Member Briefing October 28, 2024
NAM Outlook Survey: Manufacturer Sentiment Declines
Manufacturer sentiment fell in the third quarter of this year, according to the NAM’s Q3 2024 Manufacturers’ Outlook Survey, out Wednesday. Results of the survey, which was conducted Sept. 5–20, reflect “preelection uncertainty,” NAM President and CEO Jay Timmons said—but also larger economic concerns. Key findings: Notable data points from the survey include the following:
- Some 62.9% of respondents reported feeling either somewhat or very positive about their business’s outlook, a decline from 71.9% in Q2.
- A weaker domestic economy was the top business challenge for those surveyed, with 68.4% of respondents citing it.
- Nearly nine out of 10 manufacturers surveyed agreed that Congress should act before the end of 2025 to prevent scheduled tax increases on manufacturers.
- The overwhelming majority—92.3%—said the corporate tax rate should remain at or below 21%, with more than 71% saying a higher rate would have a negative impact on their businesses.
- More than 72% said they support congressional action to lower health care costs through the reform of pharmacy benefit managers.
“When policymakers take action to create a more competitive business climate for manufacturers, we can sustain America’s manufacturing resurgence—and strengthen our can-do spirit,” Timmons said. “This administration and Congress—and the next administration and Congress—should take this to heart, put aside politics, personality and process and focus on the right policies to strengthen the foundation of the American economy.”
S&P Flash Manufacturing PMI Rises To 47.3 In October, Still Contracting
Manufacturing output fell for a third successive month in October, though the rate of decline moderating to the slowest recorded over this period. However, while new orders also fell at a reduced rate, the rate of loss of orders remained steep, with weaker than anticipated sales also often having caused an unplanned rise in unsold stock levels. Inventories of finished goods consequently rose for a fourth successive month, keeping the forward-looking orders-to-inventory ratio at one of the lowest levels seen since the global financial crisis to signal further near-term production weakness.
Looking further ahead, having slumped to a 23-month low in September, optimism about output in the coming year rebounded sharply in October, hitting a 29-month high. The shift in sentiment underscores the unusual volatility of the current business and political environment as the US Presidential Election nears. The boost to confidence in October was often a reflection of hopes that paused spending and deferred decisions ahead of the election will lift once the political situation is clarified. Prospects of lower inflation, lower interest rates and stronger economic growth in 2025 also helped instill greater confidence. Future optimism struck a 16-month high in the service sector and a nine-month high in manufacturing.
Durable Goods Orders Slip More Than Expected In September
New orders for durable goods fell 0.8% M/M to $284.8B in September, a bigger drop than the -0.5% expected, falling for three of the last four months. August's number was revised down to -0.8% prior from -0.0%, the U.S. Census Bureau said on Friday. Transportation equipment, which also declined three of the last four months, drove the drop, falling 3.1% to $95.4B. Core durable goods, which excludes transportation, increased 0.4% vs. -0.1% expected and +0.6% prior. Durable goods, excluding defense, dropped 1.1% vs. -1.3% prior. Non-defense orders, excluding aircraft, increased 0.5% vs. -1.3% prior. Shipments of manufactured durable goods fell 0.6% to $287.3B in September, the second straight decline, with transportation equipment sliding 2.4% to $94.4B, the U.S. Census Bureau said.
Once you cut through the aircraft-related volatility in durable goods, the environment reveals demand conditions may be beginning to stabilize. With the direction in rates now clearly lower and the U.S. presidential election soon behind us, businesses may soon have the certainty they need to support capital investment.
Global Headlines
Middle East
- Israel And Hamas: The Latest News – The Guardian
- Five Things To Know About Israel’s Attack On Iran - AP
- Israeli Strikes on Iran Expose Gap in Prowess Between Two Arch Foes - WSJ
- One Dead, Dozens Injured After Truck Hits Israel Bus Stop - BBC
- Satellite Images Show Damage From Israeli Attack At 2 Secretive Iranian Military Bases - AP
- Israel Offered Hamas Leaders Safe Passage Out of Gaza for Hostages’ Freedom - WSJ
- Blinken Urges Diplomatic Resolution To Israeli-Hezbollah Conflict - VOA
- Israeli Strike Kills Three Journalists in Lebanon: Reports - Newsweek
- 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
- Russia Provided Targeting Data for Houthi Assault on Global Shipping - WSJ
- Russia Suffers Third-Greatest Single Day Loss of Troops in Ukraine: Kyiv - Newsweek
- Russia’s Red-Hot Economy Passed Its Peak With Future Unclear - Yahoo
- Zelensky Snubs UN Chief Guterres After His Russia Trip - BBC
- Is Europe Underestimating The Role Of North Korean Troops In Ukraine? - Forbes
- North Korean Soldiers Arrive on Russia’s Front Line. How Ready Are They to Fight? - WSJ
- 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
- Japan's Ruling LDP Coalition Loses Majority For First Time Since 2009 – BBC
- Chinese EV Battery Maker SVOLT To Shut European Operations – Nikkei Asia
- Climate Finance To Take Center Stage At COP29 - VOA
- Chaos And Political Drama Rock Japan's Snap Election - BBC
- Fearing China's Hypersonic Weapons, US Navy Seeks To Arm Ships With Patriot Missiles - Reuters
- Decision Time For Two Countries On Future Role In Europe - BBC
- Georgian President Zourabichvili Calls For Protests After Ruling Party Wins Disputed Election – France 24
- Japan's $400bn Defense Push Stalls On Weak Yen And Capacity Constraints – Nikkei Asia
Policy and Politics
Ahead of Election Day NAM Asks US Manfuacturing Community to Help ‘Move America Forward.”
On Election Day morning, the National Association of Manufacturers will release an open letter to the next president of the United States, and they are asking seeking all manufacturing leaders to join them in sending a strong, united message. The letter reflects our commitment to helping the next president and their administration address the country’s challenges and underscores manufacturing’s role to help restore confidence in the future, strengthen trust across the country and advance the principles that have driven American innovation, economic resilience and prosperity. Harold King, President of the Council of Industry has signed the letter and he is inviting all Council of Industry Manufacturing leaders to sign as well.
In part the letter reads: “We believe in an exceptional America, and that our future is strongest when we are united. As business leaders, we have a unique responsibility to help bridge divides and advance our shared purpose. In this era of challenges and change, we are committed to working together to strengthen trust and collaboration—within our sectors and across the nation.”
Joe Biden Unveils Third Attempt at Student Loan Cancellation
President Joe Biden unveiled his third attempt at student loan cancellation with a new rule that would help borrowers who are unlikely ever to be able to repay their loans. The proposed measure, which was announced Friday, would allow the U.S. Department of Education (DOE) to proactively cancel loans for borrowers if the department determines that the borrowers have an 80 percent chance of being in default on their loans within two years. A loan is typically considered in default if a payment hasn't been made in roughly nine months.
The administration said it has the authority to implement this new rule under the Higher Education Act, which allows the education secretary to waive debt in certain cases. It also mentioned that other federal agencies often waive debts owed to them when considering factors like "good conscience" and equity. U.S. Representative Virginia Foxx, a North Carolina Republican who chairs the House Education and the Workforce Committee, called the new rule a "sham plan." Last year, the U.S. Supreme Court rejected Biden's plan to forgive up to $20,000 for millions of Americans following a lawsuit from Republican states aimed at blocking it.
IRS Announces 2025 Tax Brackets, Standard Deductions And Other Inflation Adjustments
The IRS has announced the annual inflation adjustments for the year 2025, including tax rate schedules, tax tables and cost-of-living adjustments. These are the official numbers for the tax year 2025—that tax year begins January 1, 2025. These are not the numbers that you’ll use to prepare your 2024 tax returns in 2025 (you’ll find those official 2024 tax numbers here). These are the numbers that you’ll use to prepare your 2025 tax returns in 2026.
Due to the 2017 tax reform law, there will be no personal exemption amounts in 2025. Personal exemptions used to decrease your taxable income before you determined the tax due. You were generally allowed one exemption for yourself (unless you could be claimed as a dependent by another taxpayer), one exemption for your spouse if you filed a joint return, and one personal exemption for each of your dependents—but that's no longer the case. Notably, this is one of the provisions that could be affected if the Tax Cuts and Jobs Act (TCJA) is allowed to “sunset” or expire at the end of 2025 (as the law is currently written).
Read more and see the tables and numbers at Forbes
Health and Wellness
Second Dose Of This Year's COVID Vaccine Recommended For People Age 65 And Up
Immunocompromised people and those who are age 65 or older should get a second dose of the 2024-2025 COVID-19 vaccine, according to the latest recommendations from the Centers for Disease Control and Prevention. In a statement released Wednesday, the CDC said the second dose should be received six months after the first dose. The CDC also said its recommendations allow for flexibility for those who are moderately or severely immunocompromised to consider additional doses (three or more). in consultation with their health care provider.
"Data continues to confirm the importance of vaccination to protect those most at risk for severe outcomes of COVID-19," the CDC noted in the latest release. "Receiving recommended 2024-2025 COVID-19 vaccines can restore and enhance protection against the virus variants currently responsible for most infections and hospitalizations in the United States."
NYS COVID Update
The Governor updated COVID data for the week ending October 25th.
Deaths:
- Weekly: 29
- Total Reported to CDC: 84,321
Hospitalizations:
- Average Daily Patients in Hospital statewide: 589
- Patients in ICU Beds: 61
7 Day Average Cases per 100K population
- 2.9 positive cases per 100,00 population, Statewide
- 3.3 positive cases per 100,00 population, Mid-Hudson
Useful Websites:
Election 2024
- Obama Hopes His Star Power Can Rub Off on Harris - WSJ
- Joe Rogan’s Interview With Donald Trump: Here Are The Key Moments - Forbes
- Wishing He Could Do More, Biden Fades Into Campaign’s Background - Politico
- Pennsylvania County Finds 2,500 Suspected Fraudulent Voter Applications - Newsweek
- What’s Really Behind America’s Men v Women Election - BBC
- Harris And Trump Offer Worlds-Apart Contrasts On Top Issues In Presidential Race – France 24
- Trump Holds Rally at Madison Square Garden, Harris Campaigns in Pennsylvania - WSJ
- America First Agenda: What To Know About The Project 2025 Alternative—That Trump Isn’t Disavowing - Forbes
- Trump Wants More Tariffs. Is that a Good Idea for US Manufacturing? – IndustryWeek
- Democrats Bet Big On Texas In Hope Of Flipping Cruz's Senate Seat - BBC
- Real Clear Politics General Election Polls
- Real Clear Politics Electoral Map
- Latest Polls - FiveThirtyEight
Industry News
US Consumer Sentiment Rises to Six-Month High on Rate Relief
Consumer sentiment hit a six-month high this month, buoyed by lower borrowing costs and expectations of stable inflation, according to a University of Michigan survey released Friday. Consumers anticipate 2.7% inflation in 12 months, unchanged from September and within the 2.3% to 3% range during the two years before the pandemic, Joanne Hsu, director of the university’s consumer survey, said in a statement. Long-run inflation expectations eased to 3% from 3.1% in September.
Politics is influencing the economic outlook of U.S. households, according to Hsu. The Nov. 5 “election looms large over consumer expectations,” she said. While sentiment fell 1% among Democrats, it rose 8% among Republicans, highlighting confidence their candidate will prevail, she said. The Federal Reserve, after months of falling price pressures, cut the main interest rate in mid-September by a half percentage point to a range between 4.75% to 5%.
Boeing Explores Sale of Space Business
Boeing helped put the first men on the moon. Now it wants to get out of the space race. The beleaguered company is exploring a sale of its storied NASA business, including the troubled Starliner space vehicle and operations that support the International Space Station, according to people familiar with the matter. The effort, part of a strategy by Boeing’s new Chief Executive Officer Kelly Ortberg to streamline the company and stem its financial losses, is at an early stage and might not result in a deal.
For decades, the company has worked hand-in-glove on big National Aeronautics and Space Administration programs, including the Apollo astronaut missions and creating the space station. In recent years, SpaceX has supplanted Boeing’s role as a top agency partner. NASA recently opted to have two astronauts wait months for a ride back from the ISS on a SpaceX craft after problems emerged on Starliner’s first-ever human spaceflight. Boeing is expected to keep its position overseeing the Space Launch System, some of the people said. The SLS is a huge rocket NASA is paying the company to build to start future lunar-exploration missions.
Union's Rejection Of Boeing Offer Threatens Jobs At Aerospace Suppliers
Wednesday's vote by 64% of Boeing's West Coast factory workers against the company's latest contract offer, further idling assembly for nearly all of the planemaker's commercial jets, has created a fresh test for suppliers such as Independent, which opened in 1975. Boeing's vast global network of suppliers that produce parts from sprawling modern factories or tiny garage workshops, was already stressed by the company's quality-and-safety crisis, which began in January after a mid-air panel blow-out on a new 737 MAX.
About 60% of the 2.21 million Americans who work in the aerospace industry have jobs directly linked to the supply chain, according to the U.S. industry group Aerospace Industries Association. Demand for parts has dropped, hitting suppliers after they spent heavily to meet renewed demand for planes in the post-pandemic era. How small suppliers navigate the strike, which began on Sept. 13, is expected to affect Boeing's future ability to bring its plane production back online.
Hurricane Helene Exposes a Rare-Earth Supply Chain Vulnerability
Hurricane Helene left widespread destruction in western North Carolina. One of the towns impacted is Spruce Pine, the location of the world’s largest deposit of high-purity quartz, an ingredient used in semiconductor manufacturing. Two mining companies that operate in Spruce Pine, Sibelco and the Quartz Corp., had to temporarily halt operations due to flooding and damage to infrastructure in the area. Luckily, mining operations have since resumed at one of the mines.
The global semiconductor industry is dependent on Spruce Pine as the primary source for virtually all high-purity quartz it consumes. Unfortunately, it is one of only a few places in the world where high-purity quartz is known to exist, and is where it is found in the highest quality. This episode highlights the potential vulnerability of depending on just one source of supply. The high-purity quartz is used to create silicon wafers in a process known as the Czochralski method. The quartz is used to form a crucible that contains molten silicon, from which a large silicon ingot is formed and then sliced into thin wafers that serve as the base layer for building chips. These chips ultimately end up powering all types of consumer electronics – everything from laptops to automobiles.
Coffee Price War Burns Keurig and Starbucks
Americans are pinching pennies on coffee. Some are cutting back on trips to Starbucks SBUX 0.16%increase; green up pointing triangle. Others are hunting for sales at the grocery store—or filling reusable K-Cups with their own ground coffee to save. Coffee companies have been competing for customers with discounts and coupons. That price war has dented sales for K-Cup maker Keurig Dr Pepper KDP -1.03%decrease; red down pointing triangle and for Starbucks, both of which say they are now reversing strategies.
Keurig’s U.S. coffee business dropped prices by an average of 6.3% in the latest quarter, leading to a decline in revenue of 3.6%. Keurig executives said that they weren’t satisfied with the outcome of their price promotions and that they plan to raise prices in early 2025. Sales of at-home coffee spiked in 2020, when pandemic lockdowns forced millions of Americans to work from home. Many coffee drinkers invested in espresso machines, French presses and pour-over brewers. But more recently, steep price increases have strained household budgets, prompting shoppers to look for deals.
Cleveland-Cliffs: American Steel Industry In Economic Depression
Cleveland-Cliffs, a vertically integrated steel mill operator, has seen its stock decline by more than 30% in the last six months. This fall has been primarily due to the adverse business conditions that the industry is going through. Steel prices in the U.S. have witnessed a declining trend due to subdued domestic demand, a subdued Chinese economy, as well as weak global prices. In Q2 2024, CLF revenues fell by about 15% year-over-year to $5.1 billion, due to lower price realizations for steel, as well as lower volumes. Earnings stood at about $0.11 per share.
The company’s total external sales volumes fell by about 5% year-over-year to 3.98 million net tons with average realized steel prices down 10% versus the year-ago period. Having said that, the company is making good progress with its cost cuts - having met its targets in the second quarter. CLF has a full year cost cutting target of approximately $30 per ton of steel year-on-year. The cost cut is mainly due to lower coal and iron ore costs. Additionally, the company used its operating cash flows to reduce net debt levels by $237 million, bringing it down substantially.
Air Freight Demand Largely Unfazed By ILA Port Strike
Air freight demand is returning to seasonally-adjusted norms despite the short-lived International Longshoremen’s Association strike spurring cargo backlog earlier this month. Since the potential for a strike was so widely publicized, many companies took early action to avoid possible disruptions, Marc Iampieri, global co-leader of the logistics and transportation practice at AlixPartners, told Supply Chain Dive.
Although the ports quickly reopened following a tentative wage agreement and extension of master contract negotiations, the three-day work stoppage did leave ripple effects, especially for ocean shippers. The Port of Savannah, for instance, will need extra time to “restore full fluidity,” as the strike added to the backlog spurred by Hurricane Helene’s impact in September, according to an Oct. 15 market update from Freightos. While the post-strike impact on the air cargo market may be less severe, supply chains are still expected to take up to six weeks to fully recover, according to an Oct. 2 report from Xeneta.
Read more at Supply Chain Dive
How Gen Z Is Shaping Sustainability In The Manufacturing Industry
Manufacturers by and large weren’t as worried about being eco-friendly years ago, but. Now, their mindset has shifted and broadened in a radical way thanks to Gen Z’s concerns regarding the protection and stewardship of the environment. According to a recent survey conducted by Deloitte, more than half of the organizations (many industrial) said they were transitioning to more renewable processes in the next couple of years. Nearly one-fifth admitted that this change was in response to customer demand, and more than 13% said that they were moving toward sustainability to better align with investors’ beliefs.
Gen Z is a politically active and vocal group, in part due to their digital comfort and social media familiarity. They’re used to sharing their thoughts online and holding companies responsible. This has made manufacturers realize the importance of maintaining an eco-positive reputation online. As Jeffrey Brown, co-founder of Nature Focus, aptly puts it, “Gen Z is pushing businesses to be more sustainable, and they're not just looking for quick fixes. They want real, honest action that makes a difference, not just talk. To win their trust, companies need to go beyond flashy claims and take real steps to cut emissions, source responsibly, and protect the planet.