Member Briefing January 25, 2024
S&P: US Manufacturing, Services Rebound in January
S&P Global said on Wednesday that its flash U.S. Composite PMI Output Index, which tracks the manufacturing and services sectors, increased to 52.3 this month, the highest level since last June. The rise from 50.9 in December was driven by gains in both services and manufacturing activity. The survey's flash manufacturing PMI rebounded to a 15-month high of 50.3 from 47.9 in December. A reading above 50 indicates expansion in the private sector.
Its flash services sector PMI climbed to 52.9, the highest reading since last June, from 51.4 in the prior month. The higher composite reading bolsters economists' predictions that the economy will continue to grow this year, although at a moderate pace. Receding inflation in the survey also supports expectations that the Federal Reserve will start cutting interest rates sometime in the first half of 2024.
Global Headlines
Gaza
- Israel and Hamas: The Latest News – The Guardian
- Israel Proposes Pause in Fighting as Part of Hostage Deal: Media Reports – France 24
- EU Pushes for Palestinian Statehood, Rejecting Israeli Leader’s Insistence That it’s Off the Table - AP
- A War in All but Name Simmers at Israel-Lebanon Border - WSJ
- Israel Continues Assault on 'Encircled' Khan Younis as Public Mourns Slain Soldiers – France 24
- Netanyahu Tests Biden’s Patience as War Pressure Builds – The Hill
- Netanyahu Faces Doubts over goals, strategy and post-war plans - Reuters
- Interactive Map- Israel’s Operation in Gaza – Institute for the Study of War
- Map – Tracking Hamas’ Attack on Israel – Live Universal Awareness Map
Ukraine
- Ukraine and Russia: The Latest News – The Guardian
- War Cats: Ukraine Enlists Feline Friends in Fight Against Russia – Politico
- Ukraine Ends Russian Dreams to Connect Donetsk to Russia by Rail After Bridge Strike – Yahoo
- Three New Russian Strikes Injure Two in Ukraine's Kharkiv, Governor Says – Reuters
- Russian Plane Crashes With 65 Ukrainian Prisoners of War Onboard, Moscow Says - AP
- Russia Claims Ukraine Shot Down Plane it Says Was Carrying POWs – France 24
- Russia Eyes Nuclear Deterrent After Military Losses in Ukraine, Report Warns - VOA
- 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 and Russia Get a Free Pass Through Houthis' Red Sea Blockade – Maritime Executive
- Iran is ‘Directly Involved’ in Yemen Houthi Rebel Ship Attacks, US Navy’s Mideast Chief Tells AP - AP
- China Moves to Boost Bank Lending in Broad Effort to Prop Up Growth - WSJ
- Red Sea Chaos Leaves Egypt to Grapple With Dwindling Suez Canal Revenue - Bloomberg
- Two US-Flagged Maersk Ships Turn Around in Red Sea After Explosions – Shipping Watch
- Aviation Sector Seeks Urgent Solutions for GPS Interference – Reuters
- 'Dior Bag Scandal' Lands South Korea's Yoon, Ruling Party in Disarray Ahead of Election - Reuters
- Chinese Lab Mapped Deadly Coronavirus Two Weeks Before Beijing Told the World, Documents Show - WSJ
- What is Behind Iran-Pakistan Attacks and Could Conflict Escalate? - Reuters
- Pro-Palestinian Activists Blockade ZIM Ship at Port of Melbourne – Maritime Executive
Policy and Politics
Palestinian Aid Emerges as Sticking Point in Supplemental Talks
A dispute over humanitarian aid for Gaza and the West Bank has become the latest snag in efforts to reach a bipartisan deal on a war funding and border security package. The initial $110.5 billion supplemental funding package that Senate Democrats released last month would provide $10 billion for humanitarian assistance. Nearly $5.7 billion would go through the U.S. Agency for International Development’s international disaster aid account, with $4.3 billion appropriated for the State Department’s migration and refugee assistance fund. The money isn’t specifically earmarked for certain countries or regions, but an Appropriations Committee summary says the funding would “provide emergency food, shelter, and basic services to populations suffering the impacts of a confluence of complex and protracted crises, including in Ukraine, Gaza and the West Bank, East Africa, South Asia, and elsewhere.”
Majority Leader Charles E. Schumer, D-N.Y., said Tuesday that a deal must include “humanitarian aid for the Palestinians in Gaza and humanitarian aid to other places around the world.” But Minority Leader Mitch McConnell, R-Ky., pushed back against Gaza aid, saying the Palestinians had no reliable governing entity that could be trusted with it. The State Department has designated Hamas as a terrorist organization, and the Palestinian Authority, which controls the West Bank, has been accused of corruption.
Hochul Wants to Build Housing on SUNY Campuses. How Will that Work?
Gov. Kathy Hochul’s latest housing plan left many in the policy and education space intrigued. During her State of the State address, she brought up a new proposal to build 15,000 new units on underutilized state-owned property, including State University of New York buildings as one of the options – leading some to wonder what that would look like and how it would work.
For now, it’s still unclear exactly what the housing initiative will look like. Justin Henry, a spokesperson for Hochul, said that a request for proposals of eligible sites would be released in the coming months. Lawmakers said they were also left in the dark about the plan, only learning about it for the first time during the State of the State address. Building housing on college campuses is not an entirely new idea. Broadview, a 220-unit retirement community, opened in December at SUNY Purchase in Westchester County. The housing complex sends the university up to $2 million in annual lease fees and 75% of that goes towards student scholarships while 25% goes to faculty recruitment.
Health and Wellness
Mental Wellness in the 2024 Workplace
Employers are recognizing that focusing on mental wellbeing in the workplace not only enhances employee health but increases productivity and contributes to the wellbeing of the community at large. Mental health conditions cost employers more than $100 billion and 217 million lost workdays annually, according to the National Association on Mental Illness (NAMI). While mental health services are increasingly included in workplace insurance packages, the extent of mental health coverage can vary significantly from one organization to another.
Some employers may provide comprehensive mental health benefits, including therapy sessions, counseling and psychiatric consultations, as part of their health insurance plans. Others may offer more limited coverage or may not include mental health services in their insurance packages at all. Access to 24/7 mental health hotlines, apps for meditation and mindfulness (such as Calm or Iona Mind) and programs focused on building resilience and creating coping strategies will become standard practices in a wellness-focused workplace.
COVID Variant JN.1 is Not More Severe, Early CDC Data Suggests
Early data from hospitals suggests the latest COVID variant, known as JN.1, is not leading to more severe disease, a Centers for Disease Control and Prevention official said Monday, as the agency has tracked the strain's steep rise to an estimated 85.7% of COVID-19 cases nationwide. The agency is still waiting for more weeks of data to lay out its more detailed assessment of JN.1's impact this season, the CDC official, Dr. Eduardo Azziz-Baumgartner, said at a webinar with testing laboratories hosted by the agency this week.
Asked if JN.1's symptoms seemed to be more severe compared to previous waves, he said "there are early signals that that may not be the case," based on electronic medical record cohorts and other data. "Now, it's important to remember that how a virus affects an individual is a unique 'n' of one," he added. "It could be very severe. People could die from a virus that, to the general population, may be milder." Azziz-Baumgartner told the webinar the CDC hopes to release more details about JN.1's severity "during the next couple weeks" as more data on the virus accumulates.
Election 2024
South Carolina Probably Won’t Save Nikki Haley - Politico
2024 New Hampshire Primary: How Different Groups Voted - WSJ
Trump’s New Hampshire Win Had Some Bright Red Warning Signs - Politico
Fake Biden Robocall ‘Tip of the Iceberg’ for AI Election Misinformation – The Hill
Real Clear Politics Latest GOP Primary Polls – Real Clear Politics
Real Clear Politics Latest General Election Polls – Real Clear Politics
Latest Polls - FiveThirtyEight
Industry News
German Manufacturing PMI Rises, While Services Sector Deteriorates
The latest HCOB Flash Germany PMI survey by S&P Global reveals persistent challenges across both the services and manufacturing sectors. Manufacturing, a vital pillar of the German economy, showed signs of a nuanced recovery. The HCOB Flash Germany Manufacturing PMI Output Index rose to 46.0, an eight-month high, indicating a slowdown in the rate of contraction. However, the overall Manufacturing PMI reached 45.4, marking an 11-month high, suggesting a gradual improvement in the sector’s health. Despite this, the sector remains in a recessionary phase, impacted by global supply chain disruptions, notably the events in the Red Sea.
The services sector, a crucial component of the economy, experienced a notable downturn at the start of the year. The HCOB Flash Germany Services PMI Business Activity Index fell to a five-month low of 47.6. This decline reflects customer hesitancy amidst high financing costs and geopolitical uncertainty, leading to a reduction in new business inflows. Manufacturing witnessed significant job losses. On the inflation front, service sector firms faced heightened cost pressures, particularly from wage demands, leading to an increase in service prices. Conversely, manufacturing prices continued to decline, albeit at a slower pace.
Nose Wheel Comes off Delta Boeing 757 Shortly Before Takeoff
A Boeing 757 plane lost its nose wheel shortly before taking off at Hartsfield-Jackson Atlanta International Airport, according to US aviation officials. The Delta Air Lines plane had been preparing to fly to Bogota, Colombia, on January 20 when the “nose wheel came off and rolled down the hill,” according to a preliminary report from the Federal Aviation Administration (FAA). Passengers were able to disembark the plane after the incident.
While the cause of the Delta Airlines incident is unknown and it doesn’t appear to have majorly hindered operations, it comes at a time when Boeing faces intense scrutiny. On Tuesday, United Airlines CEO Scott Kirby said the company is considering dropping plans to acquire a fleet of Boeing 737 Max 10 due to production delays and the recent grounding of the Max 9 fleet. The decision isn’t final and Kirby said United was not abandoning Boeing as a partner, but “disappointed” with Boeing’s “consistent manufacturing challenges.”
‘Just in Time’ - Retailers Return to the Pre-Pandemic Playbook
Retailers are reviving an old playbook to manage their inventory levels after four years of struggling to find the sweet spot of holding enough merchandise but not too much. Merchants have worked through the excess inventory that piled up on store shelves and in warehouses over the past 18 months, and are now focusing on replenishing items rather than stocking up on goods to have on hand in case of supply-chain disruptions.
The shift marks a return to the “just-in-time” inventory management strategy many companies had employed before pandemic-driven product shortages and volatile shifts in consumer demand prompted a switch to a “just-in-case” stockpiling approach. Jamie Bragg, chief supply chain officer at Tailored Brands, said just-in-time inventory management is the goal. The Houston-based parent company of Men’s Wearhouse and Jos. A. Bank worked over the past few years to get better visibility into orders that are still in production overseas, positioning it to adjust orders based on demand, he said.
Hudson Valley Unemployment Up in December Year on Year
The December 2023 unemployment rate for the Hudson Valley Region is 3.7 percent. That is up from 3.5 percent in November 2023 and up from 2.7 percent in December 2022. In December 2023, there were 43,900 unemployed in the region, up from 41,700 in November 2023 and up from 30,800 in December 2022. Year-over-year in December 2023, labor force increased by 23,500 or 2.0 percent, to 1,178,100.
Orange, Sullivan and Ulster counties registered 3.9 percent unemployment. The lowest rate in the region was in Putnam County at 3.4 percent.
See the Labor Market Analysis from NYS DOL
The Labor Union That Defeated Amazon Is Fighting for Survival
Nearly two years ago, the Amazon Labor Union was thriving. The startup labor group had persuaded workers at a Staten Island warehouse to form the first U.S. union at Amazon.com. Now the labor organization is fighting to survive. Its leadership is in turmoil, and it is facing growing financial strain, according to its top officers. The group doesn’t appear close to establishing a first labor contract with Amazon, despite federal pressure on the company to bargain with workers.
The union’s financial position is one of its most pressing obstacles. The organization is “pretty much broke,” said Michelle Nieves, its vice president. The union, which bucked expectations by avoiding a formal tie-up with established labor organizations, has long relied on donations for its operations. In a statement, the American Federation of Teachers said it stands with the Amazon Labor Union in its effort to organize the company, but it didn’t make a donation to the group in 2023 after giving the Amazon union $250,000 in 2022. The SEIU United Healthcare Workers West, which donated $25,000 in 2022, also didn’t make a donation last year.
Breeze Service From Stewart Only the Beginning, Says Airport Official
In less than a month, Breeze Airways will begin its service from New York Stewart International Airport and airport development director Yil Surehan expects it to grow. He told the advisory Stewart Airport Commission on Tuesday that service by the new airline could expand. “As bookings grow, they plan on adding frequency in those markets and adding additional markets out of Stewart,” he said.
The airline will commence twice weekly flights to Orlando on February 15 and twice weekly flights to Charleston on February 16. Stewart’s domestic passenger traffic declined significantly since Frontier Airlines pulled out of the market in mid-year 2023.
Eli Lilly Manufacturing Plant Under FDA Scrutiny for Quality Control Issues
The U.S. Food and Drug Administration found eight separate manufacturing problems at an Eli Lilly plant in Branchburg, N.J., during an inspection last summer. The inspection report cited problems in tracking manufacturing processes and quality controls; lapses in equipment calibration; and failure to properly maintain facilities and equipment. The inspection report described inadequate protection of electronic records detailing manufacturing processes, which could leave the company open to potential data manipulation.
The FDA inspection “resulted in some observations that were, in most cases, either addressed during the inspection or already in progress as program improvements,” the company said. “Importantly, this situation does not affect the quality, safety or supply of any current or planned Lilly products in the marketplace.” Lilly has been cited multiple times for manufacturing problems at its U.S. plants in recent years, Reuters reported. The Branchburg plant has been the subject of a U.S. Department of Justice probe following a separate story in 2021 that included allegations of poor manufacturing practices and data falsification.
Tesla Plans to Build Entry-Level EV in Mid-2025
Tesla has told suppliers it wants to start production of a new mass-market electric vehicle codenamed "Redwood" in mid-2025, according to four people familiar with the matter, with two of them describing the model as a compact crossover. Tesla CEO Elon Musk has long whetted fans' and investors' appetites for affordable electric vehicles and self-driving robotaxis that are expected to be made on next-generation, cheaper electric car platforms.
Those models, including an entry-level $25,000 car, would allow it to compete with cheaper gasoline-powered cars and a growing number of inexpensive EVs, such as those made by China's BYD. BYD overtook Tesla as the world's top EV maker in the final quarter of 2023. Musk said last year the affordable model would initially be built at Tesla's factory in Texas. Making a profit from the cheaper EVs will be challenging, given the costs of batteries as well as traditional difficulties producing quality inexpensive vehicles. Tesla in recent years tore down a Honda Civic, whose price starts at $23,950 in the U.S., to study how to make cheaper cars, two separate sources said.
Apple Car Launch Date Reportedly Pushed Back To 2028—What We Know About The Electric Vehicle Project
Apple is simplifying the design and pushing back the potential launch date of its in-development electric vehicle, The vehicle’s release date has been delayed to 2028 at the earliest, according to Bloomberg, which reported the company’s previous 2026 release target was also the product of a delay. Apple is now working on the EV with more limited features, further dialing back on plans that once included an autonomous vehicle without pedals or a steering wheel.
The vehicle will operate with a “Level 2+” system capable of autonomous lane centering and adaptive cruise control at the same time, according to Bloomberg, which added the tier was a few steps below the previously planned Level 4 technology capable of autonomously driving the car under limited circumstances. Apple’s pivots on the project, codenamed Titan, were made after meetings including the company’s board, CEO Tim Cook and project head Kevin Lynch. The vehicle has reportedly been in development since 2014, though official details about the car’s name, specifications and development have been scant in the last decade.