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Member Briefing November 13, 2024

November 13, 2024

Posted By: Harold King in Daily Briefing,

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NFIB: Small Business Optimism on the Rise in October

The NFIB Small Business Optimism Index rose by 2.2 points in October to 93.7. This is the 34th consecutive month below the 50-year average of 98. The Uncertainty Index rose seven points to 110, the highest reading recorded. A seasonally adjusted net negative 20% of small business owners reported higher nominal sales in the past three months, the lowest reading since July 2020. Key findings include:

A net negative 20% of all owners (seasonally adjusted) reported higher nominal sales in the past three months, down three points from September and the lowest reading since July 2020.
Seasonally adjusted, a net 31% reported raising compensation, down one point from September. The last time it was this low was April 2021.
The net percent of owners expecting higher real sales volumes rose five points to a net negative 4% (seasonally adjusted), the highest reading of this year.
A net 5% of owners reported paying a higher rate on their most recent loan, down seven points from September and the lowest reading since January 2022.
Thirty-five percent (seasonally adjusted) of all owners reported job openings they could not fill in the current period, up one point from September.
Twenty-three percent of owners reported that inflation was their single most important problem in operating their business (higher input and labor costs), unchanged from September and remaining the top issue.

Read More at The NFIB

Improvement in US Machine Tool Orders

Strong demand by U.S. contract machine shops drove the value of new orders for CNC machines to $450.6 million during September, according to AMT - the Assn. for Manufacturing Technology. The result is a 24.0% rise over the August order total and 14.6% over September 2023. The September result brought 2024 year-to-date new order volume to $3.35 billion, which is still -7.7% lower than the nine-month total for 2023. For AMT, the September update of its U.S. Manufacturing Technology Orders report showed 2024’s highest monthly level of demand for CNC machinery, and 5.1% higher than the average September order volume. T

The contract machine shops (often called “job shops”) are the largest market segment for CNC machines, and their September demand level was the highest recorded since March 2023. AMT noted that these shops are a bellwether for the industry as a whole, “as sudden demand from this segment indicates that OEMs are increasing orders from them to meet additional needs on capacity. Demand from aerospace manufacturers declined by nearly a third from August, apparently as a result of the strike by Boeing machinists during September, and this is likely to continue into the October USMTO report. Automotive sector demand improved in September, with automotive transmissions manufacturers turning in their highest volume of orders since August 2023.

Read More at American Machinist

Panama Canal Says Shipping Rebound Is Underway After Record Drought

After two years of record drought conditions amid a challenging El Nino weather system which decimated vessel transits, the Panama Canal is experiencing a trade rebound. Ricaurte Vásquez, administrator of the Panama Canal Authority, tells CNBC the canal has changed its business model to optimize water usage and improve forecasting in an effort to restore certainty and reliability, introducing a new long-term booking system and planning to make a decision on a potential dam project early next year.

The canal is critical to the U.S. economy and trade. The U.S. is the largest user of the Panama Canal, with total U.S. commodity export and import containers representing about 73% of Panama Canal traffic, and 40% of all U.S. container traffic traveling through the Panama Canal every year. In all, roughly $270 billion in cargo is handled annually. The Panama Canal’s move to a fully booked system has resulted in an increase in the average vessel size, allowing more containers to go through the canal on fewer vessels, and saving water and helping to reduce wait times. This strategy led to a windfall of between $400 million-$450 million in the fourth quarter.

Read more at CNBC

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Policy and Politics

NYC Congestion Pricing Could Start By End Of 2024 As Gov. Hochul Aims For Cheaper Tolls

Gov. Kathy Hochul is moving forward with a plan to "unpause" congestion pricing soon by lowering the proposed New York City toll rates by 40%, sources tell CBS News New York. The governor told lawmakers and the MTA she intends to turn on the toll collection cameras that surround Manhattan's Central Business District. Hochul wants congestion pricing to become a reality and drivers to start paying by the end of the year, multiple sources said.

Hochul told MTA officials that drivers would pay $9 instead of $15 once congestion pricing begins, sources said. New York City, state and federal officials have to give the green light before congestion pricing tolls can be collected. The MTA would also have to approve the lower rates. Republican lawmakers are vowing to delay the plan until President-elect Donald Trump assumes office. "It's still a cash grab. It's still a tax on hard working New Yorkers. We should not have to pay an additional toll to enter the city, center of the city in which we live," said Staten Island Republican Congresswoman Nicole Malliotakis.

Read more at CBS News

The Sickest Patients Are Fleeing Private Medicare Plans—Costing Taxpayers Billions

A Wall Street Journal analysis of Medicare data found a pattern of Medicare Advantage’s sickest patients dropping their privately run coverage just as their health needs soared. Many, like Greene, made the switch after running into problems getting their care covered. Plans run by the private insurers in the Medicare Advantage system are supposed to offer old and disabled people the same benefits they would get from traditional Medicare. The plans can be a bargain for people because they limit out-of-pocket expenses and often offer extra benefits such as dental care.

As recipients get sicker, though, they may have more difficulty accessing services than people with traditional Medicare. That’s because the insurers actively manage the care, including requiring patients to get approval for certain services and limiting which hospitals and doctors patients can use. People in the final year of their lives left Medicare Advantage for traditional Medicare at double the rate of other enrollees from 2016 to 2022, the Journal’s analysis found. Those private-plan dropouts—300,075 during that time span—often had long hospital and nursing-home stays after they left, running up large bills that taxpayers, not their former insurers, had to pay.

Read more at The WSJ

FAFSA Fiasco Changed Composition of First-Year Classes at Most Private Colleges

Nearly three-quarters (74 percent) of private nonprofit colleges said that the federal-aid crisis changed the composition of their incoming classes this fall, according to the results of a new survey released on Friday. Nearly half (49 percent) of respondents indicated that problems with the Free Application for Federal Student Aid, or FAFSA, made their freshman class “more difficult to fill.” Forty-four percent of colleges that responded to the survey said that their incoming classes were smaller this fall compared with 2023. About a fifth (22 percent) said they enrolled fewer incoming students receiving financial aid. And 11 percent said their first-year class was less racially and ethnically diverse.

The findings come from the National Association of Independent Colleges and Universities (NAICU). Its survey, which includes responses from 251 institutions, or roughly 15 percent of the organization’s membership, provides a snapshot of how the FAFSA crisis affected enrollment and financial-aid outcomes following months of processing delays, technical glitches, faulty federal data, and coast-to-coast frustrations.

Read more at The Chronicle of Higher Ed

Health and Wellness

NIH Got $1.6 Billion For Research Into Long COVID. Where Are The Treatments?

It was already becoming clear then, in spring of 2020, that COVID could cause serious, lasting issues, including debilitating fatigue and brain fog, among many other symptoms. Because there was so much attention on COVID at the time, McCone said, “there was a lot of hope about the response to long COVID, I think, the first two years.” Then in late 2020, Congress allocated over $1 billion to the National Institutes of Health for long COVID research. “There was this feeling that we’re going to have answers here in a few years,” he said.

“There’s been a lot of disappointment in terms of the program moving slowly and also focusing a lot on the kind of observational side of things,” said Betsy Ladyzhets, co-founder and managing editor of the Sick Times, a nonprofit news site focused on long COVID. Most of the research money has gone into trying to learn more about what long COVID is — into clinical research, data collection and analysis and studies of electronic health records. “Rather than what many people in the patient community and also the research community really want, which is focus on treatments, clinical trials,” Ladyzhets said. There’s good reason for the focus on observational research, according to Dr. Serena Spudich, a neurologist and researcher at Yale who’s working with the RECOVER program.

Read more at Marketplace

Transition 2024

Industry News

Airbus Defends Free Trade Amid Growing Tariff Jitters

European planemaker Airbus defended free trade on Tuesday as the aerospace industry faces a growing cluster of economic tensions. The CEO of the planemaker's China operations said Airbus was "very much pro free trade" and its presence there was a showcase of good cooperation between Beijing and Europe. Trade ties between the European Union and China have been marred by a dispute over electric vehicles, while Airbus also faces a potential new transatlantic rift after Donald Trump won U.S. elections with a pledge to impose widespread tariffs.

Asked whether Airbus was worried about the possibility of tariffs arising from intensifying trade tensions between China and Europe, Airbus China CEO George Xu said the European group saw free trade as vital for global prosperity. "We’re looking forward to seeing if there is some progress in these discussions," he said, referring to ongoing talks between Beijing and Brussels over a European Union move to slap tariffs on Chinese-made electric vehicles.

Read More at Reuters

China's Hacker Army Outshines America

acking competitions in China have surged over recent years, supported by strong government backing and rising public interest, raising alarm in the U.S., where officials are warning that the widening cyber skills gap is placing America at a strategic disadvantage and posing national security risks. China has made great strides since President Xi Jinping's call for the nation to become a "cyber powerhouse" a decade ago. University programs in cybersecurity have been standardized, a National Cybersecurity Talent and Innovation Base capable of certifying 70,000 cybersecurity experts per year was established, and hacking competitions—many touting their alignment with Xi's "powerhouse" ambition—have proliferated.

"China has built the world's most comprehensive ecosystem for capture-the-flag (CTF) competitions—the predominant form of hacking competitions, ranging from team-versus-team play to Jeopardy-style knowledge challenges," the Washington, D.C.-based Atlantic Council think tank observed in a recent report. One strength the U.S. can leverage is its worldwide network of partnerships, both with friendly governments and with companies in the private sector to "fund capacity re-building programs, exchange information and develop solutions."

Read more at Newsweek

Aging Airline Fleets Raise Costs, Sustainability Concerns

Commercial airplane fleets are aging at an alarming rate, and the implications—ranging from higher maintenance, repair and overhaul costs to reduced ability to meet ambitious sustainability targets—are troubling for operators. The average age of the fleet is frequently cited as a measure of the fleet’s fuel efficiency and airlines’ maintenance spending. Since 2000, the average age has gone through several cycles. Following industry-rattling events like 9/11 and the global financial crisis, struggling airlines deferred and canceled orders for new aircraft, which resulted in faster growth spurts in the average age.

For airlines, an aging fleet increases pressure on maintenance costs. While maintenance historically represented about 10% of airline expenses, it has crept up closer to 15%, representing total spending of about $122 billion in 2023. Inflation has certainly played a role in this, but older fleets also drive nonroutine tasks during maintenance events, and parts become more difficult to source. Some airlines will be better prepared to offset this cost creep, especially those that have strong in-house MRO resources and are more open to alternative solutions. However, most airlines will find their options limited due to external restrictions from lessors and OEMs or internal restrictions related to resources or culture..

Read more at Aviation Week

Historic Drought Fuels Blazes Across Northeast As Wildfires Burn On Both Coasts Including the Hudson Valley

Firefighters on both coasts were battling wildland blazes Monday after thousands of acres burned in New Jersey amid a historic drought and after strong winds last week sent a blaze howling through Ventura County, California. The late-season fires, which come just a few weeks before the Thanksgiving holiday, are a reminder that wildfires are quickly becoming a year-round hazardin New York and New Jersey, several blazes were burning in rugged terrain parched by drought.

Three counties in New Jersey are experiencing “extreme” drought, while the rest of the state has severe or moderate drought conditions, according to the U.S. Drought Monitor at the University of Nebraska-Lincoln. "We are experiencing an unprecedented dry spell, and we are currently in historical numbers for our critical fuels, or the forest floor being dried out, and we’re seeing stuff that we haven’t seen in quite some time here in New Jersey," Chris Franek of the New Jersey Forest Fire Service said at a news conference Monday. The blazes in the Northeast have killed at least one person: Dariel Vasquez, 18, a New York Parks employee, was killed Saturday by a falling tree while he was battling a fire in Sterling Forest, in New York’s Orange County. A memorial service was scheduled at Ramapo High School on Monday. in the U.S.

Read more at NBC

Shell Wins Appeal Against Landmark Ruling That Ordered It To Slash 45% Of Its Emissions By 2030

A Dutch appeals court on Tuesday ruled in favor of oil giant Shell and overturned a landmark 2021 ruling by a lower court that ordered the company to sharply reduce its carbon emissions by the end of this decade, a major blow to activists pursuing legal measures to force companies to act on climate change. In its verdict, the Hague Court of Appeal ruled that while Shell was obliged to reduce its carbon emissions, there is “insufficient consensus in climate science on a specific reduction percentage to which an individual company like Shell should adhere.”

The court noted the company is already working to reduce its so-called scope 1 and 2 emissions, which include emissions from its operations, but said it would be ineffective to force Shell to reduce its scope 3 emissions, which cover emissions from the fuel it sells. The court said while Shell could, in theory, meet its Scope 3 target by ceasing or cutting trade in fossil fuels, other companies “would then take over that trade” and this “would consequently not result in a reduction in CO2 emissions.” The court, however, acknowledged Shell has an obligation to limit its carbon emissions based on the “human right to protection against dangerous climate change.” Tuesday’s ruling can be challenged before the Dutch Supreme Court, but it is unclear if the plaintiffs plan to do so.

Read more at Forbes

Hemlock Semiconductor Receives $325 Million From CHIPS Act To Increase Production Of Hyper-Pure Polysilicon

Hemlock Semiconductor (HSC) has signed a non-binding preliminary memorandum of terms (PMT) with the U.S. Department of Commerce. As part of the agreement, HSC will receive up to $325 million in proposed direct funding under the CHIPS and Science Act. The company, which specializes in hyper-pure polysilicon, believes that the investment will allow it to increase production capacity of hyper-pure semiconductor-grade polysilicon to serve leading-edge chip applications.

HSC plans to use the funding to build a new manufacturing facility on HSC’s existing campus in Hemlock, Michigan, dedicated to the production and purification of hyper-pure semiconductor-grade polysilicon. According to the company, the project will generate 180 new jobs for the surrounding area.

Read more at Plant Services

Boeing Delivers Fewest Planes Since 2020, Warns Factory Restart After Strike Will Take Weeks

Boeing said Tuesday that it handed over 14 jetliners in October, the fewest since November 2020, during the depths of the pandemic and the tail end of the worldwide grounding of Boeing’s 737 Max in the wake of two fatal crashes. Nine of the deliveries last month were 737 Maxes. A spokesman said workers unaffected by the strike performed the delivery procedures. Boeing’s troubles have put it further behind Airbus this year. The U.S. manufacturer handed over 305 airplanes so far this year compared with its European rival’s 559 aircraft.

As the workers return, Boeing has to assess potential hazards, restate machinist duties and safety requirements, and ensure that all training qualifications are current, a spokesman said. The company is resuming production in Washington state and Oregon for the 737 Max, 767 and 777 programs, as well as military versions of its aircraft. Boeing’s 787 Dreamliner production continued during the strike because those planes are made in a nonunion factory in South Carolina. Despite the strike pause, Boeing continued to sell dozens of aircraft in October, with 63 gross orders, two shy of September’s total. Forty of them are 737 Max 8s for the Avia Solutions Group. It also handed over 10 787 Dreamliners to LATAM Airlines.

Read more at CNBC

Thanksgiving Shopping: A Store Brand Meal Is Nearly $20 Less Than Name Brand, Report Says

While food inflation has largely slowed, some items integral to a Thanksgiving meal have seen slight increases, and some name brand options are actually less expensive than store brand options this year—though it is still overall less expensive to purchase store brand fixings, according to a new report by the Wells Fargo Agri-Food Institute. A Thanksgiving dinner for 10 people, including turkey, stuffing, salad, cranberries, dinner rolls and pumpkin pie, would cost $90 if using name brand products—a 0.5% decrease from last year—and would cost $73 if using store brand products, which is a 2.7% from last year.

Turkey, the centerpiece of most Thanksgiving meals, will cost about the same as they did last year—and while store brand turkey prices are increasing slightly and name brand turkey prices are decreasing, a store brand turkey is still the more-budget friendly option. Boxed stuffing mix is one of the food items seeing a price increase this season—due to the trailing costs of labor and transportation—with name brand stuffing up 9% compared to last year and store brand up 3%. Dinner rolls, both name brand and store brand, also saw a 3% increase this year as items across the bakery are still reeling from cost increases related to COVID-19, Wells Fargo said.

Read more at Forbes

1 In 4 Hiring Managers Say Gen Zs Cost Them A Client: Poll

One in four hiring managers are blaming Gen Z employees in customer-facing roles for losing clients due to their behaviour at work, according to a new poll from ResumeTemplates. The poll, which surveyed 1,000 hiring managers in the United States, found that 24% of the respondents believe Gen Z employees' behaviour cost them clients. This stems from wide-ranging complaints from customers on the behaviour of Gen Z employees taking on customer-facing roles, starting from an unprofessional tone to tardiness.

The findings worsen the reservations of hiring managers in recruiting Gen Zs for customer-facing roles, where unprofessionalism is also a top concern. As a result, one in eight hiring managers said they are unwilling to hire Gen Zs for customer-facing positions. "It's unfortunate that a few negative experiences could lead some managers to hesitate in hiring from an entire generation. Managers should remember that Gen Z is diverse — there are many dedicated professionals among them who excel at working with people and are eager to contribute," Toothacre said.

Read more at Human Resources Director

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