Member Briefing May 5, 2025
ISM Manufacturing Index Falls to 48.7, Employment Components Rises
The ISM Manufacturing Index fell to 48.7 in April, down a modest 0.3 points from the March report. Yet the manufacturing sector looks to have left behind its brief expansionary period experienced at the start of the year. The index fell below the mark of 50 that denotes contraction from expansion for a second straight month. Of the five major components that feed into the headline ISM, the current production index fell the most, dropping over four points to 44.0, or the lowest index reading since May 2020.
- New orders was one of the few components to increase during the month, but at 47.2 is still consistent with a contraction in orders (chart).
- The only other component to pick up was supplier deliveries, an indication of longer wait times among manufacturers.
- The employment component rose 1.8 points to 46.5 in April, but this is still consistent with layoffs in the manufacturing sector.
- Further, this tariff-induced anxiety is leading purchasing managers to report higher prices. The prices paid index inched up to 69.8 in April, which is consistent with the top-end of the pre-pandemic range.
- With tariff concerns leading to a pull forward in demand, cost pressure is building for manufacturers.
Across every industry in the report, tariffs are a top-of-mind consideration. A respondent from the food, beverage and tobacco products industry summed up the broad sentiment by noting: "The most important topic is tariffs. Risks include margin erosion due to rising operational costs and freight delays disrupting delivery timelines. Supplier relationships are strained by pain-share negotiations, and competitors are gaining share by importing from lower-tariff regions." Notably, a pull forward in demand for goods has led to some firms to look to build inventories, evidenced by the inventories component sitting in expansion for a second consecutive month. At the same time, this pull forward in demand and inventory stockpiling is putting added pressure on supply chains. As previously mentioned, the supplier deliveries component of the release rose 1.7 points to 55.2 in April, indicating that delivery times for orders are getting longer.
Employers Added 177,000 Jobs in April, and Unemployment Stayed at 4.2%
Job growth was stronger than expected in April despite worries over the impact of President Donald Trump’s blanket tariffs against U.S. trading partners. Nonfarm payrolls increased a seasonally adjusted 177,000 for the month, slightly below the downwardly revised 185,000 in March but above the Dow Jones estimate for 133,000, the Bureau of Labor Statistics reported Friday.
- A broader unemployment gauge that includes discouraged workers and those holding part-time jobs for economic reasons, or the underemployed, edged lower to 7.8.
- The labor force participation rate edged higher to 62.6%.
- The unemployment rate, however, held at 4.2%, as expected, indicating that the labor market is holding relatively stable.
- The survey of households, which is used to calculate the jobless rate, showed an even stronger gain, with an increase of 436,000 in those who reported holding jobs on the month.
- On the wage side, average hourly earnings rose just 0.2% for the month, below the 0.3% forecast, while the annual rate of 3.8% also was 0.1 percentage point less than expected and the lowest since July 2024.
- The average workweek for all employees on private nonfarm payrolls was unchanged at 34.3 hours in April. In manufacturing, the average workweek edged down by 0.2 hour to 40.0 hours, and overtime was unchanged at 2.9 hours.
- Manufacturing shed 1,000 jobs, coming in at 12,765,000 in April.
JOLTS: Job Openings Fall In March But Layoffs Decline
U.S. job openings dropped sharply in March, but a decline in layoffs suggested that the labor market remained on solid footing despite an ever-shifting tariffs policy casting a pall over the economy. Job openings, a measure of labor demand, decreased 288,000 to 7.192 million by the last day of March, the Labor Department's Bureau of Labor Statistics said in its Job Openings and Labor Turnover Survey, or JOLTS report, on Tuesday. Data for February was revised lower to 7.480 million open positions instead of the previously reported 7.568 million. The number and rate of total separations in March were little changed at 5.1 million and 3.2 percent, respectively. Total separations increased in state and local government, excluding education (+28,000) but decreased in federal government (-8,000)
In manufacturing there were 449,000 in March, Down from 513,000 a year ago but up from 445,000 in February. Hires were 319,000 in March, up from 315,000 a year ago and 318,000 in February. Total separations in the sector were 310,000 down from 338,000 a year ago and 323,000 in February.
Global Headlines
Middle East
- Iran-Backed Yemeni Houthis Launch Two Missiles Towards Israel - Reuters
- Houthi Missile Hits Near Israel's Main Airport - BBC
- Trump Threatens Sanctions On Countries That Buy Oil From Iran – The Hill
- Pentagon Chief Warns Iran Of Consequences For Supporting Houthis - Reuters
- Israel Calls Up Tens Of Thousands Of Reservists Amid Expanding Gaza Offensive – France 24
- Gaza Activists Say Their Aid Vessel Was Hit By Drones Off The Coast Of Malta - NBC
- Interactive Map- Israel’s Operation In Gaza – Institute For The Study Of War
- Map – Tracking Hamas’ Attack On Israel – Live Universal Awareness Map
Ukraine
- Here's Everything You Need To Know About The Critical Minerals The Deal – Reuters
- More American Air Defense Is on the Way to Help Ukraine - NYT
- Moscow Has Means To Bring Ukraine War To ‘Logical Conclusion,’ Putin Says - Politico
- Putin Says He Hopes There Will Be No Need To Use Nuclear Weapons In Ukraine - AP
- Two Russian Fighter Jets Destroyed By Sea Drones As Video Emerges Of Strike - Independent
- Russia And Ukraine Clash Over Ceasefire Proposals As Fighting Rages - 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
- Australia’s Labor Party, Buoyed By Anti-Trump Bump, Wins Landslide Reelection – Reuters
- A Superpower Crunch Over Taiwan Is Coming – The Economist
- Why Did The Lights Go Out In Spain And Portugal? - Politico
- Fears Of Global Instability Drive Singapore Voters Into Ruling Party's Arms - BBC
- Europe Is Racing to Build Its Own Version of the U.S. Military-Industrial Complex - WSJ
- Sudan's RSF Paramilitaries Launch First Attack On De Facto Capital – France 24
- Battle For Next Pope Is About Whether Rome Is Still The Church’s Power Base - Politico
- King Charles To Help Kick Off Carney Era In Canada, Open Parliament - Reuters
- Polls Open In Romania For Critical Presidential Election Rerun – France 24
- UN Eyes Major Overhaul Amid Funding Crisis, Internal Memo Shows – The Print
Policy and Politics
This Year's State Budget Is The Latest In 15 Years
When the clock struck midnight on Saturday, this officially became the latest budget in 15 years. Gov. Kathy Hochul may still have quite a ways to go to break the record for latest budget in state history, but if the trend continues, one never knows. Lawmakers approved Hochul’s second budget in 2023 on May 2, 32 days after the April 1 deadline. That’s still better than the latest budget in state history – which legislators passed a whopping 133 days late in 2004. After years of much improved budget timeliness under former Gov. Andrew Cuomo, it was notable when Hochul’s 2023 budget didn’t pass until May.
May 2 has rolled around again, and despite Hochul’s premature announcement Monday of a “general agreement,” the actual budget bills are still in the wind. Some big-ticket policy items – including substantial equivalency standards for private schools and a rental voucher program – are still getting finalized. And crucial funding specifics, especially for local and school aid, remain a mystery. Longtime Albany observers don’t exactly like what they’re seeing. “The worsening trend of late budgets not only damages public confidence in state government, but it also causes real headaches for local school officials who are trying to figure out state aid.
Read more at the NY State of Politics
Trump Proposes $163 Billion Cut To US Budget
U.S. President Donald Trump's administration on Friday proposed a $163 billion cut to the federal budget that would sharply reduce spending on education, housing and medical research next year, while increasing outlays for defense and border security. Trump's first budget since reclaiming office seeks to make good on his promises to boost spending on border security while slashing the federal bureaucracy. The so-called skinny budget is an outline of administration priorities that will give Republican appropriators in Congress a blueprint to begin crafting spending bills.
Non-defense discretionary spending, which excludes the massive Social Security and Medicare programs and rising interest payments on the nation's debt, would be cut by 23% to the lowest level since 2017, the White House Office of Management and Budget said in a statement. The proposal would cleave more than $2 billion from the tax-collecting Internal Revenue Service and would slice the budgets of the National Institutes of Health and the Centers for Disease Control and Prevention by more than 40%.
Lawmakers Echo Trump’s Aims With Bill to Revive U.S. Shipbuilding
A bipartisan group of legislators reintroduced a bill Wednesday to stimulate demand for hundreds of U.S.-built ships and to boost America’s ranks of shipbuilders and sailors. The Shipbuilding and Harbor Infrastructure for Prosperity and Security for America Act includes tax incentives for shipyard improvements, the establishment of a Maritime Security Trust Fund to pay for investments and a target to more than triple the number of U.S.-built vessels conducting international trade.
Resurrecting American shipbuilding won’t be easy. Each year, U.S. shipyards produce a handful of large commercial ships, compared with hundreds of vessels that are pumped out of Chinese shipyards. Shipping industry officials say U.S. ships take three times as long to build and cost at least three times more than foreign-built ships. They say a U.S. shipbuilding revival will require significant investments in yards and in training for a new generation of shipbuilders as well as generous subsidies to make American ships attractive compared with heavily-subsidized foreign yards.
Read more and watch the video at The WSJ
Political Headlines
- US Senate Rejects Bill To Rein In Trump Tariffs As Economy Contracts - Reuters
- Harvard’s Tax-Exempt Status to Be Revoked, Trump Says - WSJ
- GOP Defense Hawks In Congress Slam Trump Budget As Inadequate – The Hill
- Trump Says He Won't Remove Fed Chair Powell Before Term Ends In 2026 - Bloomberg
- Trump Makes First Judicial Nomination Since Returning To White House - Reuters
- Judge Rules Trump’s Use of Wartime Powers to Deport Venezuelans Was Unlawful - WSJ
- Trump Signs Order Cutting Funding For NPR, PBS – The Hill
- More Than 15,000 USDA Employees Take Trump’s Offer To Resign - Politico
- US Court Halts Ruling Ordering Voice Of America Employees Back To Work - Reuters
- Trump Tracker: Keep Tabs On The Latest Announcements And Executive Orders - WSJ
Swimming Just Might Be The Best Exercise Out There. Here’s Why.
While most people appreciate the health advantages that come from running, cycling, or lifting weights, fewer people understand the benefits that come from a good swim, which include muscle toning and strengthening, reduced inflammation, and boosted heart, lung, and mental health. As it turns out, propelling one's body mass through water activates numerous systems throughout the body and makes the low-impact, high-results nature of the sport second to none. It also explains why Americans make more than 300 million recreational swimming visits a year, resulting in swimming being the fourth most popular recreational activity in the country, per data from the U.S. Centers for Disease Control and Prevention.
"Swimming provides an array of specific benefits such as improved cardiovascular and respiratory fitness, improved muscle strength and endurance, improved lean body mass, lower risk of traumatic injuries such as occurs during high-impact activities, and improved mental health and well-being," says Mitch Lomax, a pulmonologist and exercise physiologist at the University of Portsmouth in the United Kingdom. The sport has the added advantage of being available to people of all ages and among those with physical limitations.
Read more at National Geographic
Industry News
Trade War Updates
- Here's What Ceos Are Saying About Trump's Tariffs And The Economy – Yahoo Finance
- The Rush to Beat Tariffs Is Distorting the Economy. There’s More to Come. - WSJ
- China 'Evaluating' US Offer To Talk Tariffs; Warns Against 'Extortion' - Reuters
- GM Cuts A Shift At Oshawa Canada Truck Plant In Response To Tariffs – Automotive News
- Port Of Los Angeles Director Talks Port Slowdown & Price Hikes – Yahoo Finance
- Temu Halts Shipping Direct From China As De Minimis Tariff Loophole Is Cut Off - CNBC
- China Says It's Evaluating U.S. Overtures For Trade Talks, But Tariffs Remain An Obstacle - Spectrum
- Trump’s Tariffs Are Lifting Some U.S. Manufacturers - WSJ
- Amid New Tariffs, Some Companies Are Listing What Customers Will Pay - Yahoo
- Why The Panama Canal Is A Big, Long-Term Prize In Trump’s Global Trade War – CNBC
NFIB Jobs Report: Labor Shortages Continue to Constrain Small Business Job Growth
NFIB’s April jobs report found that 34% (seasonally adjusted) of small business owners reported job openings they could not fill in April, down six points from March, the lowest since January 2021. Overall, 56% of small business owners reported hiring or trying to hire in April, up three points from March. Forty-seven percent (85% of those hiring or trying to hire) of owners reported few or no qualified applicants for the positions they were trying to fill. Twenty-eight percent of owners reported few qualified applicants for their open positions and 19% reported none.
Job openings were the highest in the construction, transportation, and manufacturing sectors. Job openings in the wholesale industry rose 16 points from the prior month to 36%. A seasonally adjusted net 13% of owners plan to create new jobs in the next three months, up one point from March. The percent of small business owners reporting labor quality as their top operating problem was unchanged from March at 19%. Labor costs reported as the single most important problem for business owners fell three points from March to 8%.
Construction Spending Fell Broadly In March
Construction spending fell 0.5% in March on lower spending in both the public and private sectors. Compared to a year ago, spending is up 2.8%, which is not adjusted for inflation. Private residential investment fell 0.4% in the month on weaker home improvements. Single-family construction was up 0.1%, while multifamily was flat. Mortgage rates fell slightly in March which helped boost new home buying activity. Builders were not swayed by the drop in rates; their sentiment about future activity remained pessimistic.
Private nonresidential construction dropped 0.8% across almost all categories. Manufacturing, the largest category of spending, fell 0.4% on lower transportation equipment, plastic and rubber and computer and electronics facilities construction. Computer, electronic and electrical manufacturing facilities had been on a tear since the middle of 2021, supported by the infrastructure bills and the CHIPS act, but have declined for eight of the last ten months. Data centers, which are recorded under office construction, were flat in March but still at record highs. Lack of power sources is a major obstacle to ramping up data center construction. Spending at all levels of government fell 0.2%. Losses were broad-based and showed up as lower highway and street, sewage and waste disposal, power and educational infrastructure spending.
TSMC Begins Construction On Third US Plant In Arizona As Tariffs Loom
Taiwan Semiconductor Manufacturing Company (TSMC) has begun construction on a third chip plant in Arizona, ramping up its US expansion as the Trump administration threatens further tariffs to spur American manufacturing. The world’s most advanced chipmaker announced the third phase of its US expansion the same day Commerce Secretary Howard Lutnick toured TSMC’s site, which the company called the single largest foreign investment in US history.
TSMC’s CEO said on an earnings call in April that the construction of the second plant in Arizona was already completed and the company was working on speeding up the production schedule. The company previously said that the first factory entered high-volume production in the fourth quarter of last year with yields comparable to Taiwan factories. Wei added that the third and fourth plants will use its most advanced N2 and A16 process technologies and the fifth and sixth plants will use even more advanced technologies.
Pentagon Awards Over $13B for Nuclear Subs
The U.S. Dept of Defense issued a total of $13.7 billion in contract modifications to General Dynamics Electric Boat Corp. and Huntington Ingalls Inc., Newport News Shipbuilding for construction of two FY 2024 Virginia-class nuclear submarines (SSN 812 and SSN 813), as well as funding productivity-focused updates at the respective shipyards in Groton, Conn., and Newport News, Virginia. The funding also will address some nuclear-powered vessel programs’ workforce support. About 90% of the total amount ($12.4 billion) issued by the Pentagon was assigned to the General Dynamics unit.
The two awards also include options that would raise the total value to $17.1 billion. The Virginia-class subs are fast-attack, missile-armed vessels designed for anti-submarine warfare and intelligence gathering operations. The program has been underway for over two decades, and the U.S. Navy anticipates they will replace the Los Angeles-class subs over the coming decades. Electric Boat and Newport News Shipbuilding share the lead contractor status for the new submarines, which have a current estimated unit cost of $4.3 billion. To date, 24 Virginia-class submarines have been built and 10 are under construction currently. The U.S. Navy plans for 66 vessels over the life of the program.
Read more at American Machinist
Cleveland-Cliffs Closing Steelton Facility, Hundreds Laid Off
The Cleveland-Cliffs Inc. plant in Steelton will be closing, according to LaRue Hess, president of Steelworkers Union Local 1688. A company spokesperson confirmed plans to close the facility. According to Hess, the facility will “idle” by June 30, 2025, and between 500-550 union workers will lose their jobs. The facility produces railroad rails, flat bars, and specialty blooms, and has a 150-ton D.C. electric arc furnace, among other capabilities. A company spokesperson says the closure is not related to recent tariffs, but is in response to insufficient demand and pricing in the railroad industry. Cleveland-Cliffs will also be closing its Conshohocken facility
In June, Governor Josh Shapiro and then-Secretary of Transportation Pete Buttigieg visited the facility while discussing the importance of infrastructure. Clifford T. Smith, Executive Vice President & Chief Operating Officer of Cleveland Cliffs, was also in attendance at the June event. He said since acquiring the mill in 2020, the company had made significant investments in the facility and that it was the “oldest, most continuously operated steel mill in the United States of America.”
Read more at ABC 27 Harrisburg
Bombardier's Quarterly Revenue Rises 19% On Delivery Strength, Higher Services Revenue
Canadian business jet manufacturer Bombardier reported higher first-quarter revenue on Thursday, owing to increased aircraft deliveries and growth in aftermarket services, but the company's gains fell slightly short of investor expectations. Bombardier President and CEO Eric Martel said he sees more opportunities than dangers amid the economic uncertainty kicked off by U.S. President Donald Trump's trade war with Canada and other nations. But the turmoil has softened new orders, he acknowledged.
The Montreal-based bizjet maker reported a 19% year-over-year rise in first-quarter revenue to $1.52 billion. Wall Street analysts had expected $1.56 billion in revenue, according to LSEG. It posted earnings per share of 61 cents, versus a consensus expectation of 66 cents. For the quarter ended March 31, adjusted profit was $68 million, up from $44 million during the first quarter last year. Bombardier released projections for its 2025 performance. It forecasts revenue exceeding $9.25 billion and between $500 million and $800 million in free cash flow, versus $8.67 billion in revenue and $232 million in free cash flow last year.
End Of An Era: Warren Buffett Will Ask Berkshire Board To Replace Him As CEO With Greg Abel
An end of an era was announced in Omaha Saturday as Warren Buffett said he will soon ask the board of Berkshire Hathaway to have Greg Abel replace him as CEO at year end. While Buffett is 94 and Abel was designated as CEO successor in 2021, it nonetheless came as a surprise to the thousands of admiring shareholders gathered for this year’s annual meeting to once again hear the investing legend opine on the future of the company.
In 1965, Buffett bought what was then a failing New England textile mill, and over six decades transformed the company into a one-of-a-kind conglomerate with businesses ranging from Geico insurance to BNSF Railway. Buffett is handing over his reins on a high note as Berkshire shares just reached a new peak, giving the conglomerate a market cap of nearly $1.2 trillion. The “Oracle of Omaha” said he will still “hang around” to help, but the final word on company operations and capital deployment would be with Abel, 62, currently the vice chairman of non-insurance operations for Berkshire.
EPA Outlines Steps To Address PFAS Contamination
The US Environmental Protection Agency on Monday announced a series of steps it plans to take to address per- and polyfluoroalkyl substances (PFAS). In a news release, the agency lists 21 actions across three “principles”: strengthening the science, fulfilling statutory obligations and enhancing communication, and building partnerships. Under its “strengthening the science” steps, the EPA says it will name an agency lead “to better align and manage PFAS efforts across agency programs.” It also says it will “implement a PFAS testing strategy under Toxic Substances Control Act (TSCA) Section 4 … [and] ramp up the development of testing methods to improve detection and strategies to address PFAS.”
The EPA announced stringent new limits last April for six PFAS in drinking water; those limits are being challenged in court. But at the EPA’s request, the US Court of Appeal for the District of Columbia Circuit recently paused two cases to give the agency time to review the drinking-water regulations and a separate regulation designating two PFAS as hazardous substances under the US Comprehensive Environmental Response, Compensation, and Liability Act, commonly known as the Superfund law.
Read more at Chemical & Engineering News