Member Briefing May 16, 2023
Empire State Manufacturing Survey: Activity “Fell Sharply” in May
Manufacturing activity declined significantly in New York State, according to the May survey. After jumping into positive territory last month, the general business conditions index plunged forty-three points to -31.8. Some of the survey details are below:
- The new orders index sank fifty-three points to -28.0, and the shipments index dropped forty points to -16.4.
- The unfilled orders index fell to -13.2, a sign that unfilled orders were lower.
- The delivery times index fell to -5.7, suggesting delivery times shortened somewhat.
- The inventories index fell to -12.3, indicating that inventories moved lower.
- The index for the number of employees remained negative for a fourth consecutive month at -3.3.
- The average workweek index held below zero at -3.5, pointing to a slight decline in employment and hours worked.
- The prices paid index was little changed at 34.9.
- The prices received index held steady at 23.6.
- The index for future business conditions edged up to 9.8, suggesting that firms do not expect activity to improve much over the next six months.
- New orders and shipments are expected to increase, and employment and the average workweek are expected to edge somewhat higher.
- The capital spending index fell to 0.9, its lowest level in three years.
War in Ukraine Headlines
- Ukraine and Russia: The Latest News – The Guardian
- Russia Says 2 Commanders Killed in Fighting in Eastern Ukraine - Politico
- Russia Launches Fresh Wave of Attacks Against Ukraine - WSJ
- Wagner Boss Offered to Sell Out Russian Troops to Ukraine, Report Says – Washington Post
- Ukrainian President Says Counteroffensive Won’t Aim to Attack Russian Territory - AP
- Ukraine Hails its First Offensive Success in Defence of Bakhmut – Reuters
- Germany Places Billion-Euro Order for Puma Armored Vehicles - Reuters
- Four Russian Military Aircraft Shot Down Near Ukraine, Russian Daily Reports – Reuters
- France to Give Ukraine More Tanks, Macron and Zelenskyy Announce - Politico
- UK and Ukraine Discuss the Thorny Issue of Fighter Jets - CNBC
- 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
CEOs Confidence Slipping in Q2
The Conference Board's Measure of CEO Confidence in collaboration with The Business Council declined slightly to 42 in Q2 2023, down from 43 in the first quarter of the year. The Measure is still below a reading of 50, which suggests CEOs remain largely pessimistic about what’s ahead in the economy. A total of 139 CEOs participated in the Q2 survey. Keeping confident during rapidly changing economic conditions is proving to be difficult.
Similar to last quarter, 93% of CEOs still report they are preparing for a recession over the next 12–18 months. In fact,87% believe the recession will be brief and shallow with limited global spillovers and 6% expect a deep recession. 15% of CEOs said they expected economic conditions to improve over the next six months, down from 18%. 56% expected conditions to worsen, up from 48%. 25% of CEOs expect conditions in their own industry to improve over the next six months—slightly less than 26% last quarter. 40% expect conditions to worsen, up notably from 33% in Q1.
Conference Board: Workers Are Happier Than They’ve Been in Decades – Especially Men
Job satisfaction hit a 36-year high in 2022, reflecting two effects of the tight pandemic labor market: The quality of jobs improved as wages and work flexibility increased, and workers moved into positions that were a better fit. Last year, 62.3% of U.S. workers said they were satisfied with their jobs, according to new data from the Conference Board, up from 60.2% in 2021 and 56.8% in 2020. The business-research organization polled workers on 26 aspects of work, and found that people were most content with their commutes, their co-workers, the physical environment of their workplace and job security.
Among the happiest workers: people who voluntarily switched jobs during the pandemic and individuals working in hybrid roles with a mix of in-person and remote work. Men’s satisfaction was higher than women’s in every component, especially in areas such as leave policies, bonus plans, promotions, communication and organizational culture.
COVID News – What Did You Learn? 10 Questions about Your Organization’s COVID-19 Response
Now that the emergency phase of COVID-19 has come to an end, organizations should take the opportunity to review “lessons learned” from their response to the pandemic. What procedures worked well? What didn’t work? What should you do differently next time (because there will be a next time)?
The International Organization for Standardization (ISO) recommends regular reviews of emergency response plans to support organizational resiliency. Ask these 10 questions about your organization’s response to COVID-19. If there are areas that need improvement, initiate actions, assign ownership and incorporate updates into your organization’s “pandemic preparedness plan” for use in future health emergencies.
McCarthy Says Talks With White House Talks Yield Little Results
Speaker Kevin McCarthy (R-Calif.) on Monday signaled there had been little progress in debt ceiling negotiations over the weekend, accusing Democrats and the White House of wanting “a default more than a deal. I still think we’re far apart. It doesn’t seem to me yet they want a deal, it just seems like they want to look like they are in a meeting but they’re not taking anything serious,” McCarthy told NBC and CNN when walking into his office Monday.
McCarthy’s assessment is a contrast from that of President Biden and his administration, which has been signaling progress in the talks. Treasury Department Deputy Secretary Wally Adeyemo said on CNN’s “State of the Union” on Sunday that debt ceiling negotiations have been “constructive.” Negotiators last week postponed a meeting between President Biden and the top four congressional leaders scheduled for last Friday, though staff-level negotiations have occurred since the five leaders met last Tuesday. Another meeting with the five principals could reportedly occur as soon as Tuesday.
There’s Unfinished Business in the Final Month of New York's Legislative Session
There’s one month to go until the 2023 New York state legislative session ends, and several issues still need to be negotiated. Some major items didn’t make it into the state budget, which was over a month late when it was approved on May 2. One is Gov. Kathy Hochul’s ambitious plan to build 800,000 housing units in the next decade to help ease the affordable housing crisis. But Hochul said with so little time left in the session, any action to ease the housing crisis may have to wait until 2024.
A measure known as Clean Slate is gaining some momentum and key backing. It would expunge the records for some people convicted of crimes who have served their sentences, enabling them a better chance to get a job. Survivors of sexual harassment, including former Fox News anchor Gretchen Carlson, are pressing for a bill that would outlaw nondisclosure agreements of all kinds. Other measures being considered as the session winds down include Aid in Dying, which would give terminally ill people the right to use medication to end their lives at the time of their choosing.
DiNapoli: NYC Has Recovered Nearly All Private Sector Jobs Unevenly Across Sectors
New York City has recovered 99.4% of private sector jobs it lost in the pandemic, but unevenly across key industries, according to an analysis released by New York State Comptroller Thomas P. DiNapoli. “The city’s job recovery is good news,” DiNapoli said. “We are seeing strength in the securities, transportation and warehousing and office sectors, but retail, restaurants, construction and tourism continue to lag the national recovery.”
Comptroller DiNapoli monitors several industries vital to the city’s comeback and provides monthly updates on the New York City Industry Sector Dashboards, which he launched last year. Key findings across the arts, entertainment and recreation, construction, office, restaurants, retail, securities, tourism and transportation and warehousing sectors include:
Biden Taps Sean Patrick Maloney for OECD Ambassador
President Biden plans to nominate former House Democratic campaign chief, Rep. Sean Patrick Maloney (D-N.Y.), for representative of the United States to the Organization for Economic Cooperation and Development (OECD). Maloney lost his seat as the House flipped to GOP control last year. Biden’s nomination announced on Friday would give Maloney the rank of ambassador on behalf of the U.S. at the Paris-based OECD, which is an intergovernmental organization made up of more than 30 democracies with market-based economies.
Biden noted in a statement that Maloney chaired both the House Transportation and Infrastructure Committee’s Coast Guard and Maritime Transportation Subcommittee and the House Agriculture Committee’s Commodity Markets, Digital Assets, and Rural Development Subcommittee. Before Congress, he served as former President Clinton’s White House staff secretary, helped found a financial services software company, and worked as a partner at two global law firms.
A ‘Significantly Lower,’ But Still Large, COLA Increase on 2024’s Social Security Benefits Expected
Retirees this year received an 8.7% cost-of-living adjustment in their Social Security benefits, which was the largest increase in four decades. The 2024 increase, however, the declining rate of inflation points to a “significantly lower” COLA and may actually be less than half that percentage, according to a new estimate by The Senior Citizens League, a nonpartisan advocacy group.
The roughly 70 million people who rely on Social Security could receive a 3.1% COLA in 2024 (or possibly as low as 2% or less), the group estimates, based on April’s consumer inflation rate announced on Wednesday. For the average retiree who received a monthly check of $1,827 this year, this would mean an additional $56.64 a month in 2024, boosting the typical payment to $1,883.64.
Schneider Electric Expands North American Manufacturing
Schneider Electric, one of the world’s largest makers of electrical and automation products, is shifting some manufacturing closer to the U.S. from factories in Asia and Europe as it pushes ahead with a regional manufacturing strategy. The moves are meant to position the France-based company, which makes goods such as light switches, electric-vehicle chargers, home-automation systems and data-center equipment, to meet growing demand in North America and to compete for federal subsidies aimed at expanding manufacturing in the U.S.
Schneider is opening factories in El Paso, Texas, and Monterrey, Mexico, that will make items such as circuit breakers and electrical panel boards, adding to its 35 factories and distribution centers in North America. It also plans to expand its Tlaxcala, Mexico, plant. The company said it has started working with North American suppliers and is encouraging some of its suppliers elsewhere to set up factories in the region as it builds a local supply chain for materials such as nickel and lithium.
Tesla’s New Car-Making Process Stokes Debate Among Industry Experts
Tesla Inc's new vehicle-assembly system, which created instant buzz when it was unveiled in March, ignited a debate among auto manufacturing experts on whether CEO Elon Musk's so-called unboxed process is radical, revisionist or derivative - or all of the above. Musk believes the company needs to radically rethink conventional manufacturing methods in order to build more affordable - and profitable - electric vehicles in higher volumes.
The unboxed assembly process is intended to enable Tesla to hit the ambitious $30,000 price target. Tesla is still testing various elements of the system, including the use of large front and rear subassemblies built on single-piece underbody castings, which are then joined to a central structural battery pack. Body panels are painted separately, then joined together toward the end of the assembly process.
U.S. Demands Recall of 67 Million ARC Air Bag Inflators, Company Rejects Agency Conclusions
The National Highway Traffic Safety Administration (NHTSA) demanded the recall of 67 million air bag inflators because it believes there is a safety defect, but auto supplier ARC Automotive Inc rejected the U.S. regulator’s request, documents released on Friday show. Even as ruptures mount, “ARC has not made a defect determination that would require a recall of this population,” NHTSA said in its demand letter to the Tennessee-based company. “Air bag inflators that project metal fragments into vehicle occupants, rather than properly inflating the attached air bag, create an unreasonable risk of death and injury.“
ARC rejected NHTSA’s tentative conclusion that a defect exists saying it is based upon seven field ruptures in the United States. NHTSA “then asks ARC to prove a negative – that the 67 million inflators in this population are not defective” that were produced over 18 years. The company said it will continue to work with NHTSA and automakers to evaluate ruptures. The 67 million inflators were produced for the U.S. market on multiple production lines across different plants and used by 12 vehicle manufacturers in dozens of models. “None of these manufacturers has concluded that a systemic defect exists across this broad population,” ARC said.
Have US Cutting Tool Orders Peaked?
Machine shops and other manufacturers consumed $225.6 million worth of cutting tools during March 2023, 14.6% higher than the February total ($196.9 million) and 14.9% more than the March 2022 total ($196.4 million), suggesting manufacturing activity is gaining some momentum. However, “While the March data was impressive and most shops remain busy, early indications are showing that Q2 will not continue to perform at this level,” according to Jack Burley, chairman of AMT’s Cutting Tool Product Group and Committee.
“Cutting tool sales in March 2023 were astronomical, contributing to the best first quarter since 2019. Machinery orders have surged in the past two years, but sales of cutting tools had struggled to return to pre-COVID levels,” according to Chris Chidzik, principal economist at AMT – the Association for Manufacturing Technology. “The March 2023 numbers show that machines are starting to hit shop floors, demand for parts remains strong, and materials are available to make them.”