Member Briefing March 4, 2024
ISM: US Manufacturing Sector Struggling to Recover -ISM
The Institute for Supply Management (ISM) said on Friday that its manufacturing PMI fell to 47.8 last month from 49.1 in January. It was the 16th straight month that the PMI remained below 50, which indicates contraction in manufacturing. That is the longest such stretch since the period from AugusISM t 2000 to January 2002. According to the ISM, a PMI reading below 42.5 over time indicates a contraction of the overall economy. That guidance has been revised down from 48.7.
- The ISM survey's forward-looking new orders sub-index dropped to 49.2 last month after rebounding to 52.5 in January.
- Production at factories was subdued, with the sub-index declining to 48.4 from 50.4 in January.
- There was a slight hint of supply chain constraints, likely because of weather-related disruptions. The survey's measure of supplier deliveries rose to 50.1 from 49.1 in the prior month. A reading above 50 indicates slower deliveries.
- Inflation at the factory gate remained moderate. The survey's measure of prices paid by manufacturers slipped to 52.5 from 52.9 January.
- Factory employment continued to shrink. The survey's measure of manufacturing employment dropped to 45.9, the lowest reading since last July, from 47.1 in January.
Inflation, Income Jump in January - Consumers Back to Prioritizing Non-Discretionary Spending
Personal income growth surprised on the upside in January allowing consumers to keep spending and the Fed's preferred gauge of inflation, the core PCE deflator, notched its biggest monthly gain since January 2023. Personal income jumped 1.0% in January. It was the largest gain since the start of 2021 when pandemic-related stimulus was still funneling into the household sector. Wage growth remained strong last month, rising 0.4%, but notable gains in rental income (+1.6%) and receipts on assets (+2.1%) were major drivers of the overall gain. As was the Social Security COLA increase of 3.5%.
Headline PCE, including the volatile food and energy categories, increased 0.3% monthly and 2.4% on a 12-month basis according to the numbers released last Thursday by the Commerce Department’s Bureau of Economic Analysis. Services prices increased 0.6% on the month while goods fell 0.2%; on a 12-month basis, services rose 3.9% and goods were down 0.5%. Within those categories, food prices accelerated 0.5%, offset by a 1.4% slide in energy. On a year-over-year basis, food was up 1.4% while energy fell 4.9%.
Global Headlines
Middle East
- Israel and Hamas: The Latest News – The Guardian
- Hopes for Gaza Truce Grow as Hamas Joins Talks in Cairo - WSJ
- ‘Well-Intentioned but Unwise”: US to Air Drop Aid Into Gaza – Reuters
- Harris Calls for ‘Immediate’ Cease-Fire in Gaza - Politico
- Rival of Netanyahu Visits US, Signaling Wider Cracks in Israel’s Wartime Leadership - AP
- Biden Backtracks On Likelihood Of A Cease-Fire By Monday After IDF Attack - Forbes
- Hamas Is Losing Every Battle in Gaza. It Still Thinks It Could Win the War. - 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
- Ukraine and Russia: The Latest News – The Guardian
- Russian Opposition Flickers with Support for Jailed Navalny Protester - Reuters
- Russia Says it Intercepts 38 Ukrainian Drones Attacking Crimea - BBC
- Russia Ready to Hand Over Crash Victims' Bodies to Ukraine, Official Says – US News
- Russia's Resilience to Sanctions Shows it is 'Costly and Unattainable' to Isolate a Large and Globally Integrated Economy - Business Insider
- Russians Keep Turning Up Dead All Over the World - WSJ
- EU, G7 Indirect Russian Diamond Ban Comes Into Effect – Reuters
- 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
- Sudan Authorities Block Cross-Border Aid to Stricken Darfur – France 24
- China's Parliament to Unveil More Stimulus this Week, Bold Reforms Unlikely – Reuters
- All Signs Point to India's Prolonged Outperformance – Wells Fargo
- Argentina's Milei Pledges to 'Speed up' Plans in Fiery Challenge to Congress – Forbes
- Iran Has Further Increased its Total Stockpile of Uranium, UN Nuclear Watchdog Report Says - AP
- Mexico Election Race Heats Up as Two Women Vie for Presidency - Yahoo
- South Korea's Yoon Says Better Japan Ties Helping Deter North Korea Threat – Reuters
Policy and Politics
Congress Unveils Long-Awaited Funding Bills Ahead of Shutdown Threat
Congressional leaders on Sunday finally revealed long-awaited bipartisan bills to fund parts of the government for most of the year, setting off a bicameral sprint to avert looming shutdown threat in less than a week. The weekend rollout entails six full-year spending bills to fund a slew of agencies until early fall, including the departments of Agriculture, Interior, Transportation (DOT), Housing and Urban Development (HUD), Veterans Affairs (VA), Justice (DOJ), Commerce and Energy.
The 1,050-page bipartisan package includes more than $450 billion in funding for fiscal year 2024. The package sets aside nearly $100 billion for the HUD and DOT funding bill. It provides more than $135 billion in nondefense discretionary funding for the annual VA and military construction funding measure and more than $172 billion in mandatory funding. The bill also includes funding increases for VA Medical Care, the Benefits Administration, as well as medical and prosthetics research. Lawmakers have until Friday to pass the legislation or risk a partial government shutdown under a stopgap plan President Biden signed into law last week to buy more time for spending talks.
Nine Appointed to NY Commission to Study Reparations
Nine people have been appointed to New York State’s Commission to study reparations and racial justice. The Commission was formed through legislation signed in December and according to the state, “acknowledges the horrific injustice of slavery and is tasked with examining the legacy of slavery, subsequent discrimination against people of African descent and the impact these forces continue to have in the present day.” The appointments were made by Governor Kathy Hochul, Senate Majority Leader Andrea Stewart-Cousins, and Speaker Carl Heastie.
Last year, Lisa Holder, a member of California’s reparations task force, told City & State that compensation, restitution, apologies or atonement and guarantees of non-repetition and rehabilitation should be components of reparations. New York lawmakers have similar hopes. “This commission has a unique mission, and all appointees possess areas of expertise that will contribute to the overarching goal of restitution and rehabilitation – core tenets of reparations,” Solages said in a statement.
NY’s Millionaire Share Dropped Again in 2021, IRS Data Show
The number of New York residents with incomes above $1 million hit a new high in the Wall Street boom year of 2021—but the state’s share of all U.S. income millionaires dropped lower, according to new Internal Revenue Service (IRS) data released today. Fueled by soaring stock prices, record financial sector bonuses and an enormous capital gains increase, the number of New York income millionaires in the federal income tax base rose from 55,100 in 2020 to 75,580 in 2021—an increase of 37 percent—the IRS state-level breakdown shows.
However, while the jump in New York millionaires was impressive in isolation, the Empire State trailed far behind the nation as a whole by this measure. New York added income millionaires at a lower percentage rate than any state in 2021—far below both the national average of 58 percent and median of 63 percent. Neighboring Connecticut had the second lowest millionaire earner increase, at 42 percent.
Read more at The Empire Center
Health and Wellness
CDC Shortens Isolation Period for People With Covid
People who test positive for Covid-19 no longer need to routinely stay away from others for at least five days, according to new guidelines from the US Centers for Disease Control and Prevention issued Friday. The change ends a strategy from earlier in the pandemic. The agency says it’s updating its recommendations for Covid-19 to bring them in line with its advice for other kinds of respiratory infections, including influenza and RSV. Offering a single set of unified guidance will make people more likely to follow it, agency experts said in a news briefing Friday.
Namely, the CDC now says people who have Covid-19 should stay home until they’ve been fever-free without medication for at least 24 hours and their symptoms have been improving for 24 hours. After that, it’s fine to resume regular activities, agency experts say. But they recommend that people take additional precautions for the next five days — including improving ventilation, masking and limiting close contact with others — to lower the risk of spreading the virus.
NYS COVID Update
The Governor updated COVID data for the week ending January 12th.
Deaths:
- Weekly: 62
- Total Reported to CDC: 82,864
Hospitalizations:
- Average Daily Patients in Hospital statewide: 1,069
- Patients in ICU Beds: 146
7 Day Average Cases per 100K population
- 6.5 positive cases per 100,00 population, Statewide
- 8.6 positive cases per 100,00 population, Mid-Hudson
Useful Websites:
Election 2024
- 4 things to Know About Super Tuesday, Including that Winning it is Crucial – NPR
- Voters Are More Upbeat on Economy, but Biden Gets Little Benefit, WSJ Poll Shows - WSJ
- New Congressional Maps Approved, Few Changes in Hudson Valley – Mid-Hudson News
- More Than 2,300 Westchester Voters Flipped From Republican to Dem for Bowman-Latimer Primary - LoHud
- Why the GOP is Suddenly Optimistic About the House – Politico
- 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
China's Factory Activity Contracts for Fifth Straight Month
China's factory activity shrank for the fifth straight month in February, amid seasonal factors and persistently poor business sentiment. The country's benchmark purchasing managers' index recorded 49.1 for the second month of 2024, the National Bureau of Statistics reported on Friday. Since October, the PMI has been below the 50-point mark that separates growth from a contraction, reflecting uncertainty over China's economic prospects and sluggish domestic demand.
In the already shorter month of February, a large part of the country took a break to observe the eight-day Lunar New Year period, unlike last year when the holidays fell in January. February's reading was weighed down by small enterprises, which usually close longer for the New Year to allow workers -- many of them migrants from rural areas -- to return to their hometowns. The index for bigger manufacturers with more resources recorded growth, as it did in January. Even so, key sub-indexes that include production, new orders, raw material inventory and employment posted declines.
Read more at Nikkei Asian Review
Construction Spending Weakened to Start 2024
Total construction spending declined 0.2% during January. The drop appears partially owed to harsh winter weather that much of the nation experienced during the month. That noted, January's weakness was concentrated in the nonresidential category. Although manufacturing project spending once again rose, educational, retail, warehouse and lodging construction all declined notably. Considering commercial construction starts have downshifted sharply over the past year alongside uncertain demand prospects, higher interest rates and reduced credit access, further declines in nonresidential spending in the months ahead would not be surprising.
By contrast, residential spending rose solidly in January thanks in large part to another gain in single-family outlays. Home builders look to be increasingly encouraged by low resale supply as well as the prospect for a soft landing and lower financing costs on the horizon. Meanwhile, the recent downturn in multifamily starts now appears to be weighing on spending. Home improvement outlays were essentially flat over the month but are down 3.7% year-over-year. Higher interest rates has chilled spending on home renovation. Reflected in consumer spending, retail sales for building and gardening materials are down 8.3% year-over-year as of January.
February 2024 US Auto Sales Up Slightly
“Auto sales in February recovered mildly from the January 2024 result, but sustained momentum seems tough to come by, given the current purchase environment facing auto consumers," said Chris Hopson, principal analyst at S&P Global Mobility. "While pricing, inventory, and incentive trends are seemingly moving in the correct directions, respectively, to promote new vehicle sales growth, high-interest rates, and uncertain economic conditions continue to push against any consistent upshift for demand levels."
The S&P Global Mobility US auto outlook for 2024 reflects sustained, but more moderate growth levels for light vehicle sales. We expect production levels to continue to develop, especially early in the year as some automakers look to continue to restock in the wake of production shutdowns late in 2023 and decent December 2023 sales volume.
Safran Plans Investment Casting Foundry
Safran Aircraft Engines plans to build a new foundry in Rennes, France, to manufacture turbine blades for its major engine programs. Safran produces the M88 installed in Dassault Rafale fighter jets, and through the CFM International joint venture it produces the LEAP engines installed in Airbus A320 and Boeing 737 commercial aircraft. Turbine blades, or airfoils, are critical components for turbofan engine maintenance as well as production.
Turbine blades are typically produced by investment casting, which allows foundries to produce precision parts in highly specialized alloys and in high volumes. Working from a master pattern, a mold is made from which a series of wax or ceramic patterns are produced. These patterns are arranged as a single complex assemblage, and this cluster is coated with a ceramic refractory. Once the ceramic is hardened, the wax is burnt out of the shells, and those molds are preheated prior to filling with molten metal. For turbine blades, the molds are filled under vacuum, which allows the manufacturer to control filling and solidification in line with the high-temperature, high-pressure performance that is required of them.
Orange County Site Secures FAST NY Shovel-Ready Grant For Advanced Manufacturing Industrial Park
The Aden Brook Business Park in Montgomery has secured a $462,000 FAST NY shovel-ready grant. The funds are to be used for pre-development activities and infrastructure investments. The business park, a 116-acre farm site, will include several buildings for advanced manufacturing uses like life sciences, microelectronic s, and clean tech. Winning the grant “marks an exciting moment” for the county, said Orange County Partnership President Maureen Halahan. “This investment will unlock opportunities for advanced manufacturing and help us attract innovative companies.”
The Orange County Industrial Development Agency teamed up with the Partnership to submit an application that secured the grant, said Executive Director Bill Fioravanti. “These grant monies will help facilitate the development of our newest advanced manufacturing park, creating good paying jobs and delivering tax revenue to the residents of Orange County.
DOE Allocates $24 Million to Train Clean Energy Workers and Help Manufacturers Improve Energy Efficiency
The U.S. Department of Energy (DOE) has allocated $24 million in funding to support workforce training programs. The funding will focus on training students and incumbent workers for clean energy jobs that do not require a four-year degree. The funding is an expansion of the existing Industrial Assessment Centers (IAC) network, which will now feature additional union training programs, community colleges, and trade schools.
According to the DOE, the program is designed to increase the clean energy workforce while ostensibly also helping small and midsized manufacturers save costs and increase productivity by reducing energy waste. The DOE’s Office of Manufacturing and Energy Supply Chains (MESC) will fund a range of workforce training institutions, with additional contributions coming from the Office of Energy Justice and Equity (EJE). The funding can be used for curriculum development, instructor recruitment and professional development, student wages to support their provision of hands-on technical assistance at SMMs, supports to help students succeed, and equipment.
Sikorsky Working on Hybrid VTOL Technologies
Sikorsky announced a plan to build, test, and fly a hybrid-electric vertical takeoff and landing aircraft with a tilt-wing configuration, the first of a series of HEX/VTOLs that the Lockheed Martin subsidiary intends to develop with different degrees of electrification plus autonomous capabilities. The Sikorsky hybrid-electric (HEX) development program will prioritize designs for aircraft with greater-than-500-nautical-mile range at high speed, as well as fewer mechanical systems in order to reduce design complexity and maintenance costs.
The company’s prototyping group, called Sikorsky Innovations, is working with GE Aerospace to build a hybrid-electric power systems testbed with a 600-kW electric motor. Sikorsky Innovations was formed in 2010 to develop technologies that improve rotary wing speed and apply autonomy and intelligence to VTOL aircraft. The testbed will be used to evaluate hover performance of the HEX demonstrator — a 9,000-lbs. maximum gross weight aircraft with 1.2-MW-class turbogenerator and associated power electronics.
Read more at American Machinist
Vietjet Adding 20 Airbus Widebody Jets
Vietjet Air, a privately owned Vietnamese carrier, is adding widebody aircraft to its fleet. The Hanoi-based airline entered a memo of understanding with Airbus SA to purchase 20 A330-900 aircraft, for long-range service and high-capacity regional routes. Neither Vietjet nor Airbus has indicated the value or the schedule for the planned purchase. Based on list prices for the A330neo, the booking could be worth as much as $5.2 billion. The airline currently operates a fleet of 84 aircraft, including 20 A330-900s and seven A330-300s that are leased.
The A330neo is the “new engine option” introduced in 2014 to modernize the wide-body series for greater fuel efficiency and reduce CO2 emissions; sharklets and other aeronautical design updates; and an enlarged passenger cabin. Vietjet also placed orders with Rolls-Royce for Trent 7000 turbofan engines to power the new twin-engine jets.
Read more at American Machinist
US Investigating Potential Security Threats From Connected Cars
The United States announced Thursday it is launching an investigation into potential security threats posed by connected vehicles that utilize technology from countries of concern such as China. U.S. President Joe Biden said he is directing the Commerce Department to lead the probe and determine what actions may be necessary to ensure that cars driving on U.S. roads do not undermine the country’s national security.
Senior administration officials told reporters in a phone call previewing the action that they do not have a precise count of how many vehicles linked to countries of concern are in the United States now, but that the number is “very, very small. It's often vertically integrated, so you're often seeing it's in vehicles that are manufactured in the PRC by PRC companies. There's very, very few of those vehicles on U.S. roads today,” an official said. The actions at this point will not involve instituting any bans or tariffs, but rather be focused on gathering information about what might be regulated, the officials said.