Member Briefing May 20, 2025
ISM Forecast: Tariffs Push Manufacturing Into Stagnation Through 2025
Manufacturing revenue will remain relatively flat through the end of the year, according to an economic forecast out last week from the Institute for Supply Management. Revenue for the year is slated to grow by only 0.1%, as tariffs drive up prices and spread uncertainty. The outlook is a significant drop from ISM’s annual forecast for 4.2% growth shared in December, and lower than the 0.8% growth seen last year. Raw material prices are set to skyrocket 7.5% this year, according to the forecast, driven up in large part by the Trump administration’s tariffs.
The outlook stands in contrast to the optimism seen for the industry at the start of the year, when ISM’s Purchasing Managers’ Index, a key indicator of economic health, reentered growth mode for the first time in more than two years. Since then, however, the industry has been on a downward slide. Industry confidence and consumer demand have both fallen amid the Trump administration’s tariff policies, leading manufacturers to pull back on production. Tariffs dominated survey respondents’ concerns for both the April ISM PMI and the forecast survey, as manufacturers remain preoccupied with the policies’ impact on metrics like production and export orders.
Read more at Manufacturing Dive
Will Anyone Take the Factory Jobs Trump Wants to Bring Back to America?
America has nearly half a million unfilled manufacturing jobs, according to the U.S. Labor Department. Nearly half of manufacturing companies say their biggest challenge is recruiting and retaining workers, according to a survey this year by the National Association of Manufacturers. Manufacturers usually assign workers to shifts with rigid hours and pay 7.8% lower on average than the private sector as a whole, according to the Bureau of Labor Statistics. In 1980, manufacturing wages were 3.8% higher. A decline in union representation in the sector hasn’t helped.
Factory employers face other headwinds, said Susan N. Houseman, an economist at the Upjohn Institute for Employment Research. These include misconceptions that all factory work is dirty and dangerous, or lingering trauma from the wave of manufacturing layoffs in the 1990s and early 2000s as factories moved abroad. “People saw what happened in their communities and may not think it’s stable employment,” Houseman said. Manufacturers will have to add in new inducements to attract workers, Carolyn Lee, president of the Manufacturing Institute said, including greater levels of scheduling flexibility that more blue-collar workers have begun to seek alongside their white-collar counterparts.
Delivering Missile Defense Requires Leveraging American Industry
President Trump’s landmark defense initiative is showing signs of moving beyond the conceptual stage. The Golden Dome directive, which directs the Pentagon to create a comprehensive integrated air and missile defense system for the United States, marks the greatest potential change in American defense strategy since the early Cold War. Creating a national integrated air and missile defense network, however, is no simple task. The Pentagon must carefully combine new defense providers with the current defense-industrial system, leveraging proven technologies as the base of an innovative, potentially transformational capability.
A full-scale national air and missile defense system requires technological advances to rapidly and accurately integrate data from multiple ground and space-based early-warning sensors, track incoming targets, discriminate between incoming missiles, warheads, and decoys, and cue interceptors to the right targets. The technical and physical complexity of even a limited defense system to protect the U.S. demands trusted industry partners that understand the difficulties of large-scale defense projects take the lead.
Global Headlines
Middle East
- Iran's Supreme Leader Calls Trump a 'Disgrace' – Newsweek
- Iran Says It Will Continue Nuclear Talks With The US – The Hill
- Hamas Proposes Releasing Some Hostages In Fresh Talks After New Israel Offensive - BBC
- Israel Has Launched A New Offensive In Blockaded Gaza. Here’s What To Know - AP
- Israel Says It Will Allow Food Into Gaza for the First Time in Months - WSJ
- UK, France And Canada Threaten ‘Concrete Actions’ Against Israel, Including Sanctions - AP
- Trump Plan Or Not, Israel Is Letting More Palestinians Leave Gaza - Reuters
- 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 Says Russia And Ukraine To 'Immediately' Start Ceasefire Negotiations After Two-Hour Call With Putin – BBC
- Europe, US To 'Tightly Co-Ordinate' Ukraine Talks After Trump-Putin Call – France 24
- Russia Outlaws Amnesty International In Latest Crackdown On Dissent And Activists - AP
- Russia Drone Attacks: A Warning To EU, US 'It Can't Be Kowtowed' Without A Reason To De-Escalate War – France 24
- Finland To Use Proceeds From Frozen Russian Assets To Supply Ammunition To Ukraine - Reuters
- Poland Seizes Aircraft Tyres Bound For Russia In Suspected Sanctions Breach - Reuters
- Vatican Could Be A Venue For Russia-Ukraine Talks, Rubio Says, After Pope Renews An Offer To Help - AP
- 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
- EU And UK Ink Post-Brexit Deal On Security, Fisheries And Energy – Politico
- Warsaw's Liberal Mayor Narrowly Wins Polish Presidential Vote - BBC
- Pro-EU Moderate Nicușor Dan Wins Romanian Presidential Election Stunner - Politico
- Argentina's Milei Wins Show Of Support In Buenos Aires Election - Reuters
- Mexico Mourns Navy Cadets Killed In Brooklyn Bridge Ship Crash - BBC
- JD Vance Has 'Exchange of Views' With Archbishop After Pope Leo Meeting - Newsweek
- Sudan’s Army Chief Appoints The First Prime Minister Since War Began In 2023 - AP
- Indonesia Raises Alert To Highest Level For Lewotobi Laki-laki Volcano – Reuters
Policy and Politics
Republicans Advance Trump’s ‘Big, Beautiful Bill’ In Unusual Late-Night Vote
Republican deficit hawks allowed President Trump’s bill of legislative priorities to advance out of the House Budget Committee in an unusual late-night vote on Sunday, marking a key hurdle cleared for House GOP leaders and a sign of progress for warring Republican factions. After gaveling in after 10 p.m. on Sunday, the committee voted 17-16 to advance the “One Big Beautiful Bill Act,” which would extend Trump’s tax cuts and boost his border funding priorities while reforming Medicaid and food assistance programs.
The four Republican holdouts who had tanked the vote on Friday — Reps. Ralph Norman (S.C.), Chip Roy (Texas), Andrew Clyde (Ga.), and Josh Brecheen (Okla.) — voted present to allow the bill to go forward, with Roy revealing that there was progress on moving up the start date for new Medicaid work requirements and speeding up the phase-out of green energy incentives. The next stop is the House Rules Committee, which is set to take up the legislation later this week and make last-minute changes to the bill to reflect any compromises and demands between deficit hawks and moderates in high-tax states.
Moody’s US Credit Downgrade – What It Means
The United States no longer holds a perfect credit rating with any of the three major agencies. The slip from top-tier status occurred after Moody's Investors Service pulled the plug on its AAA rating, downgrading the sovereign by one notch to Aa1. Fitch already lowered its rating following the debt ceiling battle on Capitol Hill in 2023, while S&P was the first to strip the U.S. government of its AAA score in 2011. The 10-year Treasury yield rose Monday by 10 basis points to 4.54%, while the 30-year topped 5.00% for the first time since "Liberation Day" tariffs were unveiled in April.
"We do not believe that material multi-year reductions in mandatory spending and deficits will result from current fiscal proposals under consideration," Moody's said in a statement. "Over the next decade, we expect larger deficits as entitlement spending rises while government revenue remains broadly flat. In turn, persistent, large fiscal deficits will drive the government's debt and interest burden higher. The U.S. fiscal performance is likely to deteriorate relative to its own past and compared to other highly-rated sovereigns." The downgrade from Moody's is a cause of concern, but it won't fundamentally change the risk profile of the U.S.. Some people, like Treasury Secretary Scott Bessent, Others are taking a more dismissive stance. Bessent quoted past secretary Larry Summers calling Moody's a "lagging indicator."
Kingston Front and Center as NY’s Top Court Hears Arguments On Upstate Rent Control
The future of rent control in Upstate New York is being decided in the state Court of Appeals as landlords try to undo Kingston’s landmark adoption of the Emergency Tenant Protection Act. The outcome of the case could either doom or breathe life into other upstate cities' dreams of rent stabilization at a time when the average cost of living for everyone is going up. The Hudson Valley Property Owners Association and a handful of Kingston landlords filed suit against Kingston’s Rent Guidelines Board and the city itself, alleging that the vacancy study was flawed and the rental reduction was invalid. Lower courts have largely sided with the city, but the landlords appealed the case all the way to the Court of Appeals, the state’s top court.
Last Thursday, Court of Appeals judges heard arguments from attorneys representing the landlords and those representing Kingston, the state and intervening advocates. The judges appeared receptive to the argument that Kingston’s survey was performed in good faith, rather than pockmarked by technical and procedural errors as alleged. But some judges expressed concern that negative adjustments could take a unit's cost below fair-market rent, as opposed to simply reigning in costs of units with prices that have shot up compared to local economic standards. An attorney for the state Department of Housing and Community Renewal struggled to defend the Rent Guidelines Board’s right to adjust rents downward. A final decision in the case is not expected for months.
Political Headlines
- Trump, Obama And Other Leaders From Both Parties Send Well Wishes To Biden After Cancer Diagnosis – Forbes
- Supreme Court Allows Trump to Strip Legal Status From Venezuelan Migrants - WSJ
- US Chamber: 5 Steps to Grow America’s Economy – US Chamber
- Watch: Business Council’s Ken Pokalsky On Unemployment Insurance And Rest-Of-Session Priorities – Spectrum News’ Capital Tonight
- Donald Trump and Letitia James Raise Stakes in Bitter Feud - WSJ
- The Cuomo Paradox: Unpopular, Yet Still Leading The New York City Mayor’s Race - Politico
- The Stark Math on the GOP Tax Plan: It Doesn’t Cut the Deficit - WSJ
- Donald Trump Gets Court Win Over Limiting Federal Union Rights - Newsweek
- Trump Tracker: Keep Tabs On The Latest Announcements And Executive Orders - WSJ
Health and Wellness
Remote Employees Are Lonelier, Sadder, And Angrier, Survey Finds
Remote work does have its perks. With benefits like saving time without a commute, being more productive without office distractions, greater flexibility, cost savings, and finding balance for family obligations, remote and hybrid work is undoubtedly appealing. The latest State of the Workplace report from Gallup, however, reveals that fully remote work might not be ideal for employees’ mental health—and could leave them more distressed (regardless of income level, across all findings).
Fully remote workers reported higher engagement (31%) compared with hybrid (23%), on-site remote-capable (23%) and on-site non-remote-capable (19%). But that autonomy could come with a price. Fully remote workers reported being less likely to thrive in their life overall (36%), compared to 42% of hybrid workers and 42% of on-site remote-capable. Gallup also found that remote workers reported higher rates of emotional distress, with 45% saying they experienced a lot of stress the previous day, compared to 39% for onsite remote-capable, 38% for non-remote-capable. Stress levels, however, were similar to that of hybrid workers (46%). Additionally, remote workers reported the highest levels of anger (25%), sadness (30%), and loneliness (27%) compared to hybrid and on-site workers.
Industry News
Trade War Updates
- US Signals Reciprocal Tariffs Will Return For Some Countries – Supply Chain Dive
- U.S. Economy to Lose $12.5B in Tourism Spending in 2025, Report Warns - Newsweek
- EU Lowers Growth Forecast As U.S. Tariffs Expected To Hit Exports - WSJ
- China Says U.S. Undermined Trade Talks With Huawei Chip Warning - CNBC
- China Takes Aim At US Steel And Aluminum Tariffs, Criticizes Recent US Restrictions On Huawei Chips - AP
- Nvidia CEO: China Chip Ban 'Deeply Painful' As $15 Billion In Sales Have Been Lost As A Result - Yahoofinance
- Jamie Dimon Says Tariffs Might Inflict More Economic Pain Than Investors Realize - WSJ
- Trump’s Massive Import Taxes Haven’t Done Much Economic Damage — Yet – AP
China’s Manufacturing Resilient In April Despite US Tariffs, But Consumption Softens
China’s economy mostly remained resilient in April, despite feeling the effects of the astronomical tariffs in place before last week, when Washington and Beijing agreed to remove or pause most of the duties imposed as part of their tempestuous trade war. With the new agreement providing a 90-day reprieve in the conflict, last month was the only period where the full force of the triple-digit tariffs could be observed in economic data – at least for now.
China’s industrial output grew by 6.1 per cent in April from a year earlier, compared to 7.7 per cent growth in March, according to data released by the National Bureau of Statistics on Monday, higher than the 5.21 per cent growth estimate from a poll of economists by financial data provider Wind. Retail sales rose 5.1% from a year earlier in April, below economists’ expectations for a 6% increa
Import and Export Prices Inch Up as Fuel Costs Fall
U.S. import prices rose 0.1% in April, after falling 0.4% in March, with higher nonfuel prices more than offsetting lower fuel prices. Over the past year, import prices inched up 0.1%. Meanwhile, U.S. export prices ticked up 0.1% for the second consecutive month in April. Over the past year, export prices increased 2.0%. Nonfuel import prices increased 0.4% in April, after slipping 0.1% in March. Higher prices for capital goods, nonfuel industrial supplies, consumer goods and automotive vehicles drove the increase. The price index for nonfuel imports grew 1.2% over the past year, led by higher prices for nonfuel industrial supplies and materials, automotive vehicles and capital goods.
Fuel import prices fell 2.6% in April, following a 3.4% drop in March, with lower prices for natural gas and petroleum driving the decline. Prices for fuel imports plummeted 12.0% from April 2024, the largest over-the-year decline since October 2024. Import prices for petroleum decreased 2.0% over the month in April and 13.3% from last year. Meanwhile, natural gas prices plunged 17.5% in April but jumped 59.9% over the year.
Manufacturers’ Sales And Inventories Show Little Change In March
In March, manufacturers’ sales fell 0.1% from February but rose 2.0% compared to March 2024. The combined value of distributive trade sales and manufacturers’ shipments for March, adjusted for seasonal and trading day differences but not for price changes, was estimated at $1,919.9 billion, up 0.7 percent from February 2025 and was up 4.5 percent from March 2024.
Meanwhile, manufacturers’ inventories inched up 0.1% in March and 0.9% from the same month a year ago. Manufacturers’ inventories/sales ratio stood at 1.45 at the end of March, the same as February, but down from 1.47 last year. Despite an expectation that companies would stockpile inventory ahead of tariffs in March, manufacturers’ inventories showed barely any growth from February, and the inventories/sales ratio was down from the year before.
Dick’s Acquires Foot Locker For $2.4 Billion, Building Share In Sports And Sneaker Markets
Dick’s Sporting Goods, the retail market share leader in sporting goods, will acquire Foot Locker, the world’s largest specialty footwear retailer, for $2.4 billion, nearly tripling total store count, expanding its global presence and further solidifying leadership in both the performance athletic sector and the broader sneaker and sportswear markets. Dick’s will pay $24 per share for Foot Locker, approximately a 90% premium over its share price before the announcement, or shareholders can choose to receive 0.1168 share of Dick’s common stock for each Foot Locker owned.
Dick’s exclusively operates in the U.S. market with 856 stores in a total addressable footwear, apparel and hardline market of $140 billion, while Foot Locker generates about 30% of revenues internationally and targets a $300 billion total addressable global market with a 2,400 retail footprint spanning North America, Europe, the Middle East and Asia-Pacific markets. The two retailers will continue to operate separately and Dick’s has no immediate plans to open Dick’s stores internationally. The deal will be financed through a combination of cash and new debt, predicted to deliver between $100 million and $125 million in cost synergies and to close in the second half of 2025, pending regulatory and other approvals.
Air Force Seeks Industry Input For EW Tech Development
U.S. Air Force experts are reaching out to industry about an upcoming project to develop enabling technologies for future electronic warfare (EW) systems. Officials of the Air Force Research Laboratory at Wright-Patterson Air Force Base, Ohio, issued a notice of contract action (FA2377-25-R-B009) on Thursday for the upcoming Simulation Environment for Technology Research and Assessments (SENTRA) project.
SENTRA has three technology areas: modeling and simulation; advanced RF simulation; and how to measure sensor system performance. The SENTRA project is part of the Air Force Trusted and Elastic Military Platforms and Electronic Warfare System Technologies (TEMPEST) program. Air Force EW experts will conduct industry briefings for the SENTRA project and facility tours of the Air Force Research Lab at Wright-Patterson Air Force Base from 1 p.m. until about 5 p.m. on 28 May 2025 at Wright-Patterson Air Force Base in Dayton, Ohio.
Read more at Military and Aerospace Electronics
Stellantis Opens Automated Parts Distribution Center In East Fishkill
Stellantis has opened a new Mopar parts distribution facility in the Hudson Valley’s East Fishkill, New York, a move the company said will enhance its services across the Northeast, according to an April 24 press release. The new facility, which covers more than 500,000 square feet, has more than 46,000 unique parts in stock. Stellantis invested $64 million to open the center, which has capacity to fulfill more than 2 million shipments each year, per the release.
The facility is one of 21 parts distribution centers Stellantis operates across the country. However, it is the first in the U.S. to use “AutoStore” technology, which automates parts storage and retrieval. The system is composed of 40 robots that retrieve parts from more than 70,000 bins and deliver them to be processed for shipment by staff. AutoStore, a Norway-based company, claims that its system “quadrupl[es] capacity” for warehouses, according to the company website. The new East Fishkill facility is the result of a merger between the former Mopar parts centers in Tappan, New York; and Boston, due in part to the AutoStore system enabling a smaller warehouse footprint.
Nippon Steel To Invest $4 Billion For New U.S. Steel Mill In $14 Billion Package, Document Says
Nippon Steel plans to invest $14 billion in U.S. Steel's (X.N), opens new tab operations including up to $4 billion in a new steel mill if the Trump administration green lights its bid for the iconic U.S. company, according to a document and two people familiar with the matter. Under details of the plan included in the document, the company will plow $11 billion into U.S. Steel's infrastructure through 2028. That includes $1 billion in a green field site, which is expected to grow by $3 billion over the following years and has not been previously reported. The total investment figure was previously reported by CTFN.
The super-charged investment pledge, up from an initial $1.4 billion, was pitched as part of a last ditch effort to win approval of the merger, which has drawn fire from both Presidents Donald Trump and Joe Biden. The companies face a May 21 deadline for the completion of a fresh national security review of their proposed tie-up, which was blocked by Biden on national security grounds in January following a prior review. Trump would then have 15 days to decide the fate of the transaction, although the timeline could slip. Nippon Steel Vice Chairman Takahiro Mori was in Washington last week to meet with U.S. officials to try to win approval of the deal, Reuters previously reported.
Carrier To Spend $1B On US Manufacturing
HVAC system maker Carrier Global announced last week it plans to invest $1 billion over the next five years to expand its U.S. manufacturing operations and workforce. The funds will go toward expanding existing facilities and building a new plant to support the production of components for its heat pumps and battery assemblies. The investment will also create 3,000 jobs in research and development and manufacturing, which adds to its workforce initiative launched in January that aims to hire 1,000 service technicians in the U.S.
The money will support Carrier’s broader U.S. operations such as its recently announced workforce strategy, dubbed Carrier TechVantage Initiative. The program also aims to provide additional training to over 100,000 HVAC technicians within five years. The actions strive to address the growing demand for technical expertise in the commercial HVAC sector due to the rapid growth of data centers, industrial facilities and large-scale infrastructure projects, the company said in the January press release. The initiative is Carrier’s push to keep up with the ever-evolving HVAC industry. While the program is included in the $1 billion investment, a specific dollar amount tied to the program was not disclosed, the spokesperson said.