Member Briefing January 9, 2024
Top Story
After a Tough Year, Manufacturing Has Reasons to be Hopeful
There was news Friday about the manufacturing sector. Factory orders for November were up by 2.6% — better than economists were expecting. But, orders were up just 0.7% year over year. In the face of high interest rates and a weakening global economy, manufacturing activity contracted in 2023. “Running a manufacturing business is pretty damn hard work right now,” said Ned Hill, a professor of economic development at Ohio State University.
All this does sound pretty grim. But actually, said economist Mark Zandi at Moody’s Analytics, with interest rates so high, we should be grateful it’s not way worse. “Manufacturing is generally the part of the economy that goes down the tubes and pushes it into recession,” he said. “So the fact that it kind of held its own is pretty incredible. Typically in a rising-rate environment, you see lots of job losses.” Zandi said one reason that hasn’t happened is the federal government has invested billions in infrastructure as well as electric vehicle and semiconductor production.
Manufacturing Employment Rose Slightly in December, Wages Jump
Manufacturing employment rose by 6,000 in December, slowing from the gain of 26,000 in November in the aftermath of the auto strikes. Overall, hiring was quite sluggish in 2023 among manufacturers, with the sector adding 12,000 workers on net, following robust gains in 2021 and 2022. On the positive side, manufacturing employment has remained resilient, hovering near 13 million workers all year, with 12,986,000 in December. This was just shy of September’s pace (12,992,000), which was the best reading since November 2008.
The average hourly earnings of production and nonsupervisory workers in manufacturing jumped 0.9% to $27.16 in December, with 5.8% growth over the past 12 months. That was the strongest year-over-year pace since April 2022, which was a 40-year high. As such, wages continue to rise strongly despite some softening in overall manufacturing hiring over the past year.
Global Headlines
Gaza
- Israel and Hamas: The Latest News – The Guardian
- Senior Hezbollah Commander Killed in Israeli Strike – Reports - BBC
- Western Allies Seek Rapid End to Gaza War as Israel Presses On - Reuters
- Blinken Tries to Avert Wider War in Middle East During Fourth Trip to Region - NBC
- Israel’s President Says Expelling Palestinians Not the Plan – Politico
- Israel Shifts to Deadlier Strikes on Iran-Linked Targets in Syria - Reuters
- Israel Warns of ‘Another War’ After Hezbollah Strike on Air Traffic Control Base – The Hill
- 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
- Ukraine's Forces Suffer 'One of Their Worst Days' in War - Newsweek
- Putin’s Unsustainable Spending Spree – Foreign Affairs
- Short on Shells, Ukraine Relies on Explosive Drones to Hold Russia Back - WSJ
- Putin Citizenship Decree violates Children's Rights, Ukraine Says - BBC
- Russia Accidentally Bombs Own Civilians for Second Time in a Week - Newsweek
- Russia Got 7,500-Pound Rockets From North Korea—And Promptly Blew Up A Pair Of Ukrainian Supply Bases - Forbes
- 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
- Eurozone Inflation Rose 2.9%, Less Than Expected, Keeping Rate-Cut Talk on Track -- Update
- Carriers Are Entering Agreements With the Houthis to Avoid Attacks – Shipping Watch
- Shipping’s Red Sea Crisis Is Providing a Boost to Some Carriers - WSJ
- How to Watch Taiwan’s Election like a Pro - Politico
- US Fighter Jets to Fly over Bosnia in Warning to 'Secessionist' Serbs - Reuters
- Nord Stream Probe Hampered by Resistance From Poland - WSJ
Policy and Politics
Congressional Negotiators Reach Agreement on $1.6 Trillion Government Spending Level for 2024
Congressional leaders reached a bipartisan deal on Sunday setting a roughly $1.6 trillion federal spending level for the year, but the pact drew quick criticism from some conservatives and it remained unclear whether lawmakers would be able to quickly pass legislation averting a government shutdown. The House and Senate now have less than two weeks to craft underlying bills funding the government, with several federal agencies set to run out of money later this month and the rest to follow in February, a tall order in a Congress that has struggled to pass major legislation on time.
The deal leaves unresolved some key battles and could open up more friction between House Speaker Mike Johnson (R., La.) and his conservative flank, which has outsize power because of Republicans’ narrow majority and has repeatedly derailed bills in the chamber. Among other things, some House Republicans plan to fight for so-called policy riders, which can be used to advance conservative social policies and which Senate Democratic leaders have called nonstarters. Johnson said the deal contains “hard fought concessions” from Democrats.
Biden Administration to Unveil Contractor Rule Set to Upend Gig Economy
The administration of U.S. President Joe Biden will release a final rule as soon as this week that will make it more difficult for companies to treat workers as independent contractors rather than employees that typically cost a company more, an administration official said. The U.S. Department of Labor rule, which was first proposed in 2022 and is likely to face legal challenges, will require that workers be considered employees entitled to more benefits and legal protections than contractors when they are "economically dependent" on a company.
A range of industries will likely be affected by the rule, which will take effect later this year, but its potential impact on app-based services that rely heavily on contract workers has garnered the most attention. The Labor Department in the proposed rule said it would consider factors such as a worker's "opportunity for profit or loss, investment, permanency, the degree of control by the employer over the worker, (and) whether the work is an integral part of the employer’s business." The department's regulation will likely be the focus of lawsuits challenging the new rule. Federal law requires agencies to adequately explain their decision to withdraw and replace existing rules.
Democrats Concerned Over Austin Hospital Secrecy as Prominent Republicans Call for His Ouster
Top Democrats have begun voicing concerns following reports that Defense Secretary Lloyd Austin was hospitalized for several days before informing the White House. Republicans, meanwhile, are stepping up calls for the Pentagon chief to resign or be fired.
Rep. Adam Smith (D-Wash.), the top Democrat on the House Armed Services Committee, has joined the panel’s GOP chair, Rep. Mike Rogers (R-Ala.), in airing their concerns about the series of events and pressing for more information from the Pentagon. Austin was hospitalized following complications from an earlier medical procedure on Jan. 1 and took days to inform senior White House officials, including President Joe Biden. “Transparency is vitally important,” the bipartisan pair said. “Sec. Austin must provide these additional details on his health and the decision-making process that occurred in the past week as soon as possible.”
Health and Wellness
Here We Go Again - Why Fears Over a ‘Tripledemic’ are Surging
Cases of three major respiratory viruses — the flu, COVID-19 and RSV — are surging in the U.S., pushing the country toward a feared “tripledemic” during its first post-pandemic respiratory viral season. Optimism was high this autumn as the U.S. headed into the viral season. The national arsenal against these viruses had vaccines against RSV for the first time, newly updated COVID-19 vaccines, and the flu “immunity debt” that plagued children in 2022 was history.
But now, confidence is waning. Accessing the vaccine for RSV, or respiratory syncytial virus, has been a struggle for many, and enthusiasm for the new COVID-19 vaccines turned out to be abysmal. COVID-19 hospital admissions have been rising since November and wastewater detection indicates most sites — 69 percent — are seeing large increases in virus levels. Flu activity across the country is currently “elevated and continues to increase in most parts of the country,” according to the latest update from the Centers for Disease Control and Prevention (CDC). And vaccine uptake for the flu seems to be lagging, with the CDC saying nearly 8 million fewer people got the shot by mid-December compared to the same period in 2022.
Seasonal Affective Disorder: How the Dark Days of January Shape Your Mood, Intelligence and Sex Drive
The northern hemisphere may have passed its shortest day, but the winter is far from over. After the sparkle of the holiday celebrations, January can feel like the darkest month for many. It's not just our emotions that are affected. A recent scientific paper, published in the journal Perspectives on Psychological Science, explores the many ways that the seasons can influence our brains – from our sexual appetites to our intelligence and our social activity.
The existence of wintertime depression, known as "Seasonal Affective Disorder" (Sad), is now well-accepted. The symptoms include a persistent sadness or anxiety lasting for at least two weeks; a sense of hopelessness and worthlessness; decreased energy; overeating; and oversleeping. If you have ever noticed your mental acuity waning with the daylight, you may not be alone. Some studies have found that those assessed in winter showed slightly worse performance on measures of learning, memory and concentration, compared to those assessed in the summer.
NYS COVID Update
The Governor updated COVID data for the week ending January 5th.
Deaths:
- Weekly: No data
- Total Reported to CDC: No data
Hospitalizations:
- Average Daily Patients in Hospital statewide: 3,320
- Percent Available ICU Beds: 19%
7 Day Average Cases per 100K population
- 28.3 positive cases per 100,00 population, Statewide
- 32.3 positive cases per 100,00 population, Mid-Hudson
Useful Websites:
Election 2024
The Changing Congressional Map is Shifting the Fight for Control of the House – Politico
Pollster: Despite Big Trump Lead, Iowa Still up for Grabs - CNN
What to Know About Next Monday’s Iowa GOP Presidential Caucuses - WSJ
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 Factory Orders Rose Less Than Expected in November
German factory orders rose much less than anticipated in November, a discouraging sign for Europe’s largest economy that is relying on its outsized manufacturing base to regain growth. Monday’s data showed a 0.3% increase in demand — falling short of analysts’ expectations of a 1.1% gain. The uptick from October — which saw a 3.8% drop — was due to large orders, the statistics office said. Trade data were more positive. Exports increased 3.7% from October, the biggest monthly jump in more than 1 1/2 years.
The outcome underscores Germany’s enduring industrial woes caused by the energy crisis and weak global demand. This malaise has probably plunged the country into its first recession since the pandemic, with economists expecting data on Jan. 15 to show a second consecutive contraction in the final quarter of 2023. While the outlook for a return to sustained growth this year is bleak — the Bundesbank anticipates overall growth of just 0.4% — the economic slump may at least aid the return of inflation to the European Central Bank’s 2% target. German consumer prices released last week showed a jump of 3.8% in December, though that was less than economists anticipated.
US Homebuyer Confidence Up in December; More See Loan Rates Falling
U.S. homebuyer confidence improved in December, with more homeowners anticipating that mortgage rates would fall further this year, but it could take sometime for housing supply to recover as many remain hesitant to sell their homes. Mortgage finance agency Fannie Mae said on Monday its Home Purchase Sentiment Index rose 2.9 points to 67.2 in December. It was up 6.2 points year-over-year.
The rate on the popular 30-year fixed-rate mortgage has plunged from a 23-year high of 7.79% in late October, tracking the decline in U.S. Treasury yields. It averaged 6.62% last week, according to data from mortgage finance agency Freddie Mac. Higher mortgage rates have discouraged homeowners locked into lower rates from selling their homes, shortening inventory and pushing existing home sales down precipitously since 2022.
FTC Will Put New Merger Guidelines to Work in 2024
The Federal Trade Commission’s aggressive agenda targeting big tech and other corporate mergers that could harm competition or the labor market is expected to continue into the new year, antitrust experts said. A priority for the FTC and the Department of Justice’s Antitrust Division will be to start applying their new merger guidelines in court because the guidelines’ impact will be determined by how readily judges accept them, said former FTC Chair William Kovacic.
In December, the FTC and the Antitrust Division finalized the guidelines, reflecting the agencies’ aggressive approach toward corporate mergers and applying greater focus to how mergers affect the labor market. Randall Hack, a partner at Locke Lord, said he is “skeptical” about the FTC’s examination of how mergers impact the labor market because it is difficult to establish what the optimal level of employment should be in any particular industry before or after a merger.
Steps to Address the Critical Skills Shortage in Industrial Maintenance
The unfilled rate for industrial maintenance positions is high, ranging from 10% to 30% based on the role and location. In a four-team shift rotation, a 25% vacancy rate means that one team position must be covered by overtime or contract resources, or the shift does not have coverage during production. Given the skills shortage, when maintenance technicians are hired, they lack the necessary skills and knowledge relative to the ones they are replacing. One group of technicians commented that since they could not find the skill level in applicants, Human Resources has defaulted to finding “warm bodies.”
For the short-term stop relying primarily on tribal knowledge. Capture and share the knowledge wealth by documenting the work. Ensure your equipment hierarchy is accurate and that you have valid preventive maintenance (PM) task plans for each asset as needed to ensure reliability. For the longer term determine the skills and knowledge required to maintain your assets. Think about the work tasks, when the knowledge was needed (day one or two years in), the frequency of the tasks, and how critical the tasks are. Based on these factors, create a progression matrix of skills and knowledge steps to ascend in the technician ranks.
Learn about the Council of Industry Industrial Maintenance Mechanic Apprenticeship
Flood Watch Issued in Advance of Heavy Rains Expected Today
The National Weather Service has issued a Flood Watch ahead of heavy, drenching rain that is expected to arrive Tuesday afternoon through early Wednesday morning. Two to four inches of rain are expected throughout the region. The NWS says the rain combined with melting snow will affect Columbia, Dutchess, Greene, and Ulster Counties from Tuesday through Wednesday afternoon.
Heavy rainfall that will be coupled with temps pushing into the upper 40’s and low 50’s will lead the rapid runoff into already swollen creeks, streams and rivers. Please keep this in mind as you handle the snow removal for this weekends storm, be strategic about the placement of your snow removal, try to not limit storm drains and ditches as this may only lead to enhanced flooding risks next week.
Read more at Hudson Valley Weather
A Key Clue in the Alaska Airlines Blowout Turns Up in a Backyard
The National Transportation Safety Board says the plug covering an unused exit door that blew out minutes into an Alaska Airlines flight Friday evening has been found. The agency's head said the discovery could prove vital in the investigation of the cause of the blowout, which forced the Boeing 737 Max 9 to return to Portland, Oregon minutes after takeoff. The Federal Aviation Administration grounded all of the types of Boeing 737 Max 9s involved until it's "satisfied that they are safe," an FAA spokesperson said in a statement Sunday.
In a news conference Sunday night, National Transportation Safety Board Chair Jennifer Homendy said the plug was found near Portland in the backyard of a schoolteacher she identified only as Bob. "We are really pleased that Bob found this," she said. Homendy told reporters pilots reported that the same plane experienced three pressurization warnings, from cockpit dashboard lights, between Dec. 7 and Jan. 4. At least one occurred in-flight.
Extreme Weather Tops List of Possible Logistics Disruptions in 2024 Forecast
Wild weather events will be the top logistics disruptor for supply chains in 2024, according to a forecast from supply chain risk analysis firm Everstream Analytics. Weather is already a top logistics disruptor, and that impact will only increase as the “Era of Extremes” persists into 2024, the firm said. Today, a billion-dollar event occurs every three weeks, and those same hurricanes, winter storms, wildfires, and floods are likely to cause havoc in supply chains in 2024.
The prediction comes from California-based Everstream’s “2024 Supply Chain Risk Report,” which is based on its database of known and predicted events, and informed by human intelligence and AI technology. Following the challenge of extreme weather, the report also named five other looming threats: Environment regulations, trade wards between the US and China, r Rising geopolitical instability, commodity shortages, and cybercrime.
Read more at Supply Chain Quarterly
Semiconductor Industry Proposes New 'Chipmaker's Visa' for H1B program
The U.S. semiconductor industry is facing a big talent problem: it will be short of 67,000 employees by 2030, according to estimates by the Semiconductor Industry Association (SIA), a lobbying group for the sector. Efforts to develop local talent in the U.S. are ongoing, but there is still a big gap, which is why the industry depends on engineers, computer scientists, and technicians from abroad.
However, the U.S. H-1B Visa system is making it tough to bring in and keep these workers, so the U.S. chip industry is calling on the U.S. government to rethink it, according to an article from Semiconductor Engineering. One of those options is a new type of visa specifically for the semiconductor industry. A new type of visa — a Chipmaker's Visa — specifically for the semiconductor industry has been proposed by the industry and the Economic Innovation Group (EIG). TIf the U.S. government were to follow EIG's proposal, it would auction off 2,500 visas per quarter, a total of 10,000 per year.
Deep Oil Price Cut by Saudis Highlights Soft Physical Market
Saudi Aramco cut the official selling price for its flagship Arab Light crude to a $1.50-a-barrel premium to the regional benchmark for February, the lowest level since November 2021. The $2-a-barrel reduction was deeper than had been foreseen, and follows a weakening of spot differentials for Middle Eastern crudes due to lackluster Chinese appetite and increased global supplies.
Oil posted the first annual loss since 2020 last year as non-OPEC+ production expanded, and traders looked ahead to slower growth in demand, including from key importer China. Crude’s weakness has prompted Riyadh to make a deep voluntary output cut, as well as complementary reductions from other members of the Organization of Petroleum Exporting Countries and its allies. Traders are also wary global growth may slow in 2024, restraining oil consumption.
Vulcan Rocket Finally Launches, Kicking Off U.S. Moon Mission
A powerful rocket developed by a Boeing -and-Lockheed Martin-owned company blasted off for the first time early Monday, the vehicle’s inaugural flight after years of delays. Called Vulcan Centaur, the 202-foot-tall rocket lifted off under a trail of flames at 2:18 a.m. ET from a Florida launchpad, powering an American moon lander, called Peregrine, into space, where it is designed to journey to the lunar surface. That uncrewed vehicle could try to land on the moon next month, potentially becoming the first U.S. device to visit the lunar surface in more than five decades.
Following the launch, United Launch Alliance said the rocket performed successfully. Vulcan used two huge engines developed by Jeff Bezos’ Blue Origin space company during the first part of the mission, marking the debut in flight for those machines. ULA is among the companies that operate larger, more powerful rockets and is a competitor to SpaceX. The Elon Musk-led company has emerged in recent years as the dominant global rocket launcher, gaining market share and conducting a growing number of flights with its fleet of partially reusable Falcon vehicles.
Update: Moon Landing Attempt At Risk Due To ‘Critical Loss Of Propellant’
The U.S.’s first moon landing attempt in over 50 years is possibly at risk hours after it launched Monday, after the private firm that designed the lander announced a failure in its propulsion system. In its latest update on the mission, Astrobotic said a failure in the lander’s propulsion system—the machine responsible for pushing the lander forward—”is causing a critical loss of propellant,” which is the material that comes out of the lander to push it forward.
Astrobotic said its team is trying to stabilize the loss of propellant, but has “prioritized maximizing the science and data” it can gather, while assessing possible alternatives for the mission. In its first update after the launch, which took place after 2 a.m. ET, Astrobotic announced that it was unable to stabilize the lander into a sun-pointing position to collect sunlight, draining the battery, and said a likely cause was a “propulsion anomaly that, if proven true, threatens the ability of the spacecraft to soft land on the Moon.”