Member Briefing May 28, 2023
Manufacturing PMI Up as Business Activity Hits 2-Year High
U.S. business activity accelerated to the highest level in just over two years in May, suggesting that economic growth picked up half-way through the second quarter. S&P Global said on Thursday that its flash U.S. Composite PMI Output Index, which tracks the manufacturing and services sectors, jumped to 54.4 this month. That was the highest level since April 2022 and followed a final reading of 51.3 in April.
However, manufacturers reported a surge in prices for a range of inputs, suggesting that goods inflation could pick up in the months ahead, in a worrying sign for the Federal Reserve as it waits for more confidence inflation has resumed a downward path before commencing rate cuts. "The main inflationary impetus is now coming from manufacturing rather than services, meaning rates of inflation for costs and selling prices are now somewhat elevated by pre-pandemic standards in both sectors to suggest that the final mile down to the Federal Reserve's 2% target still seems elusive," said Chris Williamson, chief business economist at S&P Global Market Intelligence.
Durable Goods Orders Rise More Than Expected in April; March Revised Lower
Orders for durable goods rose 0.7% in April, marking the third straight monthly gain, the Commerce Department said Friday. Economists had forecast a 0.5% fall in orders for durable goods — products made to last at least three years. Excluding defense, orders were flat in April.
- Excluding transportation, orders were up 0.4%.
- Core capital-goods orders, which exclude volatile sectors like transportation and defense, rose 0.3% last month after a 0.1% fall in March.
- Shipments of these so-called core orders rose 0.4% in April.
- Orders for transportation goods were also strong, rising 1.2% after a 2.5% gain in the prior month.
- Economists had expected a weak report mainly because of trouble at Boeing Co. The airline company reported seven new aircraft orders in April, down from 113 in March.
The third straight month of gains may be a sign that manufacturing is breaking out of neutral. Manufacturing has been facing headwinds from high interest rates, the strong dollar and a sluggish global economy, said Sal Guatieri, senior economist at BMO Capital Markets, in a note ahead of the release.
Global Headlines
Middle East
- Israel and Hamas: The Latest News – The Guardian
- Israeli Military Says it Killed Two Senior Hamas Officials in Rafah Strikes that Left at Least 35 Dead – The Hill
- ‘No Longer Justifiable’: European Leaders Condemn Israel’s Strike on Refugee Camp – Politico
- Amid Condemnation, Netanyahu Calls Civilian Deaths in Rafah Strike ‘Tragic Accident - NYT
- UNSC Condemns Attacks on Aid Workers - AP
- Shooting Near Rafah Border Crossing Kills a Member of Egypt’s Security Forces - NYT
- Israel, Egypt Try to Keep Gaza War From Escalating - WSJ
- UN Court Orders Israel to Halt Its Military Operations in Rafah - CNN
- 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
- Ukraine Gets €1B in Arms and Security Pact With Spain – Politico
- Ukraine Launches Missile Attack on Luhansk, Russia-Installed Governor Says - Reuters
- NATO Chief: Countries Should Reconsider Restricting Ukraine’s Use of Military Aid in Strikes Against Russia - VOA
- Force Russia to Make Peace, Zelensky Urges West - BBC
- Moscow Teases Weapon to Counter F-16s in Ukraine—Russian Media - Newsweek
- Putin Wants Ukraine Ceasefire on Current Frontlines - Reuters
- Russia Loses 40 Artillery Systems, 27 APVs and 1 Aircraft in a Day: Kyiv - Newsweek
- 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
- China, Japan and South Korea Hold Regional Summit – Reuters
- What is the EU Election? A Beginner’s Guide – Politico
- North Korea Satellite Images Raise New Nuclear Fears – Newsweek
- Papua New Guinea Landslide Buried More Than 2,000 People, Government Says - Reuters
- Nations Vie for Electronic Warfare Superiority - Naval Technology
- China Launches 'Punishment' Military Drills Surrounding Taiwan – Nikkei Asia
- Haiti Health System on Verge of Collapse, UN Says - BBC
- Nickel Industry Takes a Hit from New Caledonia Unrest – Nikkei Asia
- European Central Bank Carefully Approaching Its Easing Cycle – Wells Fargo
Policy and Politics
Albany Update: High-Profile Bills are Stalled in the Assembly
State Senate Majority Leader Andrea Stewart-Cousins told reporters in May that she and Assembly Speaker Carl Heastie have been able to work together on passing legislation and finding compromises to push bills over the finish line. “It’s certainly not like we don’t find ways to talk together and make sure that good law happens,” Stewart-Cousins said. She was responding to a question about why it was unclear if a package of sexual assault bills would pass the Assembly given the Democratic supermajority. With just days left in the session, a lack of collaboration could leave some bills as unfinished business when June 6 and the end of the session rolls around.
For example, the NY HEAT Act, passed in successive years by the state Senate, has yet to secure support in the Assembly after dying in the lower chamber last year. The bill would cap utility bills for lower-income New Yorkers at 6% of their annual income and eliminate a subsidy for utility companies that incentivize new gas hookups. It was left out of budget negotiations this year by the Assembly, amid intense pushback from the natural gas industry. Other bills like the Climate Superfund Act, which would make fossil fuel companies contribute to funding for climate change necessitated infrastructure, or the Fashion Workers Act, which would expand workplace protections for models and regulate management companies, add to a list of bills that the Assembly has chosen to not take up after being approved by their Senate colleagues.
DiNapoli: IDA Projects Reached a Record High Value of $132 Billion in 2022
New York's local Industrial Development Agencies (IDAs) reported 4,320 active projects with a record high total value of $132 billion in 2022, an increase of $5 billion (3.9%), from 2021, according to State Comptroller Thomas P. DiNapoli’s annual report. DiNapoli’s report summarizes the most recent annual data, which is self-reported by IDAs through the Public Authorities Reporting Information System.
“IDAs were created to help grow local economies, businesses and job markets,” DiNapoli said. “The tax breaks they provide businesses can impact local tax collections, however, and New Yorkers should be mindful about weighing the benefits these projects bring to their communities against their cost.” Total tax exemptions for IDA projects in 2022 amounted to nearly $2 billion, up $63 million, or 3.3%, over 2021. Property tax exemptions represented $1.7 billion, or 87.5% of total tax exemptions. Almost $854 million was collected through payment in lieu of taxes (PILOT) agreements in 2022. Net tax exemptions (total tax exemptions minus PILOTs) totaled approximately $1.1 billion, an increase of 4.3% from 2021 and nearly double the $555 million in 2012.
Read more at The Comptroller’s Website
OSHA Issues Final Rule on HazCom Standard
On May 20, 2024, the Occupational Safety and Health Administration’s (OSHA) announced a final rule updating the Hazard Communication Standard (HCS). The amended rule (29 CFR 1910) better aligns with the United Nations’ Globally Harmonized System of Classification and Labelling of Chemicals (GHS). The HCS requires employers to provide information to their employees about the hazardous chemicals to which they are exposed, by means of a hazard communication program, labels and other forms of warning, safety data sheets (SDSs), and information and training, also known as the “right-to-know” regulation.
The amended rule (1) revises criteria for classification of certain health and physical hazards; (2) revises provisions for updating labels; (3) provides new labeling provisions for small containers; and (4) provides new provisions related to trade secrets and technical amendments related to the contents of SDSs, including requiring a specified 16-section format for SDSs. The updated standard makes changes to help ensure trade secrets no longer prevent workers and first responders from receiving critical hazard information on SDSs. Employers who use chemical products that have SDSs will also have to update their training and chemical hazard communication programs for workers. While the regulation goes into effect on July 19, 2024, OSHA is giving chemical manufacturers, importers and distributors from January 19, 2026 to July 19, 2027, to comply with the new rules, depending on if they are evaluating substances or mixtures.
Read more at Bond Schoeneck & King
Health and Wellness
Influencers Are Saying Sunscreen Causes Cancer. They Are Wrong.
Some wellness influencers tout the sun’s natural healing powers. Others tell their followers to make homemade sunscreen or that sun protection prevents people from producing the vitamin D that they need. Consuming seed oils is what really causes sunburns, some say. In fact, sunburn is caused by the sun, dermatologists confirmed. Sensibly using sunscreen is far safer than excessive sun exposure, they said. Broad-spectrum sunscreen protects skin from ultraviolet radiation that can cause sunburn, skin cancer and signs of aging. Health agencies in the U.S. and elsewhere list sunscreen as crucial in preventing skin cancer.
Cosmetic chemist Michelle Wong, who debunks misconceptions about sunscreen under the online handle “Lab Muffin Beauty Science,” said myth-busting has become a full-time job. In a recent 46-minute YouTube video, Wong breaks down claims that sunscreen doesn’t help prevent skin cancer and that seed oils cause sunburns. The long, obscure names of sunscreen ingredients can help people conclude they are nefarious, Wong said: “Sort of like stranger danger, essentially.”
NYS COVID Update
The Governor updated COVID data for the week ending May 24th.
Deaths:
- Weekly: 12
- Total Reported to CDC: 83,324
Hospitalizations:
- Average Daily Patients in Hospital statewide: 498
- Patients in ICU Beds: 47
7 Day Average Cases per 100K population
- 3.5 positive cases per 100,00 population, Statewide
- 3.9 positive cases per 100,00 population, Mid-Hudson
Useful Websites:
Election 2024
- Nikki Haley Says She Will Vote for Trump in 2024 Election – Washington Post
- Senate Rankings: 10 Seats Most Likely to Flip – The Hill
- Trump and DeSantis Put an Often-Personal Primary Fight Behind Them - AP
- Ohio Governor Calls Special Session to Pass Legislation Ensuring President Biden is on 2024 Ballot - AP
- 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
Sudden Container Crunch Sends Ocean Freight Rates Soaring
A perfect storm in global trade is creating a shipping container capacity crunch, fueling a sudden and surprise spike in ocean freight rates. The beginning of peak shipping season, coupled with the longer transits to avoid the Red Sea, and bad weather in Asia, have hit the flow of trade on key routes. Ocean carriers are skipping ports or decreasing their time at port, and not picking up empty containers, in an effort to keep vessels on track for delivery.
Spot rates had fallen after the sharp rise triggered by Red Sea tensions in early 2024, but since the end of April they began spiking by as much as $1,500, on average, on routes to the U.S. coasts, and now some of the highest contract rates charged by shippers are over double the rates of just a month ago. MSC, the world’s largest ocean freight company, announced new rates of $8,000 to $10,000 for 40-foot containers to the U.S. West Coast, valid from May 15-May 31.
German Business Outlook Improves as Economic Momentum Builds
On Monday the Ifo Institute, a German economic think-tank, published its business-climate index. The monthly gauge of corporate optimism fell to 89.3 in May, down from 89.4 in April (100 equals the average for 2015). German businesses have been under a cloud recently. The country’s growth has lagged behind the rest of Europe's for several years. Heavy dependence on Russian gas left Germany exposed when flows were cut off after the invasion of Ukraine. Meanwhile the manufacturing sector, famed for producing high-quality cars, faces competition from Chinese electric vehicles. And automakers worry they may be excluded from the lucrative Chinese market as Europe attempts to “decouple”.
But confidence could be returning. Energy prices have fallen and the economy is picking up. The Ifo’s expectations index, which captures firms’ projections for the next six months, rose to 90.4 in May, up from 89.7 in April.
Here’s Where the Last $6 Billion in CHIPS Act Semiconductor Award Money is Going
The rollout of the Biden administration’s CHIPS Act award money has so far focused on providing major awards for major companies, with just four leading-edge semiconductor manufacturers receiving the lion’s share of the $33 billion that has been allocated to this point. Now, with $6 billion remaining, the focus is shifting to sending smaller awards to smaller companies—dozens of them, up and down the supply chain. The goal, government officials and industry experts say, is to leverage the remaining grant money to lure in as much private investment as possible, while boosting supply chain resilience and economic security by funding U.S.-based facilities in areas like materials and packaging.
That means funneling investments to both upstream suppliers – companies providing materials and equipment, for example – and downstream players, such as those involved in the advanced packaging that takes place after a semiconductor is produced. Michael Schmidt, director of the CHIPS Program Office at the Commerce Department said some current mature technologies, also known as legacy chipmakers, will likely be in line for a piece of the remaining funds as well.
Port Authority Approves Two Major Airport Hangar Projects Totaling $119 Million at Stewart International Airport
The Port Authority of NY & NJ (PANYNJ) has approved leases for two corporate jet hangar projects at New York Stewart International Airport (SWF) totaling over 300,000 square feet of development and $119 million in capital investment. SWF Development, LLC (SWFD), a development consortium composed of Sky Harbour, LLC, MJJ Builders, Corp and Passero Associates will construct approximately 13 corporate jet hangars totaling 182,000 square feet and Aviation Facilities Company Management, LLC (AFCO) will construct two hangars totaling 125,000 square feet. These projects have the potential to create hundreds of good-paying permanent and construction jobs in Orange County.
Maureen Halahan, President & CEO of the Orange County Partnership said, "The Port Authority's investment in New York Stewart International Airport is an investment in our future, creating jobs and new opportunities throughout the region. This will be a catalyst for economic development projects at SWF for many years to come. We applaud the Port Authority of NY & NJ Board of Directors for supporting these significant projects, positioning Orange County as a leader in the aviation sector in the State of New York."
Read more at The Orange County Partnership
NOAA's 2024 Hurricane Season Forecast Says Record Number of Predicted Storms in Atlantic
The start of the 2024 Atlantic hurricane season is just over a week away, and federal forecasters Thursday predicted an "extraordinary" season with as many as 25 named storms possible. This is the most storms the National Oceanic and Atmospheric Administration has ever predicted in a preseason outlook. "All the ingredients are in place for an active season," said National Weather Service director Ken Graham at a news conference in Washington, D.C.
Specifically, NOAA is forecasting a range of 17 to 25 total named storms (winds of 39 mph or higher). Of those, 8 to 13 are forecast to become hurricanes (winds of 74 mph or higher), including 4 to 7 major hurricanes (category 3, 4 or 5; with winds of 111 mph or higher). Previously, the record number of storms predicted in a preseason outlook from NOAA had been "14 to 23 named storms," back in 2010, according to Erica Grow Cei, a spokesperson for the National Weather Service. Other top forecasters are also predicting an unusually active season. Colorado State University's hurricane forecasting team, led by Phil Klotzbach, predicted 23 total named storms and 11 hurricanes in its April forecast. That's the highest number of hurricanes ever predicted in an April forecast by Colorado State since the team began releasing predictions in 1995.
DuPont Announces Plans to Split into Three Public Companies, Names New CEO
DuPont de Nemours Inc. plans to break up — again. The company will separate its electronics and water units through tax-free transactions, forming a trio of publicly traded businesses in a process expected to be completed within the next two years. That’ll leave the remaining company focused more narrowly on industries such as biopharma and medical devices, with products including Tyvek and Kevlar. Once the latest split is complete, the remaining company will be the largest piece, responsible for about $6.6 billion of DuPont’s 2023 sales. The electronics business to be spun off had revenue of $4 billion last year while the water unit accounted for $1.5 billion, according to DuPont.
Splitting apart will give each new company “greater flexibility to pursue their own focused growth strategies, including portfolio enhancing M&A,” Chief Executive Officer Ed Breen said in a statement. The CEO, who returned to the role in 2020, will step down June 1, the company said in a statement. Chief Financial Officer Lori Koch assumes the CEO post. Breen earlier engineered multiple breakups while CEO of Tyco International: a 2007 deal that created TE Connectivity and Covidien, and a later one to divide the remaining company into three businesses.
Nearshoring Continue Boosting Cross-Border Trucking with Mexico
With ongoing economic tensions between the United States and China, companies looking to relocate parts or all of their supply chains continue to look to Mexico, according to data compiled by Uber Freight. The managed transportation and freight technology provider recently released its “Q2 Market Update & Outlook Report,” which discusses the biggest economic trends impacting supply chains. The report sees continued resilience in cross-border trade between the U.S. and Mexico, boosted by nearshoring.
“The nearshoring continues to bring new companies to Mexico,” Ben Enriquez, Uber Freight’s head of Mexico logistics and customs, told FreightWaves. “What we’re seeing right now is that there are a lot of companies that are still being established in Mexico.” According to Mexico’s secretary of the economy (SE), there were 378 foreign direct investment (FDI) announcements last year, totaling over $6.4 billion. Private sector businesses from the U.S. were the top investors in Mexico, accounting for 38% of FDI. China was ranked second at 12%, followed by Denmark (9%), Australia (7%) and South Korea (6%).
Planemakers Lead Study of Sustainable Fuel Effects
Boeing and Airbus are heading an initiative by the International Aerospace Environmental Group to evaluate technical issues related to the compatibility of using sustainable aviation fuel in commercial aerospace. SAF is considered an option for reducing carbon emissions for current aircraft propulsion systems, because the global industry has committed to achieving net-zero CO2 emissions by 2050.
Work Group 13 is the body IAEG has formed to conduct the evaluation of SAF. Led by Boeing and Airbus as deputy leader, the group includes Dassault Aviation, GE Aerospace, Pratt & Whitney, Rolls-Royce, and Safran, among others. Each of the participants has conducted or participated in separate efforts to evaluate SAF use. Sustainable aviation fuel (SAF) is jet fuel produced from waste oils derived from biological sources (e.g., cooking oil, other non-palm waste oils from plants, agricultural residue, or non-fossil CO2), or solid waste from homes or businesses (e.g., packaging, paper, textiles, food waste.) Currently, commercial aircraft are certified to operate on a maximum of 50% SAF blended with conventional jet fuel, though aircraft and jet-engine manufacturers have made commitments to increase the effective applicability of the alternative fuel.
Read more at American Machinist
Newburgh’s San Miguel Academy has Two Graduates Accepted to the United States Naval Academy
San Miguel Academy is proud to announce that Christopher Recinos and Christian Recinos were accepted to the United States Naval Academy. Christopher and Christian each received Congressional Nominations from Representative Pat Ryan of New York District 18. After graduating from San Miguel Academy in 2020, Christopher attended The Mount Academy in Esopus, NY. and Christian attended Suffield Academy in Suffield, CT. Both young men have been dedicated student-athletes and exemplary community members.
San Miguel Academy is a small independent middle school in Newburgh, NY, founded in 2006 to break the cycle of poverty through education. Christopher and Christian will join the ranks of many San Miguel Academy alumni who have gone on to serve their country either through ROTC or enlistment. Currently, two San Miguel Academy graduates are serving as commissioned naval officers in the Pacific fleet. Several others are reservists, some of whom have been called to active duty for extended periods.