Member Briefing June 18, 2024

Posted By: Harold King Daily Briefing,

Top Story

Empire State Manufacturing Survey - Modest Decline in Business Activity

Manufacturing activity fell modestly in New York State, according to the June survey. The general business conditions index rose ten points but was still in contractionary territory at -6.0. The new orders index climbed sixteen points to -1.0, suggesting orders were flat.  Measures of employment also fell while optimism for the near future rose.

The shipments index moved up to 3.3, pointing to a small increase in shipments.

The inventories index came in at 1.0, indicating that inventories were level.

The delivery times index remained below zero at -4.1, suggesting that delivery times shortened.

The supply availability index was -1.0, indicating supply availability was little changed.

The index for the number of employees came in at -8.7.

The average workweek index fell to -9.9, pointing to an ongoing decline in employment levels and hours worked.

The prices paid index retreated four points to 24.5.

The prices received index declined seven points to 7.1, its lowest level in about a year, indicating that price increases continued to moderate.

The index for future business conditions climbed sixteen points to 30.1, with close to half of respondents expecting conditions to be better in six months.

However, the outlook for employment growth remained weak, and capital spending plans still appeared sluggish.

Read more at The NY Fed

Real Hourly Earnings Rose in May

Real average hourly earnings for all employees rose 0.5% in May and are up 0.8% in the past year. Real average weekly earnings increased 0.4% with no change in the average workweek. The increase in real average hourly earnings, coupled with a 0.3% decrease in the average workweek, led to a 0.5% rise in real average weekly earnings in the pa st year.

For production and nonsupervisory employees, real average hourly earnings increased 0.5% in May and are up 0.8% in the past year. Real average weekly earnings rose 0.8% in May, driven by the increase in real average hourly earnings and a 0.3% rise in the workweek. Real average weekly earnings are up 0.9% in the past year due to the change in real average hourly earnings and no change in the average workweek.

Read more at The BLS

Global Headlines

Middle East


Other Headlines

EU Leaders Discuss Top Jobs at High-Stakes Summit — Politico

Policy and Politics

Senate Armed Services Committee Pushes Past NDAA Spending Cap

The Senate Armed Services Committee has approved a $911.8 billion topline for the National Defense Authorization Act, a move that would shatter spending limits imposed by last year’s debt ceiling deal. The bill greenlights a total of $878.4 billion for the Defense Department and $33.4 billion for defense-related activities in the Department of Energy. When combined with an estimated $11.5 billion in non-NDAA defense activities, the total national defense topline sought by the SASC is $923.3 billion — blowing past the $895 billion defense spending cap imposed by the Fiscal Responsibility Act (FRA) by a significant margin that staffers put in the range of $25 billion.

The amendment to increase the defense topline was offered by the committee’s top Republican, Mississippi Sen. Roger Wicker, who for several weeks has been calling for a major increase in defense spending.  After a two day, twelve hour long markup period where committee members amended the bill behind closed doors, SASC passed the measure Thursday night in a 22-3 vote, moving it to the Senate floor. Details of the vote were released Friday.

Read more at Breading Defense

Corporate Tax Rate Spurs Political Fight With More Than $1 Trillion at Stake

The 21% U.S. corporate tax rate is the biggest single variable in the sprawling 2025 tax debate, and the two parties are trying to turn that dial in opposite directions with major consequences for companies’ profits and federal revenue. The rate could climb as high as 28% if Democrats sweep November’s elections and move as low as 15% if Republicans gain full power.

President Biden’s plan for a 28% rate would reverse half of Republicans’ 2017 rate cut, pushing the U.S. corporate rate back near the highest among major economies. A 15% rate—some Republicans are heading that way, but the party hasn’t settled on a plan—would match the lowest level since 1935, boosting profits and rewarding shareholders. Presumptive Republican presidential nominee Donald Trump told corporate executives last week that he wanted a 20% rate. Each percentage point is worth more than $130 billion over a decade in tax revenue, creating a $1 trillion-plus gap between the poles of the parties’ positions and giving the largest U.S. companies an outsize interest in the election’s outcome.

Read more at The WSJ

Early Voting for Primaries Begins Across New York State

Early voting got underway Saturday in primaries across New York state. Federal, state and local candidates are vying to be on the ballot in November.

And, with that, a few reminders:

Saturday was the last day to register to vote in a primary

If you mailed in a registration, your local board of elections must have it by today

You can also go to the board of elections in your area to register in person

Early voting wraps up on June 23. The actual primary day is June 25.

Spectrum’s voter guide is available on the Spectrum News app, where you can find all the essential voting information you need before casting your ballot. It provides all of the information you need before heading to the polls, including where to vote, a preview of your ballot and where the candidates stand on the issues in your community.

Read more at NY State of Politics

Health and Wellness

5 Ways to Improve Employee Mental Health

Equipping workers to manage daily stress and handle the inevitable challenges that affect their mental health costs money, time, and energy. But evidence shows that the cost of failing to support employees’ psychological well-being is often far higher. Employees with high levels of stress are more likely to miss work or to show lower engagement and commitment while at work, which can negatively affect your organization’s bottom line.

Positive and supportive workplace practices can boost employee physical and psychological health, company morale, and your bottom line. APA’s 2023 Work in America survey confirmed that psychological well-being is a very high priority for workers. Fostering a positive work environment and making mental health resources available can also help attract top talent to your organization. Even if you’re already committed to protecting and enhancing your employees’ mental health, it can often be difficult to identify practical ways to support your employees and enact meaningful ways to make a difference. Applied psychological research in work settings strongly supports five components that are essential to these efforts.

Read more at The American Psychological Association

Election 2024


Industry News

U.S. Bans Exports by Oregon Freight-Forwarder in Warning Shot to Industry

An Oregon freight-forwarder was hit with an export ban in what officials said was a warning to companies to heed restrictions on the shipment of sensitive technologies to countries the U.S. considers threats to national security. The U.S. Commerce Department said on Monday it was imposing a three-year export ban on USGoBuy after the Portland-based company failed to improve its compliance with U.S. export-controls laws following a 2021 settlement. Under that agreement, the department had agreed to forgo any immediate ban—pending compliance improvements at the company.

That pact came to an end last week. The Commerce Department went forward with a so-called denial order, a rare step that could effectively shut down USGoBuy’s operations given the nature of the company’s business, an official said. Freight-forwarders allow customers in other countries to place orders for U.S. goods, which the companies then arrange to ship internationally. The last time the Commerce Department took such an action was in 2018, when it prohibited U.S. companies from selling products to Chinese telecommunications company ZTE Corp. Officials at the time accused ZTE of violating the terms of a settlement relating to allegations of sanctions-busting involving North Korea and Iran.

Read more at The WSJ

China Industrial Output Cools, Retail Spending Exceeds Forecasts

China's May industrial output lagged expectations and a slowdown in the property sector showed no signs of easing despite policy support, adding pressure on Beijing to shore up growth. May industrial output grew 5.6% from a year earlier, National Bureau of Statistics (NBS) data showed, slowing from the 6.7% pace in April and below expectations for a 6.0% increase in a Reuters poll of analysts. "May activity data and our high-frequency trackers for the first half of June suggest significant cross-sector divergences remain in the economy - strong exports and manufacturing activity, relatively stable consumption, and still-depressed property activity," Goldman Sachs analysts said in a note.

Manufacturing investment in the first five months showed robust growth of 9.6%, underpinned by China's emphasis for "quality growth" through technological breakthroughs and innovation this year. But economists have warned that rising trade tensions with the West over China's so-called over-capacity may impose more challenges to Chinese solar and electric vehicle producers.

Read more at Reuters

737 MAX Production Rate Increase Reported

Boeing has signaled its 737 MAX program suppliers that the aircraft assembly rate will increase in September to an estimated 42 jets per month. The increase had been expected to be reached this month, but the OEM has been operating under voluntary limits as it works with regulators to determine the sources of various quality and performance failures with the narrow-body aircraft program. The 737 MAX is Boeing’s best-selling aircraft and the production rate slowdown has impacted earnings, as well as customer relationships.

Boeing has been hopeful of increasing the 737 MAX production rate to a goal of 50 jets per month for several years, but the program has been beset by a series of manufacturing and supply chain complications for more than two years. Many of those issues have been attributed to Spirit AeroSystems, the airframe manufacturer that supplies 737 MAX fuselage structures to Boeing and is likewise having its operations monitored by federal regulators. The current nominal completion rate for the 737 MAX is 38 jets per month, though Boeing has not defined the actual rate. Based on comments by Boeing executives, it’s generally assumed that the current rate is lower than that figure.

Read more at American Machinist

Fostering Strong Employee-Supervisor Relationships: A Key to Safety Excellence

A strong relationship between employees and supervisors is integral to employee engagement and empowerment. When individuals feel valued and supported by their supervisors, they are more likely to be motivated and committed to their work. This, in turn, contributes to higher levels of job satisfaction and a more positive organizational culture. Involving employees in safety-related decision-making processes empowers them to take ownership of safety within their workspaces. When employees feel that their opinions and insights are valued, they are more likely to actively engage in safety initiatives and contribute to a safety culture that extends beyond compliance.

Effective communication is another vital aspect of a healthy employee-supervisor relationship. When employees feel comfortable communicating with their supervisors, they are more likely to promptly report safety concerns, hazards or near-miss incidents. This transparency enables proactive identification and resolution of safety issues. Regular feedback, both constructive and positive, helps employees understand their strengths and areas for improvement. Supervisors who actively acknowledge and recognize employees for their commitment to safety contribute to a positive safety culture. Positive reinforcement promotes desired behaviors and motivates employees to prioritize safety consistently.

Read more at EHS Today

Learn more about the Council of Industry’s Supervisor Training Program starting next month

How Immigrants are Helping Keep Job Growth Hot While Inflation Cools

Immigration — both authorized and unauthorized — has helped the U.S. job market sustain a fiery run in recent months without reigniting inflation, economists and analysts say. The effect has been a favorable, though uncertain, situation for President Joe Biden ahead of the November election. The May jobs report showed that the U.S. economy added 272,000 jobs last month, well above the Dow Jones’ forecast of 190,000. Meanwhile, the Bureau of Labor Statistics reported last week that consumer prices in May remained unchanged, and even fell slightly on an annual basis. This dynamic — a heating job market and cooling inflation — is in part the result of increased inflows of immigrants.

“The immigration surge poses lots of challenges to communities across the country, but it came at a very fortuitous time to help ease the labor market pressure, when the Fed was working hard to do it by interest rate hikes,” Moody’s Chief Economist Mark Zandi told CNBC. Typically, a hot labor market walks a tightrope that could easily collapse into reheated inflation. But recent spikes in immigration at the southern border and elsewhere in the U.S. have helped keep the labor pool full even as job gains kept apace.

Read more at CNBC

Oil Prices Jump 2% on Improving Demand Outlook

The U.S. crude oil benchmark was trading up over 2% on Monday, with Brent gaining over 1.7% as the market digested data suggesting an improving demand outlook.  At 2:28 p.m. ET on Monday, Brent crude was trading up 1.73% at $84.05, for a gain of $1.43 on the day. West Texas Intermediate (WTI) was trading up 2.17% at $80.15, for a gain of $1.70 on the day. In the prior week, oil enjoyed its first weekly gain in a month buoyed by reports that lent more optimism to oil demand in the second half of this year. OPEC+ has taken pains to assure markets that it could rethink plans to put more barrels on the market if conditions dictate.

The outlook for strong fuel demand into the coming quarter and Saudi reassurance about the October hike being subject to prevailing conditions and added focus on quota breakers to bring production down and into line all seems to be supporting," Reuters cited Ole Hansen of Saxo Bank as saying on Monday. Reuters also reported that traders on Monday were rebuying oil they sold out last week after OPEC+ assurances. Also driving oil prices upwards on Monday was economic data coming out of China and suggesting more optimism for oil demand growth there.

Read more at Oil Price

Southern Company CEO Sees More Industry Nuclear Commitments in US by 2030

Power provider Southern Company CEO Chris Womack said on Monday he expects more industry commitments to build gigawatt-scale light water nuclear reactors in the U.S. before 2030. Southern Company began commercial operations on its Vogtle 4 reactor this year as part of the first nuclear power plant to be constructed in the country in more than 30 years. "You're seeing them now show up in a number of integrated resource planning processes," Womack said at the American Nuclear Society conference in Las Vegas. "The question becomes: is there willingness to push through?"

Womack said he expected announced plans in 2027 or 2028 to construct similar reactors, which are larger than the advanced small modular reactors that have not yet been built in the country, although he did not specify which companies would make the announcements.

Read more at Yahoo Finance

IBM Unveils New AI Feature for Personalized Player Stories

IBM recently announced that it has collaborated with The All-England Lawn Tennis Club (AELTC) to introduce Generative AI technology in the upcoming Wimbledon tournament. The collaboration is likely to emphasize the integration of advanced technology to enrich the overall experience of tennis fans, coaches and players globally. Leveraging its AI and data platform, Watsonx, IBM aims to provide tennis fans with real-time updates about the progress of the world's leading players during the tournament. They can access the information by simply logging into Wimbledon App and

To enhance the Wimbledon experience for fans both in person and digitally, IBM has launched the 'Catch Me Up' feature. The feature allows users to choose player cards per their preference. Additionally, it also showcases player cards for both pre- and post-match sessions, enhanced with AI-generated player stories and analysis, where pre-match analyzes the recent performance to understand the likelihood of winning and post-match provides key statistics and highlights.

Read more at Yahoo Finance

First Flight of New Air Force One Jet Slips to 2026, Air Force Says

Boeing’s long-delayed Air Force One replacement, known as the VC-25B, is facing new headwinds as the first flight for the program has now been pushed back another 16 months to March 2026, an Air Force spokesperson told Breaking Defense. Although the program’s schedule was rebaselined in 2022, it appears even more delays lay ahead. According to a previous report in Bloomberg, the program was tracking delays on top of previous schedule slips for two key objectives. The first is to “power on” the first aircraft, which consists of ground-based testing of subsystems and was most recently planned for last month. The second is the aircraft’s first flight previously expected in November of this year, according to Bloomberg.

Alongside staggering losses on programs like the KC-46A refueling tanker, the VC-25B program has been a poster child for what Boeing executives have admitted were ill-advised, fixed-price agreements with the Pentagon. Negotiated under the Trump administration with previous company leadership, incumbent CEO Dave Calhoun told investors in 2022 that the VC-25B program represented “a very unique set of risks that Boeing probably shouldn’t have taken.”

Read more at Breaking Defense