio - 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
- US-Russia talks to end war in Ukraine begin Today in Saudi Arabia – The Hill
- Ukraine Will Not Participate In Russia-US Talks, Zelenskyy Says From UAE - Politico
- Europe's Ukraine Summit Begins In Paris As Poland Calls For Immediate Defence Spend Rise - BBC
- Russia’s Advance in Ukraine Is Slowing. Here’s What’s Happening and Why. - WSJ
- Russia Sets Sights on Ukraine's 'Fortress Belt': ISW - Newsweek
- UK PM Says Ready To Send Troops To Ukraine If Needed As Part Of Peace Deal – France 24
- EU Top Brass Plans Kyiv Visit Amid US-Russia Talks - Politico
- Russian Troops Intensify Attacks On Ukrainian Forces In East, Military Says - Reuters
- 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
- US Drops Website Wording On Not Supporting Taiwan Independence – Reuters
- As US Recedes, NATO Scrambles To Find A New Leader - Politico
- Pope Francis To Remain Hospitalized For 'Complex' Respiratory Infection, Vatican Says - NBC
- Rutte: NATO Spending Target Will Be ‘Considerably More Than 3 Percent’ - Politico
- Eurozone Industrial Production Drops 1.1% MoM In December Vs. -0.6% Expected – FX Street
- Cuba Tells Non-Essential Workers, Students To Stay Home In Latest Blackout - Reuters
- Chinese Cars Are Taking Over The Global South. Petrol Engines, Not Batteries, Are Powering Their Growth – The Economist
- Germany’s Merz Again Rules Out Coalition With Far Right, But Opens Door To Center-Left Parties - Politico
- Scholz Calls For Reform Of German Debt Brake Right After Election - Politico
- Polish Leader Says United European Army ‘Will Not Happen’ – The Hill
- M23 Rebels Advance Into Eastern Congo's Strategic City Of Bukavu - Reuters
- Brexit’s Unfinished Business: Gibraltar Talks Stuck In Limbo – Politico
Policy and Politics
DiNapoli: State's Outyear Budget Gaps Grow to $27.3B Through State Fiscal Year 2028-29
In his annual report assessing the proposed Executive Budget, State Comptroller Thomas P. DiNapoli identifies risks and concerns that underscore the importance of taking action to address the trajectory of state spending and improve the state’s structural imbalance, while continuing to bolster the state’s rainy day reserves. Cumulative outyear budget gaps projected by the Division of Budget (DOB) have increased to a total of $27.3 billion through State Fiscal Year (SFY) 2028-29 and state spending is projected to rise at a rate that outpaces revenues.
- The state has struggled to contain Medicaid costs. A significant change in federal policy or an economic shock might result in having to make decisions quickly relating to healthcare funding. Making prudent financial decisions now and putting Medicaid spending growth on a more sustainable path is in the best interests of all New Yorkers.
- Similarly, continued efforts are necessary to review the Foundation Aid formula, the largest component of school aid, to allocate resources to districts with the greatest needs while providing stability for school districts planning and ensuring the state’s long-term financial viability.
- Federal funding is the state’s largest source of revenue. In total, DOB is projecting $93.1 billion in federal receipts for SFY 2025-26. Of this, Medicaid is projected to account for $57.6 billion (61.9%). In total, approximately $70.9 billion (76.1%) of the projected federal receipts are for the provision of healthcare to approximately 8.5 million New Yorkers.
- While the Executive Budget does not propose extending the higher corporate franchise tax rates, which are to expire at the end of 2026, it includes an extension of the PIT surcharges on high income taxpayers, currently set to expire at the end of 2027, until the end of 2032. While the extent of migration of taxpayers in response to tax changes remains debatable, behavior is less likely to be affected by temporary changes than permanent ones. An early extension of what was supposed to be a temporary surcharge, solidifying high tax rates for another seven years, may alter some decision making.
Read more at the Comptroller’s Website
House GOP Budget Resolution In Jeopardy Amid Concerns From Moderates
The House GOP’s budget resolution could be in jeopardy of not clearing the full chamber amid concerns from moderates over likely cuts to Medicaid — with a handful undecided on whether they will support the key measure. Reps. David Valadao (R-Calif.) and Nicole Malliotakis (R-N.Y.) — both of whom represent districts with a significant percentage of Medicaid recipients — told The Hill that they are withholding support from the budget resolution as they seek more information on the severity of the cuts and how they could impact their constituents.
Those worries are sure to raise alarm bells for Speaker Mike Johnson (R-La.) and his leadership team — including Budget Committee Chair Jodey Arrington (R-Texas) — who are looking to push the resolution through the chamber and kick-start the process to pass President Trump’s domestic policy agenda as early as the week of Feb. 24, when the House returns. Republicans can only afford to lose one vote if all members are present and the entire Democratic caucus opposes the measure, which is expected. At the current moment, key lawmakers say the resolution could be doomed to fail.
How Much Electricity Are We Going To Need? IEA Says “A Lot”
Global electricity demand is expected to grow by more than the total consumption of Japan each year through 2027, but the expansion of low-emissions energy sources should help offset the trend, the IEA said in a report on Friday. Emerging and developing economies are expected to account for 85% of global demand growth, with China forecast to make up more than half of the gains with a 6% growth rate year-on-year to 2027, the IEA report said.
- China's power demand has grown faster than its economy since 2020, spurred by a power-hungry industrial sector and the rapid expansion of electricity-intensive manufacturing of solar panels, batteries, EVs and associated materials. Air conditioning, data centres and 5G networks are seen as additional contributors.
- India is also expected to account for 10% of the global increase, with robust economic activity and rapidly rising air conditioning.
- The U.S. will reverse previously stagnant demand as electrification grows rapidly for sectors like transport, heating and data centres.
- Expectations for the European Union were revised down from the IEA's July forecast due to a weaker macroeconomic outlook, falling one percentage point to 1.6% growth expected in 2025. The bloc is not expected to recover to its 2021 demand level until at least 2027 despite growing in 2024 after two years of flagging demand.
- Low-emissions energy sources such as renewables and nuclear are expected to be able to match global demand growth trends as they continue to edge out coal's share in the power mix, the report said.
- Solar is expected to be the second largest low-emissions source in 2027 behind hydropower, while renewables as a whole are expected to eclipse coal-fired generation in 2025 as the polluting resource's share will slip below 33% for the first time in 100 years.
Trump’s First 100 Days
- Trump Writes a New Playbook for Quagmires in Gaza and Ukraine – WSJ
- Trump Appeals To Supreme Court Over Firing Of US Agency Boss - BBC
- Judge Calls Rare Hearing On A Holiday In Case Against Musk's DOGE - Reuters
- David Keeling Nominated to Head OSHA – EHS Today
- CFPB's Vought Agrees To Pause Layoffs Amid Union Litigation – Law 360
- SEC Begins Process of Eliminating Climate Disclosure Rule – National Law Review
- Trump’s Return-to-Office Order Threatens Power of Government Unions - WSJ
- Kennedy Confirmed as Health Secretary – WSJ
- EU Plans Stricter Food Import Restrictions Over Pesticide Use - Bloomberg
- Top State Democrat Calls On Adams To Resign As Party Leaders Convene For Caucus Weekend - Politico
- The Trump Tracker: Keep Tabs On The Latest Announcements And Executive Orders - WSJ
- Tracking Trump’s Cabinet Confirmations - NYT
Health and Wellness
What To Know About The Bird Flu Outbreak And Its Risk To Your Health And Wallet
“We're going through the worst bird flu outbreak that we've had in the last 10 years, potentially the worst bird flu outbreak that we've ever had in the history of this country," Eggs Unlimited Vice President Brian Moscogiuri said on Thursday. "We've lost 120 million birds since the beginning of 2022. In the last few months alone, since the middle of October, we've lost 45 million egg-laying hens," he added. "We've lost a significant amount of production, more than 13%. So we're just dealing with supply shortages. And it's just a disaster right now because this virus is in three of the top egg-laying states in the country. It doesn't seem like it's stopping anytime soon."
According to the Centers for Disease Control and Prevention (CDC), bird flu detections have been made in dairy cattle, wild birds, poultry flocks and other mammals, while 68 human cases have been confirmed as well as one death. The new CDC study is more evidence that the official U.S. tally of confirmed human bird flu infections — 68 in the last year — is likely a significant undercount, said Dr. Gregory Gray, an infectious disease researcher at the University of Texas Medical Branch in Galveston.
Industry News
IndustryWeek Poll: President Trump and Manufacturing
IndustryWeek wants to hear from manufacturers on the new administration and its policies.
December Cutting Tool Demand Shows Manufacturing Flat
Machine shops and other manufacturers purchased $179.5 million worth of cutting tools during December 2024, -2.0% less than during November and -4.3% less than during December 2023. As a result, the cumulative total for 2024 cutting-tool purchases was $2.43 billion, barely above (0.6%) the 12-month total for 2023. “Our industry continued to feel the effects of a stagnated aerospace market as we ended 2024, and this sets us up for a rather uneven first and second quarter,” stated Steve Boyer, president of the U.S. Cutting Tool Institute.
Cutting tools are significant consumable purchases for machine shops and manufacturers, meaning that shipments of cutting tools are a reliable index to real-time manufacturing activity. “Cutting tool markets still tended to perform better than other markets through the end of 2024 and start of 2025 but have noticeably softened,” Boyer continued. “Adjusted lower outlooks for this year in the transportation, automotive, aerospace, and defense sectors will project a slower rebound.”
Read more at American Machinist
Eaton invests $340M to open three-phase transformer manufacturing plant in South Carolina
Eaton has announced plans to open a new three-phase transformer manufacturing plant in Jonesville, South Carolina. The company, which specializes in intelligent power management, will invest $340 million into the project, which involves converting an existing facility into a transformer manufacturing site. The project is expected to create 700 new jobs for the surrounding area. Eaton is currently producing three-phase transformers at its two Wisconsin facilities. Production at the new plant is expected to begin in 2027.
The company hopes this project will help address the critical shortage of transformers and demand for its solutions. A September report from the National Infrastructure Advisory Council found that over the last few years, the lead time for utilities to procure new transformers has more than doubled, to 120 weeks. Electricity demand from data centers is expected to exacerbate delays. Eaton plans to convert an existing facility in Jonesville into a manufacturing site for the transformers.
Meta Plans Major Investment Into AI-Powered Humanoid Robots
Meta Platforms Inc. (META), after pushing into augmented reality and artificial intelligence, has identified its next big bet: AI-powered humanoid robots. The company is making a significant investment into the category — futuristic robots that can act like humans and assist with physical tasks — and is forming a new team within its Reality Labs hardware division to conduct the work, according to people with knowledge of the matter.
Meta plans to work on its own humanoid robot hardware, with an initial focus on household chores. Its bigger ambition is to make the underlying AI, sensors and software for robots that will be manufactured and sold by a range of companies, said the people, who asked not to be identified because the initiative hasn’t been announced. Tesla Inc. CEO Elon Musk has said that his company’s Optimus robot will eventually be sold to consumers and could cost around $30,000. Tesla is beginning limited production this year. Other businesses also have made headway. Boston Dynamics, for instance, has already brought products to market for automation in warehouses. Some companies are focused on selling to businesses and manufacturers, while Meta’s intention is to sell into homes.
Moderna Beats On Revenue But Loses More Than Expected As It Scales Down Manufacturing
Moderna on Friday posted fourth-quarter revenue that beat estimates, but lost more than expected for the period, as the biotech company continues to slash costs and demand for its Covid vaccine falls. It marks another quarter of growing pains for the company, which is racing to launch new products and recover from the rapid decline of its once-booming Covid business. Moderna reiterated its full-year 2025 product sales guidance of $1.5 billion to $2.5 billion, most of which will come in the second half of the year. Moderna expects only $200 million in sales to come in during the first half of the year due to seasonal demand for respiratory products, which typically rises in the fall and winter.
Moderna posted a net loss of $1.12 billion, or $2.91 per share, for the fourth quarter of 2024. That compares with net income of $217 million, or 55 cents per share, reported for the year-ago period. The company said the quarterly loss includes a roughly $238 million noncash charge related to ending a contract manufacturing agreement. In an interview, Moderna Chief Financial Officer Jamey Mock said one of the most important takeaways from the company’s full-year 2024 results is that it reduced costs by 27% compared to 2023. By the end of 2025, Moderna expects to cut costs by $1 billion compared to 2024.
Arcelormittal Invests $1.2B To Build Electrical Steel Manufacturing Facility In Alabama
ArcelorMittal has announced plans to build an advanced manufacturing facility in Mobile County, Alabama. The company, which produces steel, will invest $1.2 billion into the project, creating 200 new jobs in the process. The new facility will produce up to 150,000 metric tons of non-grain-oriented electrical steel (NOES) annually, that will be used in EV motors and other applications. John Brett, CEO, ArcelorMittal North America, said, “We recognize the importance of creating a resilient, sustainable domestic supply chain for this critical material.
The new production facility will feature an annealing pickling line, cold-rolling mill, annealing coating line, packaging and slitter line and additional ancillary equipment needed for specialized electrical steel manufacturing operations. The plant will be located near ArcelorMittal and Nippon Steel’s existing joint venture in Alabama, the AM/NS Calvert steel mill in Mobile County. Work on the new facility will begin in the second half of 2025, and the plant will be operational in 2027.
Saint-Gobain to Build $40M Facility in Western New York
Saint-Gobain Ceramics, through its subsidiary Saint-Gobain NorPro, expects to build a nearly 125,000-square-foot manufacturing facility worth over $40 million in Wheatfield. The project could bring 30 new full-time jobs to the region when the facility — to be located on 6600 Walmore Road — is completed. Construction is expected to begin later this year with completion expected by 2028.
The company creates catalyst carriers for energy production and refining, as well as biofuels and chemical manufacturing. The new facility will be co-located with Special Grains and Powders operations, whose structures will be repurposed to reduce carbon emissions.
FuzeHub Extends Deadline to Apply for Established Company Manufacturing Grants
The application period for the Jeff Lawrence Innovation Fund Manufacturing Grants has been extended to March 11, 2025 at 11:59 PM EST. The grants are designed to encourage collaboration between not-for-profit organizations and small to medium-sized manufacturing companies in New York State. The grants serve as a resource to help companies achieve success from early stage, proof of concept, through maturity. The partnership created by the not-for-profit organization and the industry partner serves as a pathway to technology transfer, adoption and implementation of new manufacturing processes, as well as the creation of enhanced products and services.
Determine your company’s status using the following criteria:
1. Is your annual revenue less than $100K, with total revenue to date less than $500K?
2. Are your total investments received less than $2M (excluding grants)?
3. Have you been in business for less than 5 years (7 years for life science, biomedical, or medical device industries)?
If you answered "yes" to all questions, you're likely a startup. If you answered "no" to any of the above questions, you're likely an established company.
Read more and apply at FuzeHub
With Falling U.S. Sales, Companies Are Trying to Hit the Sweet Spot for Prices
Shoppers are getting more difficult to please. Confronted with falling sales, makers of cigarettes, potato chips, cosmetics and garbage bags are re-examining what they offer—and at what price. Many consumers are looking for good value, but that doesn’t necessarily mean a lower price. “They are looking for better and enhanced value in the products, which means they are trading up to innovation,” Linda Rendle, CEO of Clorox CLX -1.89%decrease; red down pointing triangle, said on a call with analysts this month.
Reynolds American is trying to reach low-income smokers with a more affordable pack of Newport cigarettes. The maker of Cheetos and Doritos is playing around with how many servings of chips it includes in a multipack. Estée Lauder is trying to turn around its sales slump with a plan that includes developing new products across its cosmetics portfolio, which ranges from $25 lipsticks to perfumes that sell for over $1,000. Clorox is marketing stronger Glad trash bags and more-concentrated Pine-Sol cleaner as ways for shoppers to get better value.