Member Briefing July 1, 2025
China’s Manufacturing Activity Contracts For A Third Month Amid Deflation Woes
China’s manufacturing activity contracted for a third straight month in June, an official survey showed on Monday, despite Beijing’s stimulus efforts helping to stabilize certain aspects of the industrial sector. The official purchasing managers’ index (PMI) improved slightly to 49.7 in June from 49.5 in May but stayed below the 50-benchmark separating expansion from contraction, according to data from the National Bureau of Statistics. That figure was in line with analysts’ forecasts in a Reuters poll.
The sub-index tracking production rose to 51, and the gauge tracking new orders ticked higher to 50.2, indicating improvement in industrial activity and demand. Inventory and employment levels at factories, however, continued to decline, coming in at 48 and 47.9, respectively. The new export orders component of the manufacturing PMI improved significantly to 47.5 from 44.7 in the prior month. That could signal a rebound in demand from U.S. buyers following the trade truce reached by Beijing and Washington in mid-May. Chinese manufacturers have been grappling with a deepening price war amid a supply glut and sluggish consumer demand, exacerbated by higher U.S. tariffs that dwarfed its exports to the world’s largest consumption market. The country’s shipments to the U.S. plunged 34.5% in May from a year ago and over 21% in April, as exporters pivoted to alternative markets to avoid high tariffs.
University of Michigan: Consumer Sentiment Up in June.
In June, consumer sentiment surged 16.3% to an index reading of 60.7. This is the first increase in six months. However, the index reading is still below the post-election rebound in December 2024. Expectations about numerous facets of the economy improved, with views about personal finances and business conditions climbing 20% or more. However, sentiment remains 18% below December 2024, and consumers’ views are consistent with a future economic slowdown and an increase in inflation. Respondents are still concerned about the potential impact of tariffs, but geopolitical conflicts in the Middle East are not yet being connected to the economy.
Year-ahead inflation expectations plummeted from 6.6% in May to 5.0% in June. Additionally, long-run inflation expectations fell from 4.2% to 4.0% in June, the second consecutive monthly decline. While consumers’ fears about tariffs have softened, inflation expectations are still elevated relative to the second half of 2024, indicating that widespread beliefs about inflation risks persist.
Read more at University of Michigan
US Corporate Profits Decrease In First Quarter, But Up Sharply from Year Earlier
Economy-wide corporate profits fell 2.3% in the first quarter but rose 6.3% from Q1 2024. Domestic industry profits declined 1.5% from the previous quarter but improved 7.8% in the past year. Profits for domestic nonfinancial corporations decreased $69.3 billion, down from the $53.1 billion rise in the fourth quarter. Meanwhile, profits for domestic financial corporations grew $16.6 billion in the first quarter after increasing $69.4 billion in the prior quarter. Profits from the rest of the world saw a 7.3% decrease from the fourth quarter.
Companies ranging from airlines, retailers to motor vehicle manufacturers have either withdrawn or refrained from giving financial guidance for 2025, citing the uncertainty caused by the on-again and off-again nature of some duties. Businesses front-loaded imports and households engaged in pre-emptive buying of goods last quarter to avoid higher costs, making it difficult to get a clear picture of the economy.
Read more at The Bureau of Economic Analysis
Global Headlines
Middle East
- Israel Pounds Gaza, Killing Dozens As Trump Pushes For Ceasefire – France 24
- How Israel Killed Iran’s Top Nuclear Scientists - WSJ
- Iran-Israel Conflict: After The War, Enter The Diplomats - CNN
- New Satellite Imagery Shows Iran Expanding Work at Fordow Nuclear Site - Newsweek
- Syrian Forces Massacred 1,500 Alawites. The Chain Of Command Led To Damascus. - Reuters
- France, UK, Germany Slam Threats Against IAEA Chief After Allegations Of Mossad Ties – France 24
- Israeli Strike On Gaza Seafront Cafe Kills At Least 20 Palestinians, Witnesses And Rescuers Say - BBC
- Interactive Map- Israel’s Operation In Gaza – Institute For The Study Of War
- Map – Conflicts in the Middle East – Live Universal Awareness Map
Ukraine
- 'Mariupol Is Diseased': Residents Deny Russian Claims Occupied City Returning To Normal - BBC
- Russia Upgrades Shahed Drones, Adopts New Tactics In Ukraine - Forbes
- Brussels And Kyiv Mend Trade Ties After Farmer Fury Over Imports - Politico
- Russia Unleashes Its Summer Offensive With An Army Mired In Problems – Washington Post
- Germany To Help Ukraine Make More Weapons Faster To Strengthen Its Hand In Peace Talks With Russia - AP
- Russia Predicts Why NATO Will Collapse - Newsweek
- NATO Ally Denmark Seeks Women to Fight Russia Threat - 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
- 'Unprecedented' Alerts In France As Blistering Heat Grips Europe - BBC
- German Conservative Leader Calls For European Nuclear Deterrent ‘Independent’ From US - Politico
- China’s Communist Party Now Has 100 Million Members. Many Are in It for the Paycheck. - WSJ
- Investors Flock To Europe As Bloc's Stability Contrasts With Concerns Over US - Reuters
- Glastonbury Controversy Explained: Police Investigate Kneecap And Bob Vylan Sets - Euronews
- BBC Says It Should Not Have Broadcast Bob Vylan’s Chants Against Israeli Military At Glastonbury - AP
- UTA Drops Bob Vylan After “Death To The IDF” Chant During Scandal-Hit Glastonbury Set - Deadline
- Inside The Franco-German Plot To Kill Europe’s Ethical Supply Chain Law - Politico
- Countries Cool On Climate Action As The World Heats Up - Guardian
Policy and Politics
Senate Republicans Try To Get Trump's Tax Cuts Over The Line, Setting Aside Cost Concerns
U.S. Senate Republicans on Monday will try to pass President Donald Trump's sweeping tax-cut and spending bill, despite divisions within the party about its expected $3.3 trillion hit to the nation's debt pile. They were set for a marathon session in which the minority Democrats are allowed to offer an unlimited number of votes, part of the arcane process Republicans are using to bypass Senate rules that normally require 60 of the chamber's 100 members to agree on legislation.
The megabill would extend the 2017 tax cuts that were Trump's main legislative achievement during his first term as president, cut other taxes and boost spending on the military and border security. Senate Republicans, who reject the CBO's estimates on the cost of the legislation, are set on using an alternative calculation method that does not factor in costs from extending the 2017 tax cuts. Outside tax experts, like Andrew Lautz from the nonpartisan think tank Bipartisan Policy Center, call it a "magic trick." Using this calculation method, the Senate Republicans’ budget bill appears to cost substantially less and seems to save $500 billion, according to the BPC analysis.
Trump Wants to Expand Nuclear Power. It Won’t Be Easy.
President Trump wants the U.S. power industry to go nuclear. His recent executive orders aim to quadruple nuclear-power generation in the next 25 years—a monumental target. For most of the past three decades, the industry has been managing ever-older assets instead of building new reactors. Developers are counting on a supply-chain revival and will have to prove they can deliver on time and on budget to drive interest in the sector.
New York hopes to get the ball rolling. Gov. Kathy Hochul unveiled plans last week to build a large nuclear-power facility. The project could be sizable enough to help jump-start domestic construction and test Trump’s promise to expedite permitting. These graphics illustrate the challenges facing the industry.
Elise Stefanik Has A Massive Edge Over Other Republicans In A Hypothetical Gubernatorial Primary
Upstate Rep. Elise Stefanik has a massive edge over other Republicans in a hypothetical party primary to take on Gov. Kathy Hochul next year, a new poll found. Some 64% of Republicans would support Stefanik — while only 8% would back Hudson Valley Rep. Michael Lawler, the survey of 1,108 likely Republican voters conducted by the firm co/efficient found. Another 6% polled said they’d support Nassau County Executive Bruce Blakeman in a hypothetical matchup, while 22% are undecided or back another candidate ahead of the 2026 gubernatorial race.
Stefanik, first elected to the House in 2014, has more widespread name recognition and popularity among Republican voters than Lawler or Blakeman, according to the poll. “Among the most likely contenders Congresswoman Elise Stefanik is widely known AND widely loved,” co/efficient pollster Ryan Munce said. “Over the last several years, Stefanik has become a fixture in both statewide and nationwide politics and is the face of change for New York state.” Still, Munce was surprised that Stefanik amassed a 56 percentage-point lead over Lawler, a popular lawmaker and also a rising star in the GOP.
Political Headlines
- US To Restart Trade Negotiations With Canada Immediately, White House Says – Yahoo Finance
- White House Says It Expects More Countries Will Drop Digital Services Taxes After Canada Backs Down - CNBC
- Trump Administration Claims Harvard Violated Civil Rights Law – Law360
- Optimistic Trump Claims Spending Bill ‘Moving Along Nicely’—As Voting Continues Today - Forbes
- Last-Minute Changes To Trump's 'Big, Beautiful Bill' Stun Clean Energy Industry (And Elon Musk) – Yahoo Finance
- Buying U.S. Arms Will Help Europe Unlock Trade Deal With Trump, EU Leader Says - WSJ
- EPA Employees Go Public With Opposition To Trump Policies – The Hill
- White House Says Trump Wrote Powell To Urge Lower Rates - Reuters
- Trump Tried To Fire Them. But These Democratic Appointees Are Still On The Job. - Politico
- Supreme Court Takes Up Major New Challenge To Campaign Finance Restrictions - CNBC
- Push Against State Funding Of Cuomo's Legal Bills Continues – NY State Of Politics
- Trump Tracker: Keep Tabs On The Latest Announcements And Executive Orders - WSJ
Health and Wellness
Moderna’s Flu Vaccine Shows Positive Late-Stage Trial Results, Paving Way For Combination Covid Shot
Moderna in May voluntarily withdrew an application seeking approval of its combination shot targeting Covid-19 and influenza, saying it had plans to resubmit it with efficacy data from the phase three trial on its stand-alone flu vaccine. That decision came after discussions with the Food and Drug Administration, which is grappling with a massive overhaul under Health and Human Services Secretary Robert F. Kennedy Jr., a prominent vaccine skeptic.
On Monday Moderna said its experimental mRNA-based flu vaccine produced a stronger immune response than a currently available shot in a late-stage trial, clearing a path forward for the product and the company’s separate combination flu and Covid jab. With the new data, the company plans to resubmit the application for the combination vaccine and file for approval of its stand-alone flu shot later this year, Stephen Hoge, the company’s head of research and development, said in an interview. If regulators approve the flu vaccine, the company can then advance the combination shot, Hoge said. He added that Moderna expects approvals for both shots next year pending reviews.
Industry News
One American’s Two-Year Quest to Move His Business Out of China
For the first time in nearly two decades of visiting factories in Asia, Ryan Bursky’s business trip didn’t include a stop in China. Until last year, his company’s products—lamps and other lighting goods sold to retailers including Walmart and Home Depot—had been made in China. President Trump’s first-term tariffs on Chinese goods pushed him to find an alternative. That is how Bursky ended up in Cambodia. At the end of 2024, he had moved a quarter of production from China to Cambodia. Within a few months, that became 70%. The goal of a trip in June: transfer all of his products out of China.
Currently, lamps from China are subject to duties of about 60%, including new levies imposed by Trump since his return to office this year. Imports from Cambodia briefly faced a 49% tariff as part of Trump’s “Liberation Day” blitz, but that has dropped to 10% as trade negotiations continue. Tariffs on Chinese goods aren’t the only reason they are moving. China’s population is aging and shrinking, and Beijing is focusing on high-tech industries such as electric vehicles and artificial intelligence. Cambodia offers young, low-cost labor and room to grow.
One American’s Two-Year Quest to Move His Business Out of China
For the first time in nearly two decades of visiting factories in Asia, Ryan Bursky’s business trip didn’t include a stop in China. Until last year, his company’s products—lamps and other lighting goods sold to retailers including Walmart and Home Depot—had been made in China. President Trump’s first-term tariffs on Chinese goods pushed him to find an alternative. That is how Bursky ended up in Cambodia. At the end of 2024, he had moved a quarter of production from China to Cambodia. Within a few months, that became 70%. The goal of a trip in June: transfer all of his products out of China.
Currently, lamps from China are subject to duties of about 60%, including new levies imposed by Trump since his return to office this year. Imports from Cambodia briefly faced a 49% tariff as part of Trump’s “Liberation Day” blitz, but that has dropped to 10% as trade negotiations continue. Tariffs on Chinese goods aren’t the only reason they are moving. China’s population is aging and shrinking, and Beijing is focusing on high-tech industries such as electric vehicles and artificial intelligence. Cambodia offers young, low-cost labor and room to grow.
Global Steel Production Still Weakening
Global raw-steel production improved to 158.8 million metric tons during May, a 2.0% rise from the April total, with a generally positive trend apparent in most of the largest steelmaking countries – even as the annual and year-to-date comparison shows steel output continuing to slow due to weak demand. World Steel’s May report shows that global production is down -3.8% from May 2024, and the 784 million metric tons produced for the year-to-date represents a -1.3% from January-May 2024. This situation reflects the reality of the Chinese steel industry, which consistently and significantly produces at rates beyond domestic and regional demand.
- During 2024, China produced more than 1 billion metric tons of raw steel, about 55% of the total world output. In May, China produced 86.6 million metric tons, 54.5% of the global total, and yet that amount was a -6.9% reduction of China’s May 2024 output.
- India produced 13.5 million metric tons of raw steel during May, 4.4% more than during April and 9.7% more than in May 2024.
- Japanese steelmakers produced 6.8 million metric tons during May, up 2.8% from their April output but still -4.7% less than their May 2024 total.
- The United States produced 7.0 million metric tons during May, up 5.7% from April in what may yet prove to be an effect of the 25% tariffs on steel imports put in place on March 1, and later increased to 50% on June 4. The May result is 1.7% higher than the May 2024 total.
- In the European Union – 27 nations – May raw steel output was 11.4 million metric tons, or -3.1% less than May 2024. Included within the EU total for May are the German steelmakers’ 3.0 million metric tons, unchanged from the April report and -6.4% lower than the report for May 2024.
Read more at American Machinist
Home Depot Is Buying Distributor GMS For About $4.3 Billion As They Chase More Home Pros
Home Depot said Monday that it is buying GMS, a building products distributor, for about $4.3 billion as the retailer moves to draw more sales from contractors and other home professionals. As part of the deal, the Home Depot-owned subsidiary SRS Distribution will purchase all outstanding shares of GMS for $110 per share, which adds up to about $4.3 billion and amounts to total enterprise value including net debt of about $5.5 billion, the company said. Home Depot said it expects the acquisition to be completed by early 2026.
As Home Depot chases growth, it’s gone after a steadier and more lucrative piece of the home improvement business: electricians, roofers, home renovators and other professionals who tackle large projects year-round and need a lot of supplies. Home Depot said it’s speeding along that strategy with the GMS deal. Home Depot bought SRS Distribution — the subsidiary that’s acquiring GMS — last year for $18.25 billion, in the largest acquisition in its history. Texas-based SRS sells supplies to professionals in the landscaping, roofing and pool businesses and it has bought up many other smaller suppliers as it’s grown.
How China Could Shut Down Auto Factories Around The World
China’s dominance of the global supply chain is starting to hurt automakers. On April 4, the country cut off exports of a class of minerals called “heavy rare earth elements,” and it sent the global auto industry into a panic. Rare earths are a class of 17 elements that have become indispensable in all kinds of applications — everything from fighter jets and submarines, to smartphones and appliances. They are also, of course, essential to the modern automobile. Gas burning cars use them to filter pollution through the vehicle’s catalytic converter. Electric vehicles use them in motors and batteries.
The name “rare earth elements” is a bit misleading — the elements themselves are not that rare in nature. What makes them “rare” is the complex and difficult process of separating them from the rock they are embedded in, and from each other. China controls about 90% of the world’s rare earth processing, and has a total monopoly on the processing of heavy rare earths. Since at least 2023, China has been tightening its grip on several of the key critical minerals it provides for the world, Baskaran said.
Japan Factory Output Rose in May, But Tariffs Cloud Outlook
Japan’s industrial production increased modestly in May, but the rebound is likely to be temporary due to the impact of U.S. tariffs and concerns over a global slowdown. Industrial production rose 0.5% in May from the previous month, after declining 1.1% in April, data released by the Ministry of Economy, Trade and Industry showed on Monday. Production is expected to slow in the coming months as President Trump’s tariffs weigh on exports, and Japanese firms become cautious about their capital spending. Companies expect output to rise 0.3% in June and decrease 0.7% in July, the government data showed.
“Although capital expenditure continues to recover, supported by strong corporate profits, increasing uncertainty surrounding U.S. tariff policy is expected to make companies more cautious in their investment behavior going forward,” said NLI Research Institute economist Taro Saito. Saito said that corporate profits, especially of automakers, are likely to be hit hard as businesses try to absorb higher duties by cutting product prices. Some major Japanese companies have already given weak profit projections for the current business year.
Nike Releases — And Sells Out — Caitlin Clark's Version Of Kobe Bryant's Sneaker. Q4 Results Better Than Expected
Caitlin Clark's version of a popular Nike sneaker, where the WNBA superstar etched her name next to the late NBA icon Kobe Bryant, dropped and sold out quickly on Monday morning. The Kobe V Protro retails for $190 and incorporates slightly more splashy versions of blue, red, and gold, colors of her team, the Indiana Fever.
On Thursday Nike posted a poor fourth quarter, as sales dropped 12%, net income plunged 86% and profit margins dwindled. But CEO Elliott Hill stressed the company has emerged from the worst of its slump, and the slide in sales and profits would begin to moderate in the quarters ahead. He reiterated it would take the biggest financial hit from its turnaround plan during the quarter, soothing investors who worried President Donald Trump’s tariff hikes on key Nike manufacturing hubs like China and Vietnam would derail the company’s
General Dynamics Draws $1.8B More for Nuclear Subs
The U.S. Dept. of Defense authorized a further $1.85 billion for General Dynamics Electric Boat to proceed with long-lead time material acquisition and construction efforts related to the Virginia-class Block VI submarine program. This contract modification follows the initial $2.2 billion awarded in October 2023 for the upcoming nuclear submarines, plus a further $1.3 billion awarded in August 2024 and $1.06 billion approved in April of this year.
The Virginia-class subs are fast-attack, missile-armed vessels designed for anti-submarine warfare and intelligence gathering operations. The program has been underway for over two decades, and the U.S. Navy anticipates they will replace the Los Angeles-class subs over the coming decades. Most of the work covered by the new contract modification will be conducted by Electric Boat in Sunnyvale, Calif., with lesser amounts to be carried out in numerous other places and states. To date, 24 Virginia-class submarines have been built and 10 are under construction currently. The U.S. Navy plans for 66 vessels over the life of the program.
Read more at American Machinist
Google Bets on Nuclear Fusion for Next Generation of Clean Power
Tech giant Google has agreed to purchase electricity from a company developing a first-of-its-kind power plant that will use nuclear fusion, a promising clean energy technology that is still in development. Google has agreed to buy 200 megawatts of power from Massachusetts-based Commonwealth Fusion Systems (CFS) in what the companies call the "first direct power purchase agreement in history" between a customer and a fusion energy company. Michael Terrell, Google's head of advanced energy, said Friday in a call with reporters that he hoped to use Google's purchasing power to send a signal to the market about the potential in fusion energy. "There's a role for corporate buyers like us to help advance these technologies and help get them to commercial scale," he said.
Google is also increasing its investment in CFS, which has raised about $2 billion since spinning off from MIT in 2018, according to the company. Google first invested in the company in 2021. Google declined to provide specifics about the size of its investment and power purchase price with CFS. CFS said it expects to deliver power to the grid "in the early 2030s" from a fusion power facility planned for construction in Chesterfield County, Virginia, not far from the "data center alley" of northern Virginia, home to the world's largest concentration of data centers.