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Member Briefing November 18, 2024

November 18, 2024

Posted By: Harold King in Daily Briefing,

Top Story

Empire Manufacturing Survey: Business Activity Grew Strongly In New York State In November

Manufacturing activity grew substantially in New York State, according to the November survey. The general business conditions index climbed forty-three points to 31.2, its highest reading since December 2021. Here are the highlights:

The new orders index climbed thirty-eight points to 28.0.
The shipments index rose thirty-five points to 32.5.
The inventories index climbed to 1.0, signaling that inventories levelled off.
The delivery times index moved up to 3.1,
The supply availability index came in at -4.1, a sign that supply availability worsened somewhat.
The index for number of employees edged down to 0.9, indicating that employment levels were little changed, and the average workweek index edged up to 6.1, pointing to a modest increase in hours worked.
The prices paid index came in at 27.8, and the prices received index was 12.4.
The index for future business activity edged down six points to a still-high reading of 33.2, with half of respondents expecting conditions to improve over the next six months.
Employment is expected to grow moderately.
Capital spending plans continued to expand.

Read More at CNN

US Industrial Production Falls. Not All Was Due to Strike and Hurricane Disruptions

October came with a strike at Boeing and hurricanes that disrupted activity, but the fact of the matter is the slump in industrial production is bigger than these one-off factors and output is not yet seeing relief from lower interest rates. In fact, a supplemental note in today's release clocked the drag from hurricanes as a drag of just 0.1 percent. It is an unfortunate commentary on the state of affairs that the best that can be said about October industrial production is that the decline of 0.3% is a bit less than the 0.4% drop that was the glum consensus expectation . Yet even this modest consolation turns out to be a hollow one after noting that last month's 0.3% decline was revised lower to report an even bigger drop in September output of 0.5%.

The Federal Reserve's base year for industrial production is 2017 and output set such that 2017=100 for the index. The October reading is 102.3. In the years since 2017, total industrial production has grown less than 3%. For manufacturing production, the backdrop is worse. The October reading there is 98.5, meaning output is actually down since 2017. The weakness here transcends politics; at its zenith during the past 15 years, manufacturing output never exceeded a reading of 102. Manufacturing production fell again in October just as it has in three out of the past four months.

Read More at Wells Fargo

PPI = 2.4% Wholesale Inflation Heated Up Again Last Month

The Producer Price Index, a measurement of average price changes seen by producers and manufacturers, rose 0.2% on a monthly basis and 2.4% for the 12 months ended in October, marking an acceleration from September, when prices ticked up 0.1% for the month and grew 1.9% annually, according to Bureau of Labor Statistics data released Thursday. Economists were expecting prices to increase, in large part due to comparisons to this time last year (base effects), when wholesale inflation slowed sharply and even registered outright price declines.

Excluding food and energy prices, which tend to be volatile, core PPI rose 0.3% on a monthly basis, marking an acceleration from 0.2% in September. Annually, core PPI heated up from 2.9% to 3.1%, the largest increase since June. Economists projected a 0.2% monthly gain and a 3% annual rate.

Read More at CNN

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Policy and Politics

House Passes GOP Critical Minerals And Geothermal Energy Bills

House lawmakers on Thursday passed Republican bills aimed at boosting critical mineral mining projects and geothermal energy operations. In a 245-155 vote, the House passed Rep. Juan Ciscomani’s (R-AZ) Critical Mineral Consistency Act of 2024, which would add the Energy Department’s critical materials to the U.S. Geological Survey Critical Minerals list. The bill would reduce confusion between the lists and give both the same energy-related benefits. For example, the USGS minerals are eligible for more extensive clean energy tax credits and financing support than those on the DOE’s list. It would also help streamline the permitting process for critical mineral mining projects, including copper.

Copper is used in renewable energy systems to generate power from solar and wind energy. Other critical minerals are also used to develop electric vehicle batteries. The United States has looked at boosting its critical mineral manufacturing as it competes with China in the clean energy sector. “With both critical minerals and critical materials playing such a key role in everything from energy to national security, we need to ensure our federal agencies are operating with the same understanding of what we need to prioritize,” Ciscomani said earlier this year. “This legislation ensures parity between critical minerals versus critical materials while bolstering America’s supply chain for strategic resources for a more resilient future.”

Read more at the Washington Examiner

With Election Over Hochul Brings Back Congestion Pricing

New York Gov. Kathy Hochul’s “indefinite” pause of congestion pricing officially ended on Thursday, five months after she abruptly halted the tolling program that's designed to fund $15 billion worth of crucial transit repairs. In a development first reported by Gothamist, the governor gave the MTA the green light to launch the tolls, which will impose a fee on drivers who enter Manhattan south of 60th Street (unless they remain on the West Side Highway, FDR Drive or the Battery Park Underpass). Hochul said the MTA will begin collecting the fees on Jan. 5.

Before Hochul hit the brakes on the original congestion fee on June 5, the MTA planned to begin charging drivers a daytime toll of $15 to enter the zone on June 30. The governor declared that price was too high — and now plans to relaunch the program with a $9 base price. Hochul’s change comes just over a week after her Democratic Party lost the White House and both chambers of Congress in an election where cost of living proved to be a key issue among voters.

Read more at The Gothamist

NLRB Overturns 40-Year Precedent

When employers tell workers that unionizing would harm employee–manager relationships, they might be violating federal law, the National Labor Relations Board ruled last week. Telling workers that a union would come between them and their bosses may violate the National Labor Relations Act because it’s an effective threat to end workers’ direct relationships with management, a majority comprising the board’s three Democrats said [last] Friday in a case involving Starbucks.

The groundbreaking decision overturns nearly four decades of precedent. In its 1985 Tri-Cast ruling, the NLRB allowed employers to tell employees that unionization would strain worker–manager relationships “so long as they didn’t explicitly or implicitly threaten employees” when doing so. The NLRB said such cases will now be decided on a case-by-case basis. The ruling will only apply to future cases, however, “allowing past communications under the Tri-Cast standard to stand without retroactive penalties”.

Read more at Jackson Lewis

Health and Wellness

Intermittent Fasting Works for Weight Loss—but Not Much Else

Intermittent fasting probably isn’t the health hack you hoped it would be. More studies suggest the tactic can help you lose weight, but likely isn’t a silver bullet for other health improvements like lowering your inflammation levels or lengthening your lifespan. And some evidence suggests fasting can make it harder to build and retain muscle. “People were hoping it was this magical thing that did amazing things for them,” says Krista Varady, a professor of nutrition at the University of Illinois Chicago who has been studying intermittent fasting for 20 years. “All it does is help people eat less.”

The popularity of intermittent fasting exploded starting in the late 2010s. The most popular type is time-restricted eating, which involves eating meals within a limited time frame each day. It’s the easiest for most people to stick to, researchers say, and can be as simple as skipping breakfast in the mornings. Early research in animals suggested it could reduce the risk of developing heart disease and certain types of cancer, and potentially even extend lifespan. But limited research in humans and lukewarm results have muted some hopes.

Read more at The WSJ

NYS COVID Update

The Governor updated COVID data for the week ending November 15^th.

Deaths:

Weekly: 24
Total Reported to CDC: 84,440

Hospitalizations:

Average Daily Patients in Hospital statewide: 389
Patients in ICU Beds: 43

7 Day Average Cases per 100K population

2.1 positive cases per 100,00 population, Statewide
2.9 positive cases per 100,00 population, Mid-Hudson

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Transition 2024

Industry News

October Retail Sales Top Estimates, September Spending Revised Sharply Higher

Retail sales rose 0.4% in October. Economists had expected a 0.3% rise in spending, according to Bloomberg data. Meanwhile, retail sales in September were revised up to a 0.8% increase from a prior reading that showed a 0.4% increase in the month, according to Census Bureau data. Auto sales drove a majority of the gains in October's reading, with sales in the sector rising 1.6%.

October sales, excluding auto and gas, rose just 0.1%, below consensus estimates for a 0.3% increase. The control group in Tuesday's release, which excludes several volatile categories and factors into the gross domestic product reading for the quarter, decreased by 0.1% in October, below estimates for 0.3% increase. However, both categories saw large revisions for September sales. Revisions showed sales in both groups increased 1.2% in September, up from a previous reading of 0.7% growth. "The underlying weakness in October’s retail sales was accompanied by an upward revision to September’s gain, suggesting that consumption growth is still going strong," Capital Economics North America economist Bradley Saunders wrote in a note to clients Friday morning.

Read more at Yahoo Finance

China Industrial Production Up Less Than Expected In October

Chinese industrial production grew at a slower-than-expected pace in October amid weak local demand. Industrial production rose by 5.3% from a year ago, missing expectations of 5.6% growth. While fixed asset investment, reported on a year-to-date basis, rose by 3.4% from a year ago, slower than the 3.5% forecast.

The weak industrial production print came as Chinese manufacturing activity remained languid through October, amid persistent headwinds from sluggish local demand and spending. This was also seen with weaker-than-expected fixed asset investment in the month, which grew 3.4% y-o-y against expectations of 3.5%. China faces increased economic headwinds from a renewed trade war with the West, given that president-elect Donald Trump has vowed to impose steep trade tariffs against the country.

Read more at Investing

China Retail Sales Beat Forecasts In October While Real Estate Slump Worsens

China on Friday reported strong growth in retail sales and a decline in real estate investment in October, signaling that the country’s recent stimulus push has already worked to bolster certain sectors of its flagging economy. Retail sales grew by 4.8% year-on-year, the National Bureau of Statistics said Friday. That was above the 3.8% forecasted in a Reuters poll, and a pickup from 3.2% growth in September.

Investment in real estate for the January to October period fell by 10.3% from a year ago, steeper than the 10.1% drop seen in the January to September period, as the country’s property slump worsens. It was the sharpest decline since a 10.9% dive was reported for the year-to-date period ending August 2021, according to official data accessed via Wind Information. Looking ahead, real estate investment will likely stabilize and recover slightly in the next 12 to 18 months, said Bruce Pang, chief economist and head of research for Greater China at JLL.

Read More at CNBC

U.S. Port, Union Talks Break Down Again Over Automation, With Two Months To Go Before Potential Strike

The United States Maritime Alliance, which represents the owners of East and Gulf Coast ports, said in a statement on Wednesday that the union position on automation is currently making a new labor deal difficult to reach, with a January 15 deadline to either reach an agreement or face another strike.USMX says the use of semi-automated cranes, already at many ports, is critical to future supply chain demands.

The International Longshoremen’s Association, which is not publicly commenting, has said in the recent past that the union wants new contract language to clearly state that “no automation means no automation.” The use of cranes with semi-automated capabilities is the stumbling block, according to sources close to the negotiations who were granted anonymity to discuss sensitive talks. Semi-automatic cranes use real-time data and positioning systems to move and identify priority containers for pickup. These cranes are operated by union workers, using a remote control in an indoor operator’s station. The union workers are not physically on the crane.

Read more at CNBC

Boeing Draws $4B Order Ahead of Restart

Boeing is showing some progress in its effort to return its 737 MAX program to active status following the seven-week strike by union workers. The best indicator of progress is a new order from Avia Solutions for 40 737 MAX 8 jets, which includes options for an additional 40 aircraft. If the order is fully subscribed for all 80 aircraft it could be worth more than $4 billion to Boeing, based on listed values for the MAX 8. Dublin-based Avia is an ACMI (aircraft, crew, maintenance, insurance) provider of commercial aircraft services for airlines and tour operators operating in more than 60 countries, including Avion Express, Smartlynx, Klasjet, Air Explore, BBN, Ascend Airways and Skytrans among others. These AOCs operate year-round in over 60 countries on behalf of various scheduled airlines and tour operators.

Boeing has nearly 6,500 orders outstanding for new 737 MAX aircraft, but its production is operating at a reduced rate due to federal oversight in place to ensure its quality and safety standards are upheld, and more recently due to the strike that halted production entirely. The lack of new aircraft is beginning to affect the service of several Boeing customers, including Southwest Airlines and RyanAir, both of which have dozens of aircraft on order and deliveries delayed. Avia Solutions Group’s new aircraft deliveries would begin in 2030.

Read more at American Machinist

Job Cuts Beginning at Boeing

About 17,000 Boeing workers were due to receive layoff notices last week as the manufacturer begins to reorganize the business in the effort to resolve its financial instability. Last month Boeing chief executive officer Kelly Ortberg issued a memo announcing a company-wide 10% workforce reduction, which is now expected to be implemented by mid-January. Boeing has not posted an annual profit since 2018, the year that the design defects in the 737 MAX first appeared. It has totaled more than $25 billion in losses since then.

The job cuts will involve executives, managers, and regular employees across the company, both Boeing Commercial Airplanes and Boeing Defense, Space and Security – but not affected will be production-level workers involved in building aircraft. That means the downsizing will not affect the estimated 33,000 workers in Washington and Oregon who recently agreed to a new labor contract and ended their nearly two-month strike. In addition to the job cuts, Boeing will delay the first deliveries of its 777X aircraft, the updated twin-engine widebody jet that Boeing has promoted as “the world’s largest and most efficient twin-engine jet.” Boeing has booked more than 500 orders for the 777X, but the deliveries were initially planned for 2021 and have been postponed several times. The first delivery for the 777X is now planned for 2026, according to Ortberg’s memo.

Read more at American Machinist

Stanley Black & Decker CFO Hints at Sale of Aerospace Unit

The leaders of Stanley Black & Decker Inc. are looking to sell parts of their business that would fetch between $500 million and $1 billion as they aim to lower the holding company’s debt ratios. Speaking to a conference Nov. 12, CFO Pat Hallinan said the most likely candidate to be divested is Stanley Black & Decker’s aerospace fasteners group. CEO Don Allan is looking to lower Stanley Black & Decker’s ratio of debt to earnings before interest, taxes and depreciation to about 2.5 times from its roughly 3 today. “That probably means divesting one asset of size,” he added, and be more likely to come from the company’s industrials group rather than its tools businesses.

Stanley Black & Decker’s industrials portfolio brings in about $2 billion in sales annually and supplies parts for customers in the automotive, aerospace and general industrial markets as well as some tools to insert those fasteners, which Hallinan told Baird analyst Tim Wojs is “a bit of a razor-razor blade model.” The auto sector accounts for roughly $1 billion of revenues each year while aerospace customers spend about $300 million annually with Stanley Black & Decker—and thus be a good candidate for divestiture.

Read more at The WSJ

U.S. Finalizes $6.6 Billion Chips Award For TSMC Ahead Of Trump Return

The U.S. Commerce Department said Friday it has finalized a $6.6 billion government subsidy for Taiwan Semiconductor Manufacturing Co’s U.S. unit for semiconductor production in Phoenix, Arizona. The binding contract - after a preliminary agreement announced in April - is the first major award to be completed under the $52.7 billion program created in 2022. It comes just weeks before President-elect Donald Trump, who criticized the program, takes office.

The Taiwanese company will produce the world’s most advanced 2 nanometer technology at its second Arizona fab expected to begin production in 2028. TSMC also agreed to use its most advanced chip manufacturing technology called “A16” in Arizona. TSMC agreed to forgo stock buybacks for five years - subject to some exceptions - and share any excess profits with the U.S. government under an “upside sharing agreement.”

Read more at CNBC

Satellite Startup Akash Systems To Receive $18.2M In CHIPS Funding

The Biden-Harris administration offered Akash Systems up to $18.2 million in proposed CHIPS and Science Act direct funding, the National Institute of Standards and Technology announced on Wednesday. The money would support the construction of a 40,000-square-foot cleanroom space within an existing building and transform it into a facility for semiconductor manufacturing in West Oakland, California. The project is expected to create over 400 manufacturing and construction jobs.

Akash’s facility will focus on diamond cooling technology — which combines synthetic diamond with materials like gallium nitride — as it aims to improve heat dissipation in high-performance semiconductors. The technology enhances the reliability and performance of microelectronics and is supposed to improve cooling in AI-focused data centers as well, the release stated. As part of the funding agreement Akash will operate under a project labor agreement, prioritizing hiring from underserved communities and unions. It will also continue its ongoing partnerships with Berkeley City College, Laney College and Northeastern University Oakland, according to the release.

Read more at Manufacturing Dive

Honda Receives FAA Green Light to Begin Flying Hybrid-Electric Aircraft

A spokesperson for Honda Aircraft Co., a subsidiary of the automobile giant, told FLYING the FAA granted an exemption to Honda Research Institute (HRI) to fly a subscale test model of the hybrid-electric VTOL concept it announced in 2021. According to the exemption, which was shared with FLYING by the FAA, testing will be conducted HRI's facility in San Luis Obispo County, California. The hybrid-electric concept will include a gas turbine hybrid power unit intended to extend its range compared to all-electric models. According to Honda, it will be able to cover 250 sm (217 nm) when fully fueled, allowing it to fly city to city. Formula 1 technology has been incorporated throughout the design, including the engine system and airframe.

Fellow automaker Hyundai took a similar path with the formation of its VTOL air taxi subsidiary Supernal in 2020. Toyota and Stellantis, meanwhile, have signed manufacturing agreements with and invested in VTOL aircraft developers Joby Aviation and Archer Aviation, respectively.

Read more at Flying

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