Member Briefing March 10, 2025
NAM Outlook Survey: Trade Policies Shake Up Manufacturers’ Economic Outlook
Manufacturers are increasingly worried about the future of trade and rising raw material costs, according to the Q1 2025 NAM Manufacturers’ Outlook Survey. In the survey, conducted from Feb. 11 to Feb. 28, trade uncertainties moved to the top of the list of manufacturers’ concerns—with 76.2% of respondents citing them as their primary worry. Increased raw material costs came in second, cited by 62.3% of those surveyed.
- Manufacturers expect prices on their companies’ product lines to go up by 3.6% in the next year, an increase from 2.3% in Q4 2024 and the highest since Q3 2022, when inflation was more than 8%.
- Manufacturers also anticipate the cost of raw materials and other inputs to rise 5.5% in the next year, the highest expected rate of increase since Q2 2022, when inflation was between 8% and 9%.
- Manufacturers foresee export sales to increase just 0.1% in the next year. That’s the lowest anticipated rise since Q2 2020 at the height of the COVID-19 pandemic.
- The percentage of manufacturers with a positive outlook for their company inched down from the last quarter, to 69.7% from 70.9%.
Manufacturers also feel strongly that their businesses need the “rocket fuel” of the tax reform extension. If Congress fails to extend pro-manufacturing provisions of the Tax Cuts and Jobs Act of 2017:
- 45.23% would delay hiring;
- 44.72% would pause operations expansions;
- 41.71% would limit R&D investment; and
- 40.20% would curb employee wages or benefits increases.
NAM President and CEO Jay Timmons wrote in a social post Thursday: “We are calling for a comprehensive manufacturing strategy that includes a commonsense trade policy in addition to making President Trump’s 2017 tax reforms permanent and more competitive, securing regulatory certainty, expediting permitting reform to unleash American energy dominance and key manufacturing projects and increasing the talent pool.”
Looming Tariffs Led to U.S. Trade Deficit Blows Out in January
The U.S. international trade deficit widened to $131.4 billion in January. That is the largest on records that begin in 1992 and is a continuation of a widening trend that began in November. A 10% surge in imports ($36.6 billion) swamped a respectable 1.2% gain in exports ($3.3 billion). The data are reflective of domestic companies getting ahead of new tariffs by pulling forward shipments of imported goods in January. The underlying composition of imports illustrates a rush to stockpile intermediate inputs to production. Industrial supplies imports, which include products spanning crude oil, metals and fertilizers, jumped 34% over the month. Within this category, inflow of finished metal shapes accounted for most of the gain. Imports of capital goods rose a solid 5.5% as well, lifted by purchases of computers and accessories.
Imports of consumer goods increased 8.3% in January—strong enough to lift the year-ago rate to 18.5%, or the highest since June 2022. A jump in medicinal and pharmaceutical preparations drove the increase, which has been the norm over the past few years and likely is not a reflection of a pull-forward in demand. That said, imports of cell phones jumped 12% over the month, which may reflect retailers and wholesalers boosting inventory of the product before additional levies on Chinese goods went into effect in early February.
U.S. Added 151,000 Jobs Last Month – No Change In Manufacturing. Unemployment Up 0.1 %
The U.S. added a seasonally adjusted 151,000 jobs in February, the Labor Department reported Friday, slightly below the gain of 170,000 jobs economists polled by The Wall Street Journal expected to see. That was better than the 125,000 jobs added in January. The unemployment rate, which is based on a separate survey from the jobs figures, rose to 4.1% from 4%.
- Average hourly earnings increased 0.3%, as expected, though the annual increase of 4% was a bit softer than the 4.2% forecast.
- The labor force participation rate slumped to 62.4%, its lowest level since January 2023, as the labor force declined by 385,000.
- A broader measure of unemployment that includes discouraged workers and those holding part-time positions for economic reasons jumped half a percentage point to 8%, its highest level since October 2021.
- In manufacturing, the average workweek remained at 40.1 hours, and overtime edged up by 0.1 hour to 2.9 hours.
- Federal government employment declined by 10,000 in February though government payrolls overall increased by 11,000.
Global Headlines
Middle East
- Trump Says He Wrote To Khamenei Offering Talks On Iran’s Nuclear Program – AP
- Israel Chokes Electricity Supply to Gaza to Pressure Hamas on Hostages - WSJ
- Hamas Says Talks With US Focused On Release Of American Hostage In Gaza - Reuters
- Aid Efforts In Gaza Slow As Millions Of Promised USAID Dollars Do Not Arrive, Agency Officials Say - AP
- 10 Indian Workers, Held Hostage In Palestine's West Bank, Rescued By Israel - NDTV
- Israel Says It Killed Local Hamas Commander in West Bank - NYT
- 90,000 Palestinians Attend The First Friday Prayers Of Ramadan In Jerusalem - AP
- What Went Wrong at Saudi Arabia’s Futuristic Metropolis in the Desert - WSJ
- Interactive Map- Israel’s Operation In Gaza – Institute For The Study Of War
- Map – Tracking Hamas’ Attack On Israel – Live Universal Awareness Map
Ukraine
- Trump Threatens to Hit Russia with Sanctions – WSJ
- Russia Launches Major Ukraine Missile Attack After US Cuts Off Military Aid - Reuters
- Trump Calls It ‘More Difficult’ To Deal With Ukraine Than Russia – The Hill
- The America-Sized Hole in Ukraine’s War Effort - WSJ
- EU’s Defense Plans Are A Threat, Says Kremlin, Warning Of Retaliatory Measures - Politico
- Russian Forces Walked Inside A Gas Pipeline To Strike Ukrainian Troops From The Rear In Kursk – The Hill
- EU Leaders Agree On Defence Surge, Support Zelenskiy After US Aid Freeze - Reuters
- Ukraine Uses French Mirage Jets For First Time In Repelling Massive Russian Attack - Politico
- 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
- Mark Carney Wins Race To Replace Trudeau As Canada's Prime Minister - Reuters
- Women’s Rights Are Under Attack 30 Years After Leaders Adopted A Blueprint For Equality, UN Says – AP
- U.S., EU And Japan Increase Naval Deployments In South China Sea – Nikkei Asia
- South Korea Court Paves Way For President Yoon's Release From Jail - Reuters
- South Korean Fighter Jets Mistakenly Bomb Village, 29 Injured - NYT
- Canada's Economy Adds Few Jobs In February; Unemployment Unchanged – Yahoo Finance
- Poland Seeks Access To Nuclear Arms And Looks To Build Half-Million-Man Army - Politico
- Russia Is Chasing a Deal to Keep Its Military Bases in Syria - WSJ
- EPP Calls For Fast-Track Vote On Omnibus Simplification Bill This Week - Politico
- Xi Jinping Prioritizes 'Regime Security' Over Fighting Economic Turmoil – Nikkei Asia
- Brazil's Economy Grows 3.4% In 2024 But Year-End Weakness Signals Fewer Rate Hikes - Reuters
- Haitian Economist Takes Over As Transition President In Friendly Ceremony – WSJ
Policy and Politics
Acting DEC Chief: Cap-And-Invest Regs To Drop This Month
Acting DEC Commissioner Amanda Lefton said the department will advance long-awaited details of the cap-and-trade system mandated by law, which will require companies to buy credits from the state to contribute to its greenhouse gas emissions. It would also fund rebates to reduce utility costs for taxpayers. "DEC will release this month draft regulations that establish transparent greenhouse gas emission reporting protocols, advancing a cap-and-invest initiative that will ultimately fund a sustainable and affordable economy in New York," Lefton said in a statement Tuesday. "The regulations will allow DEC — in partnership with local governments, environmental organizations, and businesses — to establish the framework for this ambitious program."
- Whether you call it an “emissions trading system,” “cap and trade,” or “cap and invest,” market-based carbon pricing schemes all involve the same core elements:
- A cap on the amount of greenhouse gas emissions the state can produce, declining annually to achieve specific targets.
- A price on emissions, set through state-run auctions in which companies bid on “allowances.” One allowance allows a company to emit one ton of pollution. Polluting entities, such as utilities and factories, must buy enough allowances to cover their emissions every year.
- A secondary market allowing trading of allowances between firms.
- State investment of auction proceeds into climate-friendly initiatives like electrification of buildings and transportation.
Read more at NY State of Politics
Trump, Johnson Press Republicans To Back Clean Stopgap Funding Plan To Avert Shutdown
Congress has less than one week to pass a spending bill that would avert a government shutdown, but lawmakers from both parties are not on the same page about how they'll move forward. House Speaker Mike Johnson, R-La., said he aims to hold a vote on Tuesday in the House on a clean short-term bill that would fund the government at current levels through the end of September 2025, but the details of the proposal remain unclear.
"I believe we'll pass it along party lines," Johnson told reporters on Thursday. "But I think every Democrat should vote for this [continuing resolution]. It is a fundamental responsibility we have to fund the government, and a clean CR with a few minor anomalies is not something they should vote against, so we'll see what they do." Any funding bill will also need to clear the Senate, where Democratic support will be critical. Sen. Rand Paul, R-Ky., has already vowed to vote against the legislation, which means at least eight Democrats will be needed for any funding proposal to pass. Democrats have so far kept their cards close as to what they'll do if presented with such a bill. Many Senate Democrats say a six-month continuing resolution, like the one Johnson is proposing, would be a "disaster," but they've also expressed little interest in shutting down the government.
US Treasury's Bessent Says Economy May Slow In ‘Detox Period’ Away From Public Spending
Treasury Secretary Scott Bessent on Friday acknowledged some signs of weakness in the U.S. economy. “Could we be seeing that this economy that we inherited starting to roll a bit? Sure. And look, there’s going to be a natural adjustment as we move away from public spending to private spending,” Bessent said on CNBC’s “Squawk Box. The market and the economy have just become hooked. We’ve become addicted to this government spending, and there’s going to be a detox period,” he added.
Under Biden, the U.S. saw generally strong economic growth. However, there were signs of a slowdown in late 2024, and inflation remained above the Federal Reserve’s 2% target. In its first few months, the Trump administration has taken steps to reshape global trade policies and to reduce the federal workforce. There has not been much hard economic data reflecting Trump’s term, though consumer surveys have shown a decline in confidence. Bessent also said the administration was “not getting much credit” for areas where costs have fallen since Trump’s inauguration, such as oil prices and mortgage rates.
Trump’s First 100 Days
- Secret Service Shoots Armed Man In Confrontation Near White House – NBC
- Scott Perry Says No One ‘Legitimately’ On Medicaid Will Lose Coverage – The Hill
- Trump Wins Fight to Fire Ethics Watchdog - WSJ
- US Ends Collective Bargaining For 50,000 TSA Officers - Reuters
- Fetterman Trolls ‘Resistance’ Dems, Warns Against Voting For Shutdown – The Hill
- Republicans Hammer Mayors Of Boston, Chicago, Denver And New York Over ‘Sanctuary City’ Policies - AP
- How Does The U.S. Federal Workforce Compare With Those In Other Countries? - NPR
- Judge Won’t Block DOGE Access to Sensitive Treasury Data - WSJ
- Trump Won't Predict Whether Recession Could Result From His Tariff Moves - Reuters
- Trump Administration Freezes $400 Million In Federal Contracts With Columbia University - Politico
- Trump To Sign Executive Order Limiting Public Service Loan Forgiveness Program - CNBC
Health and Wellness
5 Recent Scientific Findings That Change What We Know About Cannabis
Despite how many Americans use cannabis—now about one in five—there has historically been a gap in our scientific understanding of its health effects. But as policies against the drug loosen, we’re starting to learn more than ever about cannabis. Conventional wisdom holds that cannabis offers a safe, natural alternative to pharmaceuticals for treating pain, nausea, muscle spasms, appetite, and post-traumatic stress disorder. And indeed there is evidence that cannabis can help with pain from cancer, and the U.S. Food and Drug Administration has approved two artificial cannabinoid medicines to help cancer patients with nausea and vomiting.
But now, we’re learning that the drug isn’t quite as harmless as some people believed. Thanks in part to loosening restrictions on accessing cannabis for medical research, scientists are revealing the downsides of using cannabis might be greater than we thought, posing long-term threats to the lungs, heart, gastrointestinal tract, and mental health. Here’s what we’ve learned in the last few years about cannabis.
Read more at National Geographic
Industry News
NFIB Jobs Report: Small Business Job Creation Weakens in February
NFIB’s February jobs report found that 15% of owners plan to create new jobs in the next three months, down three points from January. Overall, 53% of small business owners reported hiring or trying to hire in February, up one point from January. Forty-eight percent (89% of those hiring or trying to hire) of owners reported few or no qualified applicants for the positions they were trying to fill.
- 38% of small business owners reported job openings they could not fill in February, up three points from January and the highest reading since August 2024.
- Job openings were the highest in the retail, construction, and manufacturing sectors, and the lowest in the agriculture and finance sectors.
- Thirty-one percent have openings for skilled workers (up two points) and 13% have openings for unskilled labor (up three points).
- The percent of small business owners reporting labor quality as their top operating problem rose one point from January to 19%.
- Labor costs reported as the single most important problem for business owners rose three points from January to 12%, only one point below the highest reading of 13% reached in December 2021. The last time labor costs were ranked this high was February 2023.
- A net 33% of small business owners reported raising compensation in February, unchanged from January. A net 18% plan to raise compensation in the next three months, down two points from January.
US Manufacturing Labor Productivity Barely Nudges Higher On Fewer Hours Worked. Overall Workforce Productivity Up 1.5% In Q4
US labor productivity grew at a 1.5% annualized rate in the fourth quarter of 2024, an upward revision from the initial estimate of 1.2%, per data from the Bureau of Labor Statistics. For the full year, productivity increased 2.7%. Unit labor costs rose 2.2% in the fourth quarter, while hourly compensation climbed 3.8%.
Manufacturing sector labor productivity increased 0.3 percent in the fourth quarter of 2024, as output decreased 1.3 percent and hours worked decreased 1.6 percent. In the durable manufacturing sector, productivity decreased 1.1 percent, reflecting a 3.2-percent decrease in output and a 2.1-percent decrease in hours worked. Nondurable manufacturing sector productivity increased 1.4 percent, as output increased 0.6 percent and hours worked decreased 0.8 percent. Total manufacturing sector productivity increased 0.4 percent from the same quarter a year ago.
Unit labor costs in the total manufacturing sector increased 3.7 percent in the fourth quarter of 2024, reflecting a 4.0-percent increase in hourly compensation and a 0.3-percent increase in productivity. Manufacturing unit labor costs increased 2.0 percent from the same quarter a year ago. Manufacturing sector labor productivity has grown at an annualized rate of 0.3 percent during the current business cycle, as output was unchanged (0.0 percent) and hours have declined 0.3 percent. The 0.3-percent annualized rate of productivity growth in the current business cycle thus far is above the 0.1-percent rate of the previous business cycle from the fourth quarter of 2007 through the fourth quarter of 2019 and is below the long-term rate of 2.1 percent since the first quarter of 1987.
China’s Exports Miss Forecasts As U.S. Tariffs Hit, Imports Post Sharp Decline As Stimulus Fades
China’s exports growth slowed more than expected at the start of the year while imports plunged, as lackluster domestic demand and U.S. tariffs challenge Beijing’s bid to bolster sluggish growth. Exports in the January to February period rose 2.3% in U.S. dollar terms from a year earlier, data from the customs authority showed Friday, significantly undershooting expectations of a 5% increase in a Reuters poll. That marked the slowest growth since April last year when exports increased by just 1.5% on year, according to LSEG data.
Imports surprised markets by declining 8.4% year-on-year in the first two months of 2025, the sharpest fall since July 2023, LESG data showed. Analysts had expected imports to expand 1% year-on-year. The sharp contraction in imports showed the “last quarter’s stimulus-led pick-up in domestic demand has already partially reversed,” Julian Evans-Pritchard, head of China economics at Capital Economics, said in a note.
Broadcom’s Solid Forecast Eases Demand Worries For AI Chips
Broadcom on Thursday assuaged investor worries about AI chip demand with a strong second-quarter forecast and hinted about new potential customers that could boost revenue in a highly competitive market. Its forecast eased concerns about the thirst for AI chips, a day after Marvell Technology's spooked the market with a tepid forecast. The chipmaker expects revenue of around $14.90 billion, compared with estimates of $14.76 billion, according to data compiled by LSEG.
Broadcom is seeing red-hot demand for its custom artificial intelligence chips from cloud computing companies looking for an alternative to the costly processors designed by Nvidia as they expand their AI infrastructure. Broadcom CEO Hock Tan said the company expects revenue of $4.4 billion in the second quarter for its AI semiconductors as hyperscale customers invest in custom AI chips for data centers.
Honeywell To Acquire Heatpump Maker Sundyne For $2.2B
Honeywell plans to acquire heat pump maker Sundyne from private equity firm Warburg Pincus for approximately $2.2 billion, the manufacturing conglomerate announced Tuesday. The company will be added to Honeywell’s energy and sustainability solutions segment in an effort to boost innovation and efficiency as well as support security needs worldwide, according to the release.
Honeywell’s latest acquisition aligns with its plans to streamline its portfolio as it shifts focus to automation, aviation technology and clean energy. The conglomerate’s strategy includes spinning off its advanced materials, automation and aerospace businesses into three independent public companies by 2026. Honeywell also made several acquisitions over the past year with the goal of driving growth in those three priority areas. In September 2024, the company completed its $1.81 billion acquisition of Air Products’ liquefied natural gas process technology and equipment business. The portfolio is now under Honeywell’s ESS business.
Read more at Manufacturing Dive
RTX Collaborating on Blended Wing Demonstrator Jet
Defense manufacturing group RTX Corp. struck a series of agreements with a start-up aerospace business to develop some critical systems for a demonstrator aircraft for its “blended wing” jet concept. The blended wing design merges an aircraft’s wings and fuselage to form a single, large airfoil, with potential advantages for fuel efficiency and payload. Launching in 2021, California-based JetZero has proposed an aircraft based on the novel design that would carry up to 250 passengers.
The demonstrator will validate technologies that may be adapted for commercial passenger planes, cargo transports, and military aircraft. JetZero claims its blended wing “is the biggest leap in commercial aircraft design since the beginning of the jet age and the best first step toward the ultimate goal of zero-carbon emissions aviation.” It states the aircraft will be available by 2030, and will achieve a 50% reduction in fuel burn thanks to the aerodynamic efficiency of its design. In addition to fuel efficiency, JetZero will be capable of operating with 100% sustainable aircraft fuel (SAF), as well as zero-carbon hydrogen fuel.
Read more at American Machinist
Boeing Ties Employee Incentive Plan To Company-Wide Performance
Annual bonuses for more than 100,000 Boeing employees this year will be tied to company-wide performance, rather than by business unit, as in previous years. Eighty percent of the bonuses are tied to Boeing's financial performance, with the remaining 20% tied to progress on improving safety and quality, and program execution, according to the 2025 proxy statement filed on Friday with the U.S. Securities and Exchange Commission.
The announced changes come two days after CEO Kelly Ortberg told employees the company's myriad business units have to work together as part of a wider cultural shift driven in large part by employee feedback that he said he expects to be "brutal to leadership."
China’s Consumer Inflation Turns Negative For The First Time In 13 Months
China’s national consumer price index (CPI) in February fell into negative territory for the first time since January last year, weighed down by a decline in food, tobacco and alcohol prices. The CPI declined by 0.7% last month from a year earlier, data published Sunday by China’s National Bureau of Statistics showed, reversing a year-on-year gain of 0.5% in January. China’s CPI in February fell 0.2% on a monthly basis, meanwhile, compared to a rise of 0.7% in January.
The data comes as investors continue to look for signs that Beijing’s stimulus measures can help to boost the country’s economic recovery. China on Wednesday set its GDP target for 2025 at “around 5%” and laid out plans to stabilize economic growth by propping up domestic demand. Beijing also revised down its annual consumer price inflation target to “around 2%” — the lowest in more than two decades — from 3% or higher in prior years, according to the Asia Society Policy Institute.