Member Briefing May 6, 2025
Commercial Aircraft Demand Boosts US Factory Orders In March
New orders for U.S.-manufactured goods surged in March, boosted by demand for commercial aircraft, but the momentum was expected to fizzle amid trade tensions. Factory orders increased 4.3% after a downwardly revised 0.5% rise in February, the Commerce Department's Census Bureau said on Friday. Economists polled by Reuters had forecast factory orders would surge 4.5% after a previously reported 0.6% gain in February. Factory orders advanced 3.0% on a year-on-year basis in March. The government also reported that orders for non-defense capital goods excluding aircraft, which are seen as a measure of business spending plans on equipment, gained 0.1% in March.
Commercial aircraft orders soared 139.0% in March, but the gain is unlikely to be sustained. China has ordered its airlines not to take further deliveries of Boeing planes during its trade war with the U.S. Ryanair, Europe's largest low-cost carrier, on Thursday threatened to cancel orders for hundreds of Boeing aircraft if the tariff war leads to materially higher prices. Orders for motor vehicles, parts and trailers rose 0.6% in March. Transportation equipment orders vaulted 27.1%. But orders for computers and electronic products dropped 1.3%, while those for electrical equipment, appliances and components fell 1.0%. Machinery orders edged up 0.1%.
ISM Services PMI Reaches Highest Level Since January 2023
Service sector activity quickened slightly in April with the ISM Services Index coming in at 51.6, up from 50.8 in March. The business activity index at 53.7 is still expanding, but at a slower pace than March when it registered a reading of 55.9. The other components that feed into the headline came in slightly higher than they did last month. New orders rose slightly to 52.3. Employment was still in contraction, but is now contracting at a more modest pace, and Supplier Deliveries came in at 51.3, up from 50.6 last month.
In terms of industry performance, 11 service-sector industries still report growth in April, but six industries are reporting a contraction with farming at the top of the list of those reporting decline and a respondent from that sector placing blame squarely on tariffs. In a somewhat counterintuitive development, transportation and warehousing is still seeing expansion in activity. We suspect this may reflect a last-ditch effort to move supplies and products ahead of the tariffs. On that basis, the expansion in this sector may be short-lived. While the Services ISM signals current activity is holding up, the tariff impact was evident in growing wait times and higher costs.
Fed And Powell Face 'Tug-Of-War' With Trump And His Tariffs Looming
The biggest question facing the Federal Reserve as it gathers again today is how to grapple with a tariff-related "tug-of-war" between sticky inflation and a slowing economy — as well as a president who wants looser monetary policy. How that dilemma gets resolved could mean two very different courses for interest rates in the coming months. President Trump has made his views known in recent weeks: He wants rates lowered ahead of any slowing of the economy possibly triggered by his trade policies. There is a "strong likelihood," Powell said last month, that the economy will be moving away from both of the Fed's goals for the "balance of the year, or at least not making much progress."
New reports on the economy, jobs, and inflation released last week reinforced the Fed's conundrum as it looks for patterns in the data. A GDP report showed the US economy contracted for the first time in three years to begin 2025 due largely to a rush by importers to beat the start of President Trump's tariffs. But an April jobs report released Friday also showed the labor market remained resilient even in the weeks after Trump's "Liberation Day" announcements shook markets. An inflation gauge favored by the Fed showed that price growth slowed in March to an annualized 2.6%, but it was still a hotter-than-expected 3.5% for the quarter. And both marks are above the Fed's target of 2%. Luke Tilley, chief economist for Wilmington Trust, isn't expecting much change in the Fed's stance at this week's meeting. He does expect Powell to reiterate the tension between lower growth and higher inflation.
Global Headlines
Middle East
- Window Open For Gaza Deal During Trump Middle East Visit, Israeli Defence Official Says – Reuters
- US Redeploys Pacific Warship As Iran Threat Grows - Newsweek
- Turkey And Israel Are Becoming Deadly Rivals In Syria – The Economist
- Yemen's Houthis Announce Campaign Targeting Israeli Airports - Reuters
- Houthis Warn Global Airlines After Missile Attack - Newsweek
- U.K. Probing Possible Link Between Two Suspected State-Sponsored Iranian Plots - 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
- Kim Jong Un’s Latest Gift to Russia Is Migrant Workers - WSJ
- Ukraine’s Fighters Fear Russian Attacks And America’s Ceasefire – The Economist
- Putin Opens Up On His Successor, Nuclear Weapons and Crimea - Newsweek
- Kyiv Can’t Guarantee Safety Of Foreign Leaders On May 9 In Moscow, Zelenskyy Says - Politico
- Allies Seek Deal On More Patriots For Kyiv Before NATO Summit, Source Says - Reuters
- European Allies Mull $90B Contingency for Ukraine If Trump Peace Plan Fails – 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
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Germany’s Merz Suffers Surprise Setback in Bid to Be Confirmed Chancellor - WSJ
- With Militaries Upgraded, Risks Multiply In Any Potential India-Pakistan Conflict – Reuters
- New Pope Update: Latest Odds on Who Will Replace Francis - Newsweek
- Teenage Terrorists Are a Growing Threat to Europe’s Security - WSJ
- It’s Crunch Time For The Brexit Reset - Politico
- Simion’s Romanian Election Win Sparks Right-Wing Jubilation Around Europe - Politico
- EU Announces €500 Million Package To Woo Scientists Away From Trump's America – France 24
- How Bad Is China’s Economy? The Data Needed to Answer Is Vanishing – WSJ
Policy and Politics
Will The State Budget Deliver On Hochul’s Affordability Promises?
Gov. Kathy Hochul and state Democrats identified affordability as the year’s marquee issue, and the state budget seems on pace to address that, even if it is in a much more watered-down format than Hochul had hoped. The governor has succeeded in pushing through inflation rebate checks, bumped up funding for child care vouchers, funded universal free school lunches and cut middle-class taxes. But there have been some hiccups. Her checks were pared down in size, the federal government might undercut her plan for school lunches, the housing vouchers are turning into a bargaining chip and New York City is perturbed at how she went about addressing the child care cliff.
Patrick Orecki, director of state studies at the fiscally conservative Citizens Budget Commission, views Hochul’s affordability push in this year's state budget as well-intentioned but ultimately inefficient. The tax relief could make a real impact, he said, but otherwise the benefits are spread too thin. “When we talk wasteful, thinking specifically of the inflation refund checks to send out as much as $3 billion, as proposed by the governor, in such small increments to nearly every taxpayer, it's just not going to have the benefits that are really going to change households’ finances for many of the people who receive it,” Orecki told City & State.
Bill To Shred Tons Of Regulations. They May Be Closer Than Ever.
Conservative Republicans have spent more than a decade working toward a wholesale rollback of federal regulations — and now they think they have the legislative battle plan to make it happen. Advocates of the rule-shredding proposal are seeking to give their legislation a coveted spot in the GOP’s party-line energy, tax and border security megabill, a maneuver that would defuse the filibuster threat that has repeatedly thwarted their dreams. They say they have spent the better part of the past year crafting ways to ensure their latest iteration can pass muster in the Senate.
The proposal would turn Congress into a gatekeeper for certain major rules and allow lawmakers to roll back countless regulations for the remainder of President Donald Trump’s term, drastically transforming the way the federal government oversees everything from businesses and banks to health care and energy development. The House Judiciary Committee advanced it last week as part of the Republicans’ broader budget reconciliation package — a potentially major step toward finally catapulting the deregulatory proposal to Trump’s desk.
Student Loan Collections Restart For More Than 5 Million Borrowers In Default
The U.S. Department of Education restarted collection efforts on defaulted student loans on Monday — putting millions of borrowers at risk of wage garnishment and other consequences. The federal government has extraordinary collection powers on its student loans and it can seize borrowers’ tax refunds, paychecks and Social Security retirement and disability benefits.
More than 42 million Americans hold student loans, and collectively, outstanding federal education debt exceeds $1.6 trillion. More than 5 million borrowers are currently in default, and that total could swell to roughly 10 million borrowers within a few months, according to the Trump administration. “American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies,” said U.S. Secretary of Education Linda McMahon in a statement.
- Donald Trump Plays Down 2028 Presidential Run, Talks Successors - Newsweek
- Why Trump Is Ending Enforcement Of Civil Rights Laws That Ban 'Disparate Impact' - Reuters
- Donald Trump's Response to Question on 'Due Process' Sparks Alarm – Newsweek
- States Sue Trump Administration For Blocking The Development Of Wind Energy – NY State Of Politics
- NY AG James Says She’s Suing Trump Administration Over Cuts To Health And Social Programs - Gothamist
- Trump Calls for 100% Tariff on Movies Made Overseas - WSJ
- Trump Dismisses Third Term Talk: ‘I’ll Be An Eight-Year President’ - Forbes
- Trump Tracker: Keep Tabs On The Latest Announcements And Executive Orders - WSJ
Health and Wellness
The Overlooked Skills Gap: Mental Health Training For Managers
In the last few years, mental health has risen to the forefront for HR and benefits professionals, largely driven by the pandemic’s stigma-breaking influence. Yet, while more employers are actively tending to the mental health of their workforce, those efforts could be missing the mark without one key support system: mental health training for managers. New research out this Stress Awareness Month by mental health platform Unmind on mental health workplace trends found that employees increasingly expect support from their employers.
Organizations are largely appreciating these new expectations: Last year, a full 99% of HR leaders surveyed rated the role of employee mental health to the organization’s business success as somewhat or very important, a figure that dipped slightly to 91% this year, in the survey of 2,500 respondents, including HR decision-makers, C-suite members, managers and individual contributors. Yet, despite managers being the organization’s first line of defense when it comes to protecting—or inhibiting—employee wellness, mental health training for managers remains lacking. Last year’s survey found that 28% of managers reported having no training focused on employee mental health.
Read more at Human Resources Executive
Industry News
Trade War Updates
- The 3 Steps Smart Ceos Are Taking In A Volatile Tariff Environment, According To The Head Of A Major Global Leadership Advisory Firm – Yahoo
- Global Economy Already Feeling Drag From Trump Tariffs – Reuters
- No Plans For Trump-Xi Talks, Ackman Floats China Pause – Yahoo Finance
- China’s Garment Factories Face a Tipping Point After New Tariffs - WSJ
- Trump Says He Will Not Drop Tariffs To Get China To Negotiating Table - Fox
- Trump Orders 100% Tariff On Foreign-Made Movies To Save 'Dying' Hollywood – Yahoo Finance
- Mexico Lays Out Measures To Avoid Steel, Textile Dumping - Reuters
- Taiwan Dollar Rises At Fastest Pace In Decades, Threatening Tech Profits – Nikkei Asia
Companies Are Slowing Hiring and Keeping More Jobs Unfilled
Major U.S. employers are starting to take a new approach to jobs: Hire less—or not at all. A stop-start trade war, sinking consumer confidence and dramatic cuts to federal funding in education, research and the sciences have piled up in the past month. They come on top of companies’ yearslong desire to embrace artificial intelligence to make workers more efficient. During earnings calls over the past two weeks, companies big and small shied away from mentioning layoffs, but repeatedly said they would be more cautious before bringing in new workers.
People just entering the job market or coming back to it after a break have been having a tougher time finding work in the past few months, said Brad Hershbein, an economist at W.E. Upjohn Institute for Employment Research, a think tank focused on labor markets. That can indicate a deteriorating job market since entry-level hiring is a signal of new investment and growth, he added. When companies are feeling cautious about the future, “that’s one place where they pull back first,” Hershbein said. “People are increasingly saying they’re nervous.”
Global Steel Tonnage Up, Despite Tariffs
Global raw steel production increased 12.9% from February to March, up to 166.1 million metric tons across the 69 countries tracked by the World Steel Association. The total is 2.9% higher than the March 2024 total, but the year-to-date total of 468.6 million metric tons is barely even (-0.4%) with the volume recorded for January-March 2024. And although the new data covers the period of the U.S. implementation of 25% tariffs on steel imports, on March 12, the effect is not apparent in the month’s results. The rise in global output is mainly the effect of significantly higher output in China, the world’s major exporter of steel, but the new total is in line with recent years’ rise in that country’s raw-steel production from February to March.
Steel production worldwide continues to face weak demand, and steelmakers in most industrialized regions continue to restrain any surplus tonnage that may weaken prices – as they have done for the past three years. In nearly every regional and national total reported by World Steel, the results for the first quarter of 2025 are even with or slightly less than the figures reported for Q1 2024.
Read more at American Machinist
Lockheed Completes Orion Artemis II Deep-Space Capsule
Lockheed Martin reported it has completed assembly and testing for the Orion Artemis II spacecraft, a manned mission that will flight-test NASA's deep-space exploration system around the Moon. The spacecraft has been transferred to NASA’s Exploration Ground Systems team, the defense group added. NASA's Artemis II program is scheduled for launch in April 2026 and will carry four astronauts around the moon, testing the Space Launch System rocket and Orion spacecraft with a crew for the first time.
This mission also will be a critical part of NASA's plan to establish a long-term presence on the Moon for science and exploration. According to Lockheed – which is NASA’s primary contractor for Orion, and built the crew module, crew module adaptor and launch abort system – the mission also will help advance plans for crewed missions to Mars.
Read more at American Machinist
Boeing, Airbus Wrap Up Production Of Legacy Models
How many more previous-generation Boeing and Airbus commercial jets are still to be produced? The final passenger previous-generation aircraft appears to have been delivered in 2024, but five more previous-generational passenger jets remain on the books, although it is unclear if these will ever be fulfilled. Boeing will continue making previous-generation freighter aircraft, while both Boeing and Airbus have previous-generation aircraft that have been modified for military use.
The last previous-generation Airbus A330-300 built was registered EI-EIN and was delivered to Ireland's Aer Lingus on March 4th, 2020. Meanwhile, the final Airbus A320ceo family jet (an Airbus A321-200) was delivered to Delta Air Lines on December 16th, 2021. Almost at the same time, the final Airbus A380 was also delivered on December 16th, 2021, to the Middle Eastern giant Emirates. Like Airbus, Boeing has now fully transitioned to delivering the current generation of commercial jets with one possible lingering exception. Boeing delivered its final Boeing 737 Next Generation aircraft in January 2020 as it transitioned fully to the current generation Boeing 737 MAX family. The previous generation Boeing 747 came to an end in 2023 as Boeing delivered the final 'jumbo jet' (a freighter) and shuttered the production line.
Defense Leaders, Industry Move Quickly On "Golden Dome"
Laser-toting satellites capable of taking out missiles have long been the stuff of science fiction. President Trump is asking defense contractors to make the idea a reality. Trump is looking to create a defense system that he calls the Golden Dome for America. It is envisioned to be a cutting-edge system of space and ground technology, with the goal of defending the U.S. against high-tech missile threats and potential attacks. Taking cues from Israel’s Iron Dome, defense officials want the proposed shield to stretch from sea to sea, and from the Earth’s surface to space.
Makers of aerospace equipment and weapons are already jockeying to grab a piece of the program. The Pentagon hasn’t released many details about Golden Dome, including its potential cost. Congressional Republicans proposed allocating $25 billion from this year’s budget for the project. The White House said Friday it wants to make a down payment on Golden Dome in an upcoming spending plan. Military officials say they want to move quickly to advance the program, and one agency involved has said it wants a first round of technologies for it to be demonstrated or delivered by the end of next year.
Inside The Waymo Factory Building A Robotaxi Future
About 20 minutes east of Phoenix’s airport in Mesa, Arizona, is a 239,000-square-foot factory that opened in October. Every day, it churns out several battery-powered, white Jaguar I-PACE electric SUVs loaded up with the company’s custom-designed computer, cameras, radar and laser lidar sensors on a single production line. But the plan is to dramatically scale up the pace and automate output to keep up with growth plans, said Kent Yiu, Waymo’s head of vehicle manufacturing, who previously managed production operations for Apple and General Motors.
The production scale is small compared to traditional auto plants that make hundreds of thousands of vehicles a year. But the 1,500 robotaxis Waymo has provide more than 250,000 paid rides a week or about 24 a day per vehicle, vastly more use than personal cars and trucks that are driven only a few times a day. And by the time the Mesa factory gets 10,000 Waymos on the road, perhaps in a year or so based on the current rate, the fleet could be booking 250,000 rides a day. That’s well over 1.5 million a week. At that scale, Waymo’s annual revenue could jump to $2 billion, up from a Forbes estimate of $100 million last year. The company declined to comment on those estimates.
Inside GM’s Decade-Long Battle To Revive Cadillac As The Quintessential American Luxury Car Brand
Walking into General Motors’ global design headquarters is like taking a step back in time. Much of the midcentury-modern architecture and designs have remained untouched since the space opened in the 1950s. The massive tech campus was built during a time when the Detroit automaker reigned supreme. It was GM’s so-called “Golden Era,” with its luxury Cadillac brand leading the way as “the standard of the world” — before decades of U.S. market share declines amid increased competition from BMW, Mercedes-Benz, Lexus and others. The luxury vehicle market is crucial for automakers. The vehicles have higher profit margins than their mainstream counterparts and cater to a more affluent customer that views them as much as a status symbol as a mode of transportation.
GM President Mark Reuss wasn’t alive to witness that era, but he’s harkened back to it as he and his teams have methodically overseen a product renaissance for Cadillac, which wants to regain its prominence as the American luxury brand. “There isn’t a lot of American luxury brands. There just isn’t. I think it’s time, and I’m deeply passionate about that, for GM and Cadillac to show the world what we can do,” Reuss told CNBC. Cadillac’s domestic competition has historically been Ford Motor’s Lincoln luxury brand, which sells roughly a third of the vehicles in the U.S. as its GM competitor. Other luxury brands from Germany, Japan and, more recently, South Korea have entered the market as well. All-electric vehicle competitors Tesla and Lucid Group are also in the mix.
Oil Prices Drop As OPEC+ Accelerates Output Hikes, Surplus Looms
Oil prices fell more than 1% on Monday after OPEC+ decided over the weekend to further speed up oil output hikes, spurring concerns about more supply coming into a market clouded by an uncertain demand outlook. Brent crude futures dropped by 90 cents, or 1.47%, to $60.39 a barrel by 1320 GMT, while U.S. West Texas Intermediate crude was at $57.31 a barrel, down 98 cents, or 1.68%.
OPEC+ agreed on Saturday to accelerate oil production hikes for a second consecutive month, raising output in June by 411,000 barrels per day (bpd). The June increase from the eight producers in the OPEC+ group will take the total combined hikes for April, May and June to 960,000 bpd, representing a 44% unwinding of the 2.2 million bpd of various cuts agreed on since 2022, according to Reuters calculations. Barclays and ING have also lowered their Brent crude forecasts following the OPEC+ decision. Barclays reduced its Brent forecast by $4 to $66 a barrel for 2025 and by $2 to $60 for 2026, while ING expects Brent to average $65 this year, down from $70 previously.