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Member Briefing July 16, 2024

July 16, 2024

Posted By: Harold King in Daily Briefing,

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Empire State Manufacturing Survey – ‘Modest Decline’

Business activity continued to decline modestly in New York State, according to firms responding to the July 2024 Empire State Manufacturing Survey. The headline general business conditions index was little changed at -6.6. Here are some key findings:

The new orders index was little changed at -0.6, suggesting that orders remained flat, and the shipments index ticked up to 3.9, pointing to a slight increase in shipments.
The inventories index fell to -6.1, indicating that inventories moved lower.
The delivery times index remained below zero at -9.2, suggesting that delivery times shortened, while the supply availability index was zero, indicating that supply availability was unchanged.
The index for the number of employees came in at -7.9, pointing to another month of employment contraction.
The average workweek index came in around zero, suggesting that hours worked held steady.
The prices paid index edged up slightly to 26.5, indicating that input prices continued to rise modestly.
The prices received index came in at 6.1, indicating that selling price increases remained quite minor.
After climbing sharply last month, the index for future business conditions was just slightly lower at 25.8.
The outlook for employment growth remained weak, and capital spending plans remained sluggish.

Read more at the NY Fed

China Reports Second-Quarter GDP Growth of 4.7%, Missing Expectations, But Industrial Production Rises on Exports

China’s National Bureau of Statistics on Monday said the country’s second-quarter GDP rose by 4.7% year on year, missing expectations of a 5.1% growth, according to a Reuters poll. June retail sales also missed estimates, rising 2% compared with the 3.3% growth forecast. “We estimate that discretionary retail spending fell at the sharpest sequential pace since the April 2022 Shanghai lockdowns,” Oxford Economics Lead Economist Louise Loo said in a note. The firm now pegs China’s 2024 GDP growth at 4.8%, higher than the 4.4% it estimated in December 2023 for the year ahead.

Industrial production year-on-year growth in June, however, beat expectations at 5.3%, compared with Reuters’ estimate of 5%. High-tech manufacturing saw an 8.8% increase in value added in June. China’s exports as a driver of growth have held up better than expected, but there are uncertainties about the future due to trade tensions, said Xu Hongcai, deputy director of the Economics Policy Commission at the China Association of Policy Science.

Read more at CNBC

Global Headlines

Middle East

Ukraine

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Policy and Politics

Trump Picks Ohio Sen. J.D. Vance as His Running Mate

Former President Donald Trump named Sen. J.D. Vance of Ohio as his running mate, ending months of theatrical buildup and settling on a much younger partner who could help appeal to working-class voters in critical Midwest battleground states. If Trump is elected, Vance, who turns 40 in August, would be one of the youngest vice presidents in history and one with just two years of elected experience. But he is a figure closely associated with the style and views of Trump’s conservative, populist movement.

“After lengthy deliberation and thought, and considering the tremendous talents of many others, I have decided that the person best suited to assume the position of Vice President of the United States is Senator J.D. Vance of the Great State of Ohio,” Trump posted on his platform Truth Social. Trump signaled in the post Vance’s potential appeal in the Midwest. “J.D. has had a very successful business career in Technology and Finance, and now, during the Campaign, will be strongly focused on the people he fought so brilliantly for, the American Workers and Farmers in Pennsylvania, Michigan, Wisconsin, Ohio, Minnesota, and far beyond….” Trump posted.

Read more at The WSJ

Powell Indicates Fed Won’t Wait Until Inflation Is Down To 2% Before Cutting Rates

Federal Reserve Chair Jerome Powell said Monday that the central bank will not wait until inflation hits 2% to cut interest rates. Speaking at the Economic Club of Washington D.C., Powell referenced the idea that central bank policy works with “long and variable lags” to explain why the Fed wouldn’t wait for its target to be hit. “The implication of that is that if you wait until inflation gets all the way down to 2%, you’ve probably waited too long, because the tightening that you’re doing, or the level of tightness that you have, is still having effects which will probably drive inflation below 2%,” Powell said.

Instead, the Fed is looking for “greater confidence” that inflation will return to the 2% level, Powell said. “What increases that confidence in that is more good inflation data, and lately here we have been getting some of that,” he said. Powell also said he thinks a “hard landing” for the U.S. economy was not “a likely scenario.” The federal funds rate influences, directly or indirectly, the cost of money throughout the economy, such as mortgage rates. “People I don’t know will always say, ‘hey, cut rates.’ Somebody said that in the elevator this morning,” Powell said jokingly.

Read more at CNBC

Federal Judge Dismisses Classified Documents Prosecution Against Trump

A federal judge dismissed the classified documents prosecution against Donald Trump on Monday, siding with the former president’s argument that special counsel Jack Smith was unlawfully appointed.U.S. District Judge Aileen Cannon in Florida said federal law didn’t authorize Smith to conduct the prosecution. No legal authority “gives the Attorney General broad inferior-officer appointing power or bestows upon him the right to appoint a federal officer with the kind of prosecutorial power wielded by Special Counsel Smith,” the judge wrote in the 93-page ruling. In addition to finding Smith’s appointment invalid, Cannon’s Monday decision also said Congress never authorized the appropriation of money for the expenses of Smith’s office.

The decision marks a surprise twist after a year of court proceedings that have been unpredictable—and slow-moving—from the start. Cannon, a Trump appointee confirmed in 2020, had given the former president’s legal team considerable room to make legal arguments challenging the validity of the charges, prompting repeated frustration from prosecutors and criticism from legal experts. The dismissal also is the latest in a series of developments that have boosted Trump’s legal fortunes.

Read more at The WSJ

Health and Wellness

U.S. Health Officials Confirm Four New Bird Flu Cases in Colorado Poultry Workers

Four poultry workers in Colorado have been diagnosed with bird flu, health officials confirmed Sunday. The new cases bring the U.S. total to nine since the first human case of the current outbreak was detected in 2022, also in a Colorado poultry worker. Eight of the nine were reported this year. Their illnesses were relatively mild — reddened and irritated eyes and common respiratory infection symptoms like fever, chills, coughing, sore throat and runny nose. None were hospitalized, officials said. The other U.S. cases have also been mild.

A fifth person with symptoms is undergoing testing, but those results are not back yet, officials said. The workers were culling poultry at a farm in northeast Colorado, according to state health officials. All had direct contact with infected birds. The cases earlier this year were among dairy farm workers in Michigan, Texas and Colorado. Health officials continue to characterize the threat to the general public as low and the virus has not spread between people. But officials are keeping careful watch, because earlier versions of the same virus have been deadly to people.

Read more at CNBC

The Latest on the Assassination Attempt of Former President Trump

Election 2024

Industry News

US Corporate Bankruptcies in June Reach Highest Monthly Level Since Early 2020

June marked a historic surge in US corporate bankruptcy filings, with the highest number recorded in a single month since at least the start of 2020 and surpassing half-year figures seen in over a decade. S&P Global Market Intelligence recorded 75 new corporate bankruptcy filings in June. The pace accelerated from the first months of 2024 and is rivaled by only the busiest months in 2020, when the shock from COVID-19 pushed a relatively higher number of companies into bankruptcy. The 346 total filings so far in 2024 is also higher than any comparable figure in the prior 13 years.

High interest rates, supply chain issues and slowing consumer spending continue to weigh on struggling companies. The majority of businesses that have gone belly up are considered “consumer discretionary,” a broad category of firms that sell goods or services that people don’t need every day, such as restaurants, clothing stores and car dealerships. Most of the businesses are also considered small or mid-sized, economists and investors say.

Read more at S&P Global

Auto Manufacturers See Early AI Gains in 3 Areas

Artificial intelligence (AI) and machine learning (ML) offer new opportunities for auto manufacturers to drive higher levels of production efficiency, overall equipment effectiveness (OEE), safety and quality on their shop floor than they've seen through traditional process improvement and digital upgrades. These benefits are among the reasons why the automotive AI market is forecast to grow at a 22.7% (CAGR) through 2030.

Optimizing production timing: By unifying data to provide an ecosystem view that includes incoming assemblies and real-time line activity, Al/ML tools can analyze that data to optimize production timing. The AI system can then dynamically change the production schedule with suppliers, update receipt dates and locate safety stock if there’s a possibility of critical parts shortages.
Avoiding supply-chain slowdowns: Efficiency use cases could also apply to the supply chain. For example, EV battery manufacturers need to meet demand that will be six times greater in 2030 than it was in 2021, according to the International Energy Agency. AI tools that help manufacturers source inputs based on real-time availability could avoid slowdowns caused by shortages.
Making operations safer: The volatility of chemical battery components can pose safety risks on the shop floor, especially for manufacturers that are not native to the chemical manufacturing space. AI has the potential to increase the safety of working with and storing the chemicals used in EV batteries by identifying best practices and analyzing real-time production and storage data.

Read more at Industry Week

US Cutting Tool Orders Inching Upward

U.S. machine shops and other manufacturers purchased $214.4 million worth of cutting tools during May 2024, slightly more (0.1%) than their April purchases, and 1.8% more than the May 2023 purchases value. The new data raises the total for 2024 cutting tool shipments to $1.06 billion, 4.0% above the total for shipments during January-May 2023. “May’s results indicate that production levels remain strong, but I think the historically high numbers can be somewhat attributed to inflation,” according to Jack Burley, chairman of AMT’s Cutting Tool Product Group. “Backlogs are coming down, and most job shops are no longer working overtime, but they’re still dependent on the core customer base they support,” Burley continued.

AMT - the Assn. for Manufacturing Technology and the U.S. Cutting Tool Institute jointly present the monthly Cutting Tool Market Report, from which the shipment totals are drawn. The CTMR summarizes shipments made by companies who comprise the majority of the U.S. market for cutting tools – whose customers are contract machine shops (job shops) and OEMs for whom cutting tools are significant consumable. Their demand for cutting tools closely matches U.S. durable goods shipments as a measure of overall industrial activity.

Read more at American Machinist

Volvo Awarded $208 Million To Upgrade Facilities, Including In Dublin, VA

The Volvo Group has been awarded a $208 million federal grant for upgrades at its Dublin manufacturing plant as well as facilities in Maryland and Pennsylvania, officials announced Thursday. The 2.3 million-square-foot New River Valley plant on 566 acres in Pulaski County employs about 3,600 people. It makes trucks that include the Volvo VNR Electric, which, along with Mack Trucks’ Mack LR Electric made in Pennsylvania, is one of two heavy-duty electric vehicles that the Volvo Group manufactures in North America.

The U.S. Department of Energy grant will help Volvo upgrade its facilities to more efficiently produce those vehicles and eventually expand its range of electric models. The DOE said that the grant will help Volvo sustain 7,900 existing jobs and add 295 jobs across the three facilities. The DOE said that the grants are contingent upon a negotiation process that includes the companies meeting certain criteria such as undergoing environmental reviews and ensuring that “commitments to workers and communities are met.” If all awards are finalized, the DOE said the projects would “create over 2,900 new high-quality jobs and help ensure over 15,000 highly skilled union workers are retained.”

Read more at Cardinal News

Southwest Airlines signs MoU to develop an eVTOL air taxi network with Archer Aviation

Southwest Airlines is the latest major airline to explore the possibility of eVTOL air taxi travel and has chosen Archer Aviation’s technology to help get it there. The two companies have signed a Memorandum of Understanding (MoU) to develop a network of electric air taxi operations across multiple airports, beginning in California. In June, Archer announced a landmark deal with Signature Aviation, a major network of private airport terminals, to identify day-one opportunities for launching eVTOL air taxi services in the US and globally.

Electric vertical takeoff and landing (eVTOL) developer Archer Aviation ($ACHR) continues to expand its Rolodex with another one of the big boys in aviation. Since its founding in 2018, Archer has established working relationships with United Airlines, the United States Air Force, and Stellantis, which is helping manufacture its flagship Midnight aircraft here in the US.

Read more at Electrek

U.S. Chip Designer Aims To Bring Down AI Prices Pushed Up By Nvidia

Jim Keller, a chip designer who worked for Intel, AMD and Tesla, is trying to bring down the price of AI applications by designing chips that are more efficient than Nvidia's, with an eye to gaining some of the market held by the American giant. "There are lots of markets that are not well served by Nvidia," said Keller, who is now the CEO of Tenstorrent, a U.S. startup for designing AI chips. With the use of AI expanding to smartphones, EVs and cloud services, more companies are searching for cheaper solutions, he said, adding that there are "a lot of small companies that don't want to pay $20,000" for Nvidia's high-end graphics-processing units (GPUs), seen as the best options on the market.

Tenstorrent, founded in 2016, is preparing to sell its second-generation multipurpose AI chip at the end of this year. The company says that in some areas it boasts better energy and processing efficiency than Nvidia's AI GPUs. Its Galaxy systems are three times more efficient and 33% cheaper than Nvidia's DGX, a popular server used for AI, according to Tenstorrent. One reason this is possible, Keller said, is that the company does not use high-bandwidth memory, a popular type of advanced memory chip capable of transferring large amounts of data quickly. HBM is a vital component for generative AI chips and has played a significant role in the success of Nvidia's offerings. However, HBM is also one of the culprits behind the massive energy consumption and high prices of AI chips.

Read more at Nikkei Asia

SHRM Drops 'E' from DE&I

In a world where acronyms seem to hold as much power as actual actions, SHRM (Society for Human Resource Management) has decided to make a "strategic" change. As announced yesterday, SHRM will now lead with "Inclusion" by adopting the acronym "I&D" instead of "IE&D." But is this change genuinely meaningful, or is it just another buzzword-laden move to appease critics and the general public? It’s hard to embrace the former when the announcement includes the following: “By emphasizing Inclusion-first, we aim to address the current shortcomings of DE&I programs, which have led to societal backlash and increasing polarization.”

Johnny C. Taylor, Jr., SHRM President & CEO, has stated, "We're going to lead with inclusion because we need a world where inclusion is front and center. And that means inclusion for all, not some people."

Read more at LinkedIn

‘Unbossing’: A Cause for Layoffs, or an Opportunity to Boost Manager Success?

According to a report from Live Data Technologies, some recent layoffs have been focused on eliminating unnecessary management layers. For example, job cuts specifically for middle managers accounted for 30% of all layoffs in 2023, up from 20% in 2018. What’s driving the move? In part, it could be a theory that modern teams tend to operate better in a more self-directed manner—also known as “unbossing.”

David Satterwhite, CEO of Chronus, an employee-driven development platform that focuses on mentoring and employee resource group management software, says many employers are making economic decisions to lay off managers to cut costs and reduce inefficiencies. But this can be counterproductive. “While it might flatten the organization, remove poor managers and empower some employees with a new sense of ownership, it doesn’t mean better managerial leadership or reinforce connections between leadership and junior employees,” he explains. “This potentially myopic approach could leave some companies vulnerable to the consequences of a ‘get rid of people and see what happens mindset.’ ”

Read more at HR Executive

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