Member Briefing January 6, 2025
U.S. ISM Manufacturing PMI improves to 49.3 in December. Still in Contraction
The ISM Manufacturing Index ended the year basically where it started it; at 49.3 the composite index is just two tenths above its January reading. All told, the ISM has signaled contraction now for essentially two-straight years as the overall sector has done little more than tread water amid the initial pandemic-related pull forward in goods demand and the fastest rate tightening cycle in a number of decades
- Fifty-two percent of manufacturing gross domestic product (GDP) contracted in December, down from 66 percent in November.
- The Employment Index of the PMI survey edged lower to 45.3 from 48.1 in the same period
- The Prices Paid Index climbed to 52.5 from 50.3, highlighting stronger price pressures.
- The New Orders Index improved to 52.5 from 50.4.
New Year, New Port Strike?
Dockworkers on the East and Gulf coasts could go on strike again in less than two weeks if they don’t reach a contract agreement with ports and shippers. Talks are set to resume next week, according to Bloomberg. The main sticking point between the two sides? Automation. It’s a growing part of port operations around the globe. But the International Longshoremen’s Association does not want ports to adopt technology that could eliminate jobs.
Ports were built for loading and unloading cargo from ships in many kinds of containers. As Johns Hopkins University professor Tinglong Dai pointed out, it was up to humans to understand the nuances. But for several decades now, shipping containers have come in standard sizes, meant to easily move among boats, trains and trucks, said Phil Evers, an associate professor of supply chain management at the University of Maryland. “So It’s very easy to automate that process,” he said. That’s happening at some ports in the U.S., but especially in Europe, Asia and the Middle East, said Margaret Kidd, a professor of supply chain and logistics technology at the University of Houston. Go to the most automated ports in Europe, she said, and you don’t see people. “People are in the background. They’re in offices. They’re in safer locations to execute their work,” she said.
Construction Spending Flat in November
U.S. construction spending was unchanged in November as a moderate rise in single-family homebuilding was offset by a sharp decline in outlays on multi-family housing projects. The Commerce Department's Census Bureau said on Thursday the unchanged reading in construction spending followed an upwardly revised 0.5% rise in October. Construction spending increased 3.0% on a year-on-year basis in November.
Spending on private construction projects edged up 0.1% after increasing 0.6% in October. Investment in residential construction nudged up 0.1%, with outlays on new single-family projects rising 0.3%. Spending on public construction projects dipped 0.1% in November after easing by the same margin in October. State and local government spending slipped 0.1%, while outlays on federal government projects dropped 0.5%.
Global Headlines
Middle East
- Turkey Says It 'Neutralised' 32 Outlawed PKK Members In Syria– Reuters
- Hamas Releases Video Of Israeli Hostage Liri Albag As Ceasefire Talks Resume - BBC
- Gaza Cease-Fire Deal Likely to Elude Biden - WSJ
- In The West Bank, Palestinian Authority Clashes With Militant Groups And Suspends Al Jazeera – France 24
- Israeli Military Says Commandos Raided Missile Plant In Syria In September - Reuters
- Syria Restricts Entry For Lebanese Citizens, Security Sources Say – France 24
- Israel Claims Senior Hamas Leader Killed in Gaza Strike - 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
- Russia Declares Emergency In Crimea After Black Sea Oil Spill – Yahoo
- Ukraine Launches New Attack In Kursk Region Of Western Russia - Reuters
- Russian Ruble Nosedives as Economy Gives Putin Major Headache - Newsweek
- Hundreds Of North Korean Troops Dead In Kursk, Ukraine Estimates - Politico
- Russian Gas to Europe Stops Flowing After Ukraine Refuses to Renew Pipeline Deal - WSJ
- Ukraine’s Newest Leopard 2 Brigade Began Disintegrating Before It Reached The Front Line - Forbes
- Zelensky to Boost Post-Assad Syria Relations Amid Russia Pullback - Newsweek
- Russian Drone Attack Kills 1 In Kyiv Suburbs - 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
- Ethiopia Defense Minister Visits Somalia, In Sign Of Detente – VOA
- Mexico Restricts Duty-Free Apparel Imports – Supply Chain Dive
- China and Russia Forge Major Tech Collaboration To Challenge US - Newsweek
- Number Of Children In War Zones Doubled Since 1990s – The Guardian
- Maduro’s Rival Seeks Talks With Biden Before Venezuela’s Inauguration – Bloomberg
- The Heroic Race to Rescue 370 Orphans from a War Zone—Twice - WSJ
- South Korean Presidential Guards Prevent Arrest Of Impeached Yoon After Tense Stand-Off - Reuters
- Central American Troops Arrive In Haiti To Fight Gangs - Reuters
Policy and Politics
Newly Elected Speaker Johnson Tells House GOP Trump Wants One Reconciliation Package
Speaker Mike Johnson (R-La.) told House Republicans on Saturday that President-elect Trump wants to pass one reconciliation package, a strategy that runs counter to the two-bill effort several other GOP lawmakers had been pushing for. Johnson made the announcement during a private House GOP meeting at Fort McNair as the conference gathered to discuss plans for moving legislation through the budget reconciliation process. Johnson told lawmakers that the president-elect wants to pass “one big beautiful bill,” according to two of the sources. Reconciliation allows for expedited consideration of certain tax, spending, and debt limit legislation. In the Senate, reconciliation bills aren’t subject to filibuster and the scope of amendments is limited, giving this process real advantages for enacting controversial budget and tax measures.
Trump’s position, however, does align with that of House Ways and Means Chair Jason Smith (R-Mo.), who has been adamant that Congress should plan for one reconciliation package, not two, citing previous legislative undertakings and the razor-thin margin Republicans have in this Congress. “There have not been two reconciliations that have been signed into law in the same year,” Smith said last month. “And why would we think in a majority of 219 to 215 that we would over perform?”
Moving Company Studies: NY Among States With Most Residents Moving Out In 2024
New York had some of the most people move out of the state this year, according to annual studies recently released by United Van Lines and Atlas Van Lines. United Van Lines' 48th Annual National Movers Study looked at the number of household moves handled by its parent company UniGroup network while Atlas Van Lines' 2024 Migration Patterns Study took the company's interstate relocations from Nov. 1, 2023 through Oct. 21, 2024 into consideration as well as a survey of over 1,000 people who recently relocated. Some of the primary reasons for relocating nationwide across both studies include wanting to be closer to family and friends, jobs and costs.
United Van Lines' study reveals New York saw 59% total outbound moves in 2024 with the Nassau/Suffolk and Poughkeepsie/Dutchess metropolitan statistical areas seeing some of the most throughout the 48 contiguous states and Washington D.C. The Nassau/Suffolk area came in third with 76% total outbound moves and the Poughkeepsie/Dutchess area followed closely behind in the fourth spot with 73% total outbound moves last year.
Read more at The Democrat & Chronicle
Net Neutrality Rules Struck Down by Appeals Court
A federal appeals court has struck down the Federal Communications Commission’s net neutrality rules that prevented internet service providers from throttling or blocking some content or charging more to deliver it. The U.S. Court of Appeals for the Sixth Circuit said Thursday that the FCC lacked the authority to reinstate the Obama-era rules, dealing a final blow to a decade-long effort to gain greater oversight over the internet.
Long the source of partisan tensions, the net neutrality rules were repealed in Donald Trump’s first term. President Joe Biden signed a 2021 executive order encouraging the FCC to reinstate them, which the FCC voted to do along party lines in April. Democrats want greater oversight of internet service providers while Republicans reject the idea that they should be regulated like phone companies. The appeals court’s decision is an early win for the incoming Trump administration which has vowed to roll back Biden regulations.
Transition 2024
- Trump Nominees Face Senate Scrutiny For Key Defense Roles – Military Online
- Thune Says It’s Unclear Whether All Trump Cabinet Picks Will Be Confirmed – The Hill
- Italy’s Meloni Makes Surprise Visit To See Trump In Florida - Politico
- New Orleans Attack Highlights Revived Terrorism Risk Inside U.S. - WSJ
- Schumer Backs Wisconsin’s Wikler For DNC Chair - Politico
- Some Democrats Said To Be Open To Backing RFK Jr – The Hill
- Schumer Unveils Democratic Committee Rosters As Party Looks To Counter Trump - Politico
- Before Trump Takes Office, Biden to Ban Drilling in Some Coastal Waters - WSJ
- Trump’s Greenland And Panama Canal Ambitions Face Republican Skepticism – The Hill
- Tracking Trump’s Cabinet Picks – Politico
Health and Wellness
Flu Emergency Room Trips Are 'Very High, CDC Says
During Christmas week, respiratory virus activity continued a steady rise across much of the nation, with the largest spikes seen for flu. COVID-19 levels continue to climb from low levels, and respiratory syncytial virus (RSV) activity is still very high in many regions, the Centers for Disease Control and Prevention (CDC) said today in its latest updates. Emergency department (ED) visits for flu and RSV are very high, with the steepest rise for flu. For COVID, ED visits are highest among young children and older adults.
Meanwhile, flu hospitalizations continue a steep rise compared to the other two viruses, coming in at 7.8 per 100,000 hospitalized people, roughly twice the level as for COVID, according to data from the CDC's National Healthcare Safety Network. Flu hospitalizations are on the rise for all age-groups but are highest in seniors. COVID hospitalizations, tracking higher from a low level, remain highest for older people, with RSV hospitalizations rates highest in young children and older adults. The weekly percentage of deaths, however, is higher for COVID than for flu or RSV, according to the latest CDC data. Flu is also leading the other two viruses for test positivity, rising from 12.0% to 18.7% compared to the previous week. For comparison, COVID test positivity has risen to 7.0%, with the level for RSV at 12.7%.
Read more at University of Minnesota
Industry News
Lockheed Martin, Raytheon Hit As China Slaps Dual-Use Export Ban On 28 U.S. Defense Firms
China's Ministry of Commerce implemented new trade controls on Thursday targeting U.S. defense contractors and technologies, citing national security concerns. In an escalation of ongoing trade tensions between the U.S. and China, China’s Ministry of Commerce added 28 U.S. companies to an export control list and banned the export of dual-use items with both military and civilian applications to those companies. The move is seen as retaliation to recent U.S. measures including the Biden administration’s restrictions on exports of advanced memory chips and chipmaking machinery to 140 Chinese companies and the addition of Chinese firms to the U.S. Department of Commerce’s Entity List.
China also added 10 companies to its Unreliable Entity List for participating in arms sales to Taiwan. Those companies are prohibited from doing any business in China and their executives may not enter or live in the country. Lockheed Martin Corp. Boeing Co., General Dynamics Corp. and RTX Corp. are among the companies affected. China's new trade controls come just weeks before President-elect Donald Trump enters the White House. Trump has pledged to raise tariffs on China-made goods and could use those tariffs to push for a new trade deal with China.
Micron To Invest $2.17 Billion To Expand U.S.-Based Memory Production
Micron plans to invest $2.17 billion to expand its semiconductor facility in Manassas, Virginia, creating 340 jobs and boosting its U.S. semiconductor production capacity. The project will upgrade the facility to produce specialty DRAM memory for industrial, automotive, aerospace, and defense applications. Earlier this month, Micron announced that it had gotten $275 million in federal funding under the CHIPS and Science Act to upgrade its long-lifecycle DRAM fab in Manassas, Virginia, and move production of DRAM for the automotive industry from Taiwan to the United States. Back then, the company said that its fab in Virginia employs 1,230 people and that the expansion will create 950 construction jobs and more than 400 manufacturing jobs.
Micron could also receive up to $70 million in special funding approved by the MEI Commission. This funding depends on the company investing over $2.1 billion and creating 340 new jobs, and the final approval is required from the Virginia General Assembly.
Pentagon Opens $984M Loan Program For Tech Firms
Companies can now start applying for direct loans from the Defense Department’s Office of Strategic Capital, which is looking to disperse up to nearly $1 billion to finance equipment via its new credit program. “The OSC Credit Program assesses capital market needs and develops financial instruments to encourage private investment in industries that are both commercially viable and necessary for the geopolitical challenges of the 21st century…. Where private capital alone may require higher interest rates or comparably rapid repayment, the Credit Program can offer competitive rates with substantially longer repayment timelines, thereby providing companies the time and space they need to move new products to market,” officials wrote in the strategy.
The Pentagon created OSC in December 2022. About a year later, Congress formally enacted the office into law through the fiscal 2024 National Defense Authorization Act and gave it new authorities to issue loans and loan guarantees to eligible companies working on covered critical technology categories that were laid out in the NDAA, such as autonomous mobile robots. In March 2024, appropriators gave OSC funding for these efforts.
Biden Blocks U.S. Steel Takeover By Japan’s Nippon Steel, Citing National Security
President Joe Biden on Friday officially blocked the takeover of U.S. Steel by Japan’s Nippon Steel, making good on his promise to keep an industrial name that is more than a century old under domestic ownership. Biden said the proposed $14.9 billion acquisition by Nippon would place one of the largest steel producers in the U.S. under foreign control, creating a risk for the nation’s critical supply chains. Biden’s decision to torpedo the deal underscores a bipartisan swing toward protectionism in the U.S., as Democrats and Republicans alike seek to maintain domestic control over key industries as geopolitical tensions escalate around the world.
The United Steelworkers union fiercely opposed the takeover by Nippon from the day it was announced in December 2023. Biden had signaled as early as March 2024 that he intended to block the sale, backing the United Steelworkers’ opposition to the deal. President-elect Donald Trump also opposed the deal.
Cyberattacks In Manufacturing: What’s Driving The Trend?
The manufacturing industry is taking a beating when it comes to cyberattacks. The industry has been the biggest target for cyberattacks three years in a row, accounting for more than 25% of incidents, according to IBM’s 2024 X-Force Threat Intelligence Report. Manufacturers were targeted in 70% of ransomware attacks in 2023, leading to millions of dollars in losses. Moreover, the costs of these attacks are have risen by an average of 125% per year and are projected to reach a global impact of $10 trillion by 2025, according to the World Economic Forum.
Why are manufacturers coming under such cyber fire? Because of high-value payoffs, said Shankar Somasundaram, founder and CEO of Asimily, a connected device security firm. “Manufacturers are sitting on valuable intellectual property, proprietary designs and critical operational data,” Somasundaram said. “Their role in supply chains and the broader economy means operational disruptions can create widespread impacts — giving attackers significant leverage in ransomware scenarios.”
Read More at Manufacturing Dive
Tesla’s Global Annual Deliveries Fall For The First Time Despite Big Q4 Incentives
Tesla reported a big fourth quarter delivery miss and an overall down year for the electric vehicle maker. For the quarter, Tesla said it delivered 471,930 vehicles globally, missing analyst estimates of around 510,000 as compiled by Bloomberg. This figure is just barely above the 463,000 delivered last quarter, and below the 484.5K delivered a year ago. For 2024, Tesla delivered 1.78 million vehicles, missing analyst estimates for 1.8 million and resulting in a total below 2023’s 1.8 million vehicles delivered. This is the first year-over-year decline for Tesla, hinting that new competition, demand, and global economic conditions may be hurting the company.
Though Tesla warned last year that its "vehicle volume growth rate may be notably lower than the growth rate achieved in 2023,” due to preparations to launch its next-generation vehicle at Gigafactory Texas, investors most likely were not expecting an annual delivery decline. Meanwhile, China’s BYD (BYDDY) reported global deliveries of approximately 4.3 million passenger cars in 2024. Though Tesla’s main rival in China said 2.5 million of those were hybrids, a reversal of years past, the deliveries still bring BYD’s pure EV total to around 1.76 million — knocking on Tesla’s door.
Forklifts Hurt Thousands of Workers Each Year. Factories Are Seeking Alternatives.
Some of America’s biggest manufacturers are backing away from forklifts. The vehicles have been integral to factories and warehouses for more than a century, but now companies are aspiring to go “forklift-free” to improve productivity and safety. Federal statistics show that each year around 7,500 workers are injured in forklift-related collisions, tip-overs and other mishaps, while nearly 100 are killed.
Manufacturing safety consultant Larry Pearlman said that few clients a decade ago were looking for substitutes for forklifts, also known as lift trucks. Today roughly 10% are, and he expects that portion to grow as robotic material carriers become more widespread. Brian Feehan, president of the Industrial Truck Association, a trade group for forklift makers, said that despite the post pandemic sales drop, he doesn’t expect “a big diminishment” in the business. Some companies that make the vehicles say demand is shifting as customers seek autonomous versions.
SpaceX Launch Surge Helps Set New Global Launch Record In 2024
The world set another record for orbital launches in 2024 in a continuing surge of launch activity driven almost entirely by SpaceX. There were 259 orbital launch attempts in 2024, a 17% increase from the previous record of 221 orbital launch attempts in 2023, based on SpaceNews analysis of open source records. That figure does not include suborbital launches, such as four SpaceX Starship/Super Heavy test flights or two launches of the HASTE suborbital variant of Rocket Lab’s Electron.
That increase in overall launches matches the increase by SpaceX alone, which performed 134 Falcon 9 and Falcon Heavy launches in 2024, up from 96 in 2023. The company performed more orbital launches than the rest of the world combined. China performed 68 launches in 2024, breaking a record of 67 launches set in 2023. Russia performed 17 launches, followed by Japan (7), India (5), Iran (4), Europe (3) and North Korea (1).