Member Briefing January 27, 2025
U.S. Manufacturing PMI Jumps into Expansion in January
New data from S&P Global out Friday showed its manufacturing PMI increased to 50.1 in January, up from 49.4 in December and marking a seven-month high for the index. Readings above 50 indicate expansion in the sector; readings below indicate a contraction in activity. The manufacturing output index increased to 50.2 in January, up from a reading of 47.7 in December.
"US businesses are starting 2025 in an upbeat mood on hopes that the new administration will help drive stronger economic growth. Rising optimism is most notable in the manufacturing sector, where expectations of growth over the coming year have surged higher as factories await support from the new policies of the Trump administration, though service providers are also entering 2025 in good spirits, " Chris Williamson, chief business economist at S&P Global Market Intelligence, said in a release. "Especially encouraging is the upturn in hiring that has been fueled by the improved business outlook, with jobs being created at a rate not seen for two-and-a-half years," Williamson said.
U.S. Homes Sales Rose in December But 2024 Sales Fell to Lowest Level in Nearly 30 Years
U.S. existing-home sales fell in 2024 to the lowest level since 1995, the second straight year of anemic sales due to stubbornly high mortgage rates. High costs related to homeownership sapped sales again. The average rate for a 30-year fixed mortgage has hovered between 6% and 8% since late 2022, making it prohibitively expensive for many Americans to buy homes at current prices, which hit record highs last year. Rising home insurance and property tax costs are also adding to homeowners’ expenses. Existing-home sales fell 0.7% in 2024 from the prior year to 4.06 million, the National Association of Realtors said Friday.
The number of sales is also down about a third from the more than six million homes that sold in 2021, when the market was booming due to low mortgage rates and pent-up demand after the first year of the pandemic. Home prices have continued rising on a year-over-year basis, because the inventory of homes for sale is lower than historically normal levels. Inventory is up from year-ago levels, but supply is still tight in many markets because many would-be sellers with low mortgage rates are unwilling to sell and take on a higher rate to buy a different home. The national median existing-home price in December was $404,400. That is down from the record high of $426,900 reached in June but represents a 6% increase from December 2023, NAR said.
The State Of The Job Market, 5 Years After The Pandemic Began
February 2020 was the last gasp of the pre-COVID economy. And things were going pretty well. The labor market was on a roll, adding jobs at a healthy pace. Unemployment was at a historically low 3.5%. By April, with the pandemic in full swing, 22 million jobs had disappeared. Unemployment peaked that month at just shy of 15%. For a while, it seemed like the economy would never fully recover. But it did. By June 2022, nonfarm payrolls had surpassed their pre-pandemic level. As of December 2024, there were 7.2 million more jobs in the economy than in February 2020.
But there’d be about 11 million more jobs if the economy had kept adding them at the same pace it did in the five years before the pandemic. So, have we fallen behind the pre-pandemic trend? Not exactly, according to Harvard economist Jason Furman, who chaired the Council of Economic Advisers under former President Barack Obama. “Right now, we have 3.5 million more jobs than the Congressional Budget Office had been expecting for this point in time, prior to COVID,” Furman explained. “There’s more jobs, more employment, than the CBO and, I would say, just about anyone would have expected five years ago.” Critics have pointed out that the CBO consistently understates employment and growth figures.
Global Headlines
Middle East
- Four Israeli Hostages Released By Hamas In Carefully-Staged Handover – BBC
- As Hamas Exchanges Gaza Hostages, It Puts on a Show of Force – NY Times
- Hamas Took More Than 200 Hostages From Israel. Here’s What We Know. - WSJ
- Lebanon Says 14 Killed By Israeli Forces After Withdrawal Deadline Missed - BBC
- Trump Urges Jordan, Egypt To Take Palestinians, Thousands Blocked From Northern Gaza - Reuters
- Israel Blocks Thousands Of Palestinians Seeking Return To North Gaza - AP
- Trump Makes 2,000-Pound Bombs Available To Israel, Undoing Biden Pause - 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
- Russia’s Putin says he and Trump should meet to talk about Ukraine war, energy prices - CNBC
- Putin Ally Issues Warning on Risks of War Between Nuclear Powers - Newsweek
- North Korea Prepares To Send More Troops To Russia After Suffering Casualties, South Korea Says - AP
- Inside The Ukrainian Drone Unit Conducting Deep Strikes On Russia - Reuters
- Turkey Pushing To Help EU Replace Ukraine Gas Transit - Politico
- Putin Echoes Trump’s Claim That Conflict In Ukraine Could Have Been Avoided Had He Been In Office - AP
- Zelensky's Videos Of North Korean Troops Breach Geneva Conventions—Human Rights Watch - 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
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Colombia Backs Down On Accepting Deportees On Military Planes After Trump’s Tariffs Threats - CNN
- South Korea President Yoon Indicted For Insurrection Over Martial Law Decree - Reuters
- Bank Of Japan Raises Interest Rate To 0.5% As Economy Faces Key Test – Nikkei Asia
- A 2025 Guide To Lunar New Year As We Slither Into The Year Of The Snake - CNN
- Japan's Shigeru Ishiba to Warn Trump Against Asia-Pacific 'Power Vacuum' - Newsweek
- TSMC Says All Its Sites Operating Following Taiwan Quake - Reuters
- Elon Musk Speaks At Germany’s Afd Campaign Launch As Thousands Protest The Far-Right Party -CNN
- U.N. and Congolese Troops Struggle to Halt Lightning Rebel Attack - WSJ
- Takeaways From AP’s Reporting On The Thousands Disappeared In Colombia, Peru And Paraguay - AP
- Is LA Able to Host the 2028 Olympics? - Newsweek
Policy and Politics
Trump’s Executive Orders Aside, It’s Full Steam Ahead For New York’s Sustainable Infrastructure Projects
While President Donald Trump’s latest executive orders have signaled an ominous end to green infrastructure and diversity, equity and Inclusion efforts – such rhetoric will do little in dismantling major sustainable infrastructure projects in the New York, New Jersey region, speakers at City and State’s 2025 Most Significant Infrastructure Projects Summit said Thursday. “80% of energy decisions get made at the state level. We can get a lot done. There is a lot of really great bipartisan support,” said Lisa Dix, the New York director of the Building Decarbonization Coalition.
Keynote speaker Rick Cotton, executive director of the Port Authority of New York and New Jersey assured stakeholders that the authority remains steadfast to meet New York State’s net-zero emissions goal by 2050. The $10 billion rebuild of the Manhattan Midtown bus terminal, equipped with expanded storage and staging facilities for new fleets of zero-emission buses, alone will be one the region’s most ambitious carbon-cutting measures, with construction set to begin later this year with help from a $1.9 billion loan from the U.S. Department of Transportation. As panelists reflected on the potential impact of the Trump presidency on sustainable infrastructure projects, most experts were confident that the state will remain committed to net zero emissions by 2050.
NAM’s Timmons: Grow U.S. Manufacturing with Policies that Spur Investment
Jay Timmons, CEO of the National Association of Manufacturers, joins Asking for a Trend to discuss his disagreement with Trump’s strategy to revive US manufacturing through trade barriers, advocating instead for policies that drive investment. “If you have the right policies in place to reduce the cost of doing manufacturing in the United States, what's going to result from that? You're going to see more investment. You're going to see more job growth," Timmons tells host Josh Lipton.
"We want to see manufacturing expand here in this country, and our message has been basically 'put us in the game, coach,' because we want to help get these [extensions] of the tax reforms across the line in Congress," Timmons adds. Drawing from the successes of past administrations— Reagan, Clinton, and President Trump's — Timmons also underscores how tax and regulatory reforms have spurred growth in the past.
Fed Very Likely To Wait Until March For Next Interest Rate Cut, Maybe Longer
There is little chance that the Federal Open Market Committee will cut interest rates on January 29. Fixed income markets currently project a 99.5% chance that interest rates are held steady at their current level of 4.25% to 4.5%, according to the CME FedWatch Tool. However, a March or May cut in interest rates remains possible. There is roughly an even chance at one or both of those meetings.
Job market strength perhaps lessens any urgency for the FOMC to cut rates. However, Consumer Price Index inflation data for December as reported in January has shown inflation remaining more subdued than some had feared. That may ultimately support the FOMC in cutting rates in 2025 should inflation appear on track for a 2% annual rate. Many inflation metrics are closer to a 3% annual rate. President Trump’s call for the bank to lower rates is likely to be ignored for the time being but presents a wild card in predicting what the committee will ultimately do.
Trump’s First 100 Days
- 5 Takeaways From Trump’s Whirlwind Week Back At The White House – The Hill
- Deportations Have Started, White House Says: Everything To Know About Trump’s Plan – Forbes
- ICE Raids and I-9 Audits: What You Need To Know If They Come Knocking – JD Supra
- Hegseth Narrowly Wins Confirmation To Become US Defense Secretary - Reuters
- Senate Confirms Trump’s Choice For CIA Director - VOA
- Senate Confirms Kristi Noem As Homeland Security Secretary - CNN
- Trump Fires Independent Inspectors General - Politico
- Trump Freezes Most IRA Funding – Manufacturing Dive
- Trump Floats Reversing Decision To Leave WHO - Politico
- Trump Executive Orders Are Unlikely To Slow EV Adoption But May Benefit Gas-Powered Vehicles – Automotive Dive
Health and Wellness
The Dueling Science Behind How Alcohol Affects Your Health
U.S. officials are set to sift through competing science on drinking to decide how much is too much. Any change in the Dietary Guidelines for Americans later this year—currently up to two drinks a day for men and one drink a day for women—could upend people’s perception of their nightly tipple with far-reaching consequences for the alcohol industry and the public. The verdict on heavier drinking has been clear for years: It raises the risk for many conditions including heart and liver disease and over half a dozen types of cancer, resulting in some 178,000 deaths in the U.S. each year. The more a person drinks, the greater the risk.
The problem? The scientists don’t agree on moderate drinking. Conventional wisdom used to say that a little bit of alcohol had some health benefits. Now, more researchers and governments are saying that less alcohol is best for your health. One committee of scientists this past week said one drink a day for both men and women raises the risk of death from several alcohol-related illnesses or injuries. The other group last month said moderate drinking was linked to a lower risk of dying overall compared with not drinking at all. The Health and Human Services and Agriculture departments will consider both committees’ reports, as well as federal input and public comment for the new dietary guidelines.
Industry News
No Growth in Cutting Tool Orders
Machine shops and other manufacturers continued to reduce their orders for cutting tools during the final quarter of 2024, -13.8% from October to $183.1 million during November. That figure is a -9.7% drop from the November 2023 total, and it brings the 11-month 2024 order total to $2.25 billion, roughly even (-0.3%) with January-November 2023. “Uncertainty due to the(2024) election and now potential changes to policy have kept new projects and orders for manufactured products on hold, resulting in stagnant cutting tool consumption,” observed AMT’s Jack Burley, chairman of the association’s Cutting Tool Product Group.
“Overall consumption levels remain historically robust, with monthly figures consistently exceeding $180 million,” Jarvis continued. “With the ISM Purchasing Managers Index improving, Boeing going back to work, and the overall reshoring of manufacturing, 2025 looks to be a much stronger year.” Despite lower new orders for durable goods, the outlook remains optimistic for a return to more activity across all sectors, Aerospace was the most significant cause for the reduction in manufacturing activity, and many machine shops and Tier 1 suppliers continue to wait for U.S. commercial aircraft orders to get back on track.
Read more at American Machinist
From 3M and Fastenal, Hints of an Industrial Upturn
Two companies that make many of the nuts, bolts and adhesives that stick the industrial world together are getting increasingly excited about the prospects for 2025. While their optimism remains cautious, leaders at 3M Co. and Fastenal Co. say orders are rising as producers buy more of the supplies needed to boost manufacturing activity. Speaking after St. Paul-based 3M reported its fourth-quarter results—net income from continuing operations of $726 million, up from $625 million in late 2023, on sales of a little more than $6 billion—CEO Bill Brown told analysts Jan. 21 that six of seven divisions of the conglomerate’s safety and industrial group posted growth in the last three months of 2024 and that sales trends have help up nicely so far this year.
At fellow Minnesota powerhouse Fastenal, which distributes industrial and construction supplies through more than 3,600 locations around the world, CFO Holden Lewis on Jan. 17 said many of the company’s regional leaders are reporting “broadening post-election customer optimism” for the year ahead. And that’s after new business signings popped 12% in December.
Activist Ancora to Push U.S. Steel to Drop Merger With Nippon Steel, Oust CEO
Activist investor Ancora Holdings is preparing to wage a proxy battle at U.S. Steel X 0.86%increase; green up pointing triangle and wants the company to turn the page from its failed marriage with Nippon Steel 5401 1.63%increase; green up pointing triangle, according to people familiar with the matter. Ancora intends to rally shareholders around a plan to oust U.S. Steel’s chief executive and drop litigation to salvage a merger with the Japanese steelmaker. The firm isn’t interested in pursuing a sale of U.S. Steel to another party, the people added.
The activist’s arrival comes after U.S. Steel agreed to sell itself to Nippon Steel for more than $14 billion in late 2023. Former President Joe Biden blocked the deal at the start of the year on national-security concerns. President Trump and others in his administration have also said they oppose the deal. Biden’s decision is being challenged in court by both companies. Ancora has nominated nine director candidates to U.S. Steel’s 12-person board, including former Stelco CEO Alan Kestenbaum, the people said. Stelco, a Canadian steel company, was acquired by Cleveland-Cliffs last year. The exact size of Ancora’s stake in U.S. Steel couldn’t be determined.
Hudson Valley Added 9,700 Jobs in 2024 - Nearly All in Education and Health Services
For the 12-month period ending December 2024, the private sector job count in the Hudson Valley rose by 9,700, or 1.2 percent, to 833,800. The largest gains were in private education and health services (+8,200), other services (+3,800), government (+3,300) and financial activities (+800). Job losses were centered in mining, logging and construction (-1,900), professional and business services (-1,700), trade, transportation and utilities (-1,500) and information (-500).
Manufacturing added 100 jobs in 2024. Employment in the sector stands at 41,900.
GlobalFoundries Invests $575M To Open Semiconductor Packaging And Photonics Center In New York
GlobalFoundries (GF) has announced plans to open a new center for advanced packaging and testing of U.S.-made essential chips within its New York manufacturing facility. The company will invest $575 million into the New York Advanced Packaging and Photonics Center, generating 100 new jobs in the process. According to GF, the center is designed to enable semiconductors to be securely manufactured, processed, packaged and tested entirely onshore in the United States to meet the growing demand for GF’s silicon photonics and other essential chips. The investment will enable the New York Advanced Packaging and Photonics Center to provide packaging, assembly and testing for GF’s differentiated silicon photonics platform; turnkey advanced packaging, bump, assembly and testing for aerospace and defense customers; and new production capabilities for the advanced packaging, wafer-to-wafer bonding, assembly and testing of 3D and HI chips.
To help aid the project, GF will receive $20 million from New York state, in addition to $550 million from the New York State Green CHIPS program. Additionally, the U.S. Department of Commerce will provide up to $75 million in direct funding to support the center.
Pentagon Looks To Leverage AI In Fight Against Drones
The Replicator 2 initiative looks to counter-UAS (unmanned aircraft systems) and leverage next-generation technology, such as artificial intelligence (AI), to defend against swarms of attack drones. While the effort is still young and has time to evolve, industry players are just now exploring new technology and a vision for the new era has yet to fully emerge, including which technologies might shape the new drone defense landscape.
Set to lead this initiative are smaller defense tech firms that are testing a range of ways to counter these swarms, from lasers to portable guns and tracking systems. Dedrone is one of the leading companies in the counterdrone space, with a software system called DedroneTracker.AI that uses sensors to pull together data for analysis on drone threats. The software can also integrate with a jammer device called DedroneDefender.
Supply Chain Risks Persist, FDA Medical Device Director Says
Michelle Tarver, the Food and Drug Administration’s recently appointed medical device director, warned that the U.S. risks falling behind other countries in its ability to protect patients by ensuring product supply, according to a Jan. 16 press release. Last week’s statement about supply chain vulnerabilities in the U.S. presents a higher-level vision for how device regulation could change under Tarver. The CDRH director said the European Union now has access to “vital information about medical device shortages that could impact their population” through a regulation that took effect earlier this month. Yet, the U.S. is largely reliant on voluntary shortage reports.
The CDRH director highlighted several recent examples of supply issues that affected children, including a tracheostomy tube shortage that meant patients “were unable to get the appropriate care in a timely fashion” and a duodenoscope disruption that forced infants to undergo procedures “that carry a higher morbidity and mortality rate.”
Read more at Supply Chain Dive
New Vehicle Prices Rose 1.3% YOY In December
New vehicle prices increased for the fourth consecutive month in December, nearly reaching the all-time record set at the end of 2022, Cox Automotive’s Kelley Blue Book reported Jan. 15. The average purchase price of a new car last month was $49,740, a 1.3% year-over-year increase and a 1.5% gain from November, inching closer to the record-high of $49,958 set in December 2022, according to the report.
Luxury vehicles tend to sell better in December and 2024 was no exception, with increased sales of high-end models boosting the average transaction price for the month, Kelley Blue Book said. Luxury models selling for over $80,000 represented 5.6% of total new car sales in December—a record high. Consumer sentiment and confidence is also on the rise, Erin Keating, an executive analyst at Cox Automotive, said in a statement. She said consumer optimism benefits sales of luxury vehicles. Electric vehicles also sold well in December. The average EV transaction price of $55,544 was nearly 1% higher than it was in December 2023. Average EV purchase incentives also remained strong at 14.3% of purchase price, slightly down from November’s rate of 14.7%.
CIA Now Says Covid-19 Is More Likely To Have Originated From A Lab Leak
The Central Intelligence Agency said Saturday that it’s more likely a lab leak caused the Covid-19 pandemic than an infected animal that spread the virus to people, changing the agency’s yearslong stance that it couldn’t conclude with certainty where the pandemic started. “We have low confidence in this judgement and will continue to evaluate any available credible new intelligence reporting or open-source information that could change CIA’s assessment,” an unnamed CIA spokesperson wrote in an email sent to reporters Saturday.
The statement didn’t include any additional details about what led the agency to change its assessment and whether it had intelligence that would add weight to the theory that the virus had leaked from a research lab in Wuhan, China. The “CIA continues to assess that both research-related and natural origin scenarios of the Covid-19 pandemic remain plausible,” the statement said.