Skip to content

Member Briefing October 31, 2023

October 31, 2023

Posted By: Harold King in Daily Briefing,

Durable Goods Orders Jumped More Than Expected in September

Orders for longer-lasting goods rose in September by more than expected, after two months of declines, suggesting the outlook is improving for U.S. manufacturers. New orders for products meant to last at least three years, including appliances, computers, cars and other manufactured goods, rose 4.7% on month in September on a seasonally adjusted basis, to $297.2 billion, the Commerce Department said Thursday. New orders for nondefense capital goods excluding aircraft, a closely watched proxy for business investment, rose 0.6% on month to $74.46 billion, according to the data.

It compares with a 0.1% drop in August, which was downwardly revised, and a strong 5.6% drop in July. September's reading is better than expected by economists surveyed by The Wall Street Journal, who forecast a 2.0% increase. Transportation equipment, also up following two consecutive monthly decreases, led the increase, rising 12.7%, the Commerce Department said. Excluding defense categories, new orders jumped 5.8%. Stripping out transportation, new orders were up 0.5%, it said.

Read more at Barron’s

War in Israel Headlines

War in Ukraine Headlines

Manufacturing Jobs, Start-ups Increase in Q1 2023

Business Employment Dynamics: Manufacturing experienced a net increase of 17,000 jobs in the first quarter of 2023, slowing from 52,000 in the fourth quarter of 2022. Manufacturers saw gros s job gains of 419,000 in the first quarter, with 376,000 from expanding establishments and 43,000 from new establishments. At the same time, gross job losses totaled 402,000 in the first quarter, with 352,000 from contracting establishments and 50,000 from closing establishments.

In addition, the Bureau of Labor Statistics reported the formation of 7,000 manufacturing start-ups in the first quarter of 2023, the same pace as in the previous quarter. The start-up rate represented 2.1% of all establishments in the sector. Those new establishments (or “births”) employed 27,000 workers in the first quarter, down from 32,000 in the prior quarter and the slowest in two years. Overall, manufacturing start-up activity rose in 2021 and 2022 but has cooled since then, albeit at levels that remain elevated relative to pre-pandemic paces, including for employment.

Will Interest Rates Go Even Higher? Fed Meeting Wednesday Could Provide Clues

Policymakers at the central bank are widely expected to hold the Fed’s influential fed funds rate steady when they meet next Wednesday, maintaining the pressure that’s pushed typical 30-year mortgage rates up to within a hair’s breadth of 8% and car loan interest to the point where payments over $1,000 a month are becoming commonplace. The Federal Open Market Committee (FOMC) opted to keep its rate unchanged when it last met in September, after raising it to a range of 5.25% to 5.50% in July.

With the rate decision considered a foregone conclusion based on the comments of Fed officials this month, traders will closely watch the Fed’s policy statement and press conference by Fed Chair Jerome Powell for clues about whether rates will go even higher before they move lower at future meetings. “All the focus will be on the post-meeting press conference with Chair Jerome Powell, where he is likely to leave the door open to additional hikes but make clear that those are conditional on continued upward surprises to inflation and growth,” Michael Pearce, lead U.S. economist at Oxford Economics, wrote in a commentary.

Read more at Investopedia

COVID Update - A New Variant has Become Dominant Amid Slow Uptake of the Updated Shots

A new Covid variant has become dominant in the U.S., but relatively few people have thus far gotten the new shots that could offer some protection against it. The variant, called HV.1, replaced EG.5 as the country's most prevalent this week, according to data released Friday by the Centers for Disease Control and Prevention. The two variants are genetically similar versions of omicron.

HV.1 makes up around 25% of Covid cases now, up from around 1% at the beginning of August. EG.5, meanwhile, represents nearly 22% of cases, down from 24% at the start of the month. Both are descendants of the XBB variant. The updated Covid vaccines from Pfizer and Moderna, which became available last month, target a different XBB descendant, called XBB.1.5. HV.1 could be slighter better than EG.5 at spreading among people or infecting those with prior immunity to Covid — but not enough to cause alarm among scientists.

Schools and Sewers: NY Ballot Proposals This Election

Schools and sewers top NY ballot proposals this election. Both proposals will be on ballots statewide. Voters began trickling into the polls over the weekend when early voting started; it will run through Nov. 5. The general election is on Nov. 7. Neither issue has drawn any significant opposition, while some associations for municipal interests are urging “yes” votes on both measures, saying they will free up city and town officials to spend money on essential public services.

Proposal 1: The education proposition seeks approval to remove the debt limitation placed on small city school districts, which currently restricts the amount schools can spend on needs such as campus maintenance or capital projects. Proposal 2: Sewage debt: is a 10-year exemption for debt ceilings on municipal sewage treatment and disposal facilities. The state constitution limits the amount of debt that all municipalities in New York can take on for either repairing sewage plants or constructing new facilities to handle sewage. The issue comes before voters every decade, and the current exemption is set to expire in January.

Read more at The Albany Times Union

GM Deal With UAW Brings Last of Big Three Into Fold

General Motors GM 0.35%increase; green up pointing triangle became the last of the Detroit automakers to reach a new tentative labor deal with the United Auto Workers union Monday to end a strike that has spanned more than six weeks, according to people familiar with the talks. This latest accord follows tentative agreements struck last week with Ford Motor and Stellantis and is expected to bring to a close a historic union walkout that sent more than 45,000 workers to picket lines at nine U.S. factories and dozens of parts-distribution centers.

The tentative agreements at all three car companies must still be approved by UAW-represented workers in ratification votes expected to be held in the coming weeks. The terms of the GM deal couldn’t immediately be determined but they are expected to generally align with proposed contract agreements at its two crosstown rivals. GM is the largest of the Detroit Three by sales and has roughly 46,000 unionized workers in the U.S.

Read more at the WSJ

Former Industry Leader Slams Ford’s Deal with UAW: ‘This Was a Gun to the Head’

A former industry executive criticized the tentative deal struck between the United Auto Workers (UAW) and Ford earlier this week, accusing the labor union of having no regard for automakers. “First of all, this is not like other labor negotiations,” Bob Lutz, who has worked for all three of the “Big Three” automakers facing strikes, told host John Catsimatidis Sunday on “The Cats Roundtable” on WABC 770 AM. “This was a gun to the head from a government-sanctioned monopoly called the labor union.”

“And in the past, the UAW always had a realistic respect for the needs of an automobile company to stay competitive,” he continued. “This time they did not, and I think a lot of what had to be given back was exactly the same things that caused the American automobile industry to be in big trouble in ‘08.” The four-year deal features a wage increase of 25 percent during the time of the contract, with 11 percent coming in the first year. The pay raises may even lift to 33 percent via cost-of-living increases.

Read more at The Hill

DiNapoli: Local Sales Tax Collections Increase by 3.6% in Third Quarter Over Last Year

Local government sales tax collections in New York state totaled $5.9 billion in the third calendar quarter of 2023 (July - September), an increase of 3.6%, or more than $205 million, compared to the same period last year, according to a report released today by State Comptroller Thomas P. DiNapoli. This marks the second consecutive quarter of collections returning to lower pre-pandemic year-over-year growth rates.

New York City’s sales tax growth, which had been moderating since the second quarter of 2022, strengthened in the third quarter of 2023. In July-September, city collections totaled $2.5 billion, up 4.9%, or nearly $119 million, year over year. More workers are returning to the office and the number of international travelers is nearing pre-pandemic levels, although parts of the city’s economy are still recovering. Forty-three of 57 counties had year-over-year sales tax increases during the third quarter of 2023, totaling 2.4% statewide. The counties of Allegany (17.1%), Livingston (15.6%) and Saratoga (12.1%) had the strongest growth, while Lewis County (-10.2%) experienced the steepest decline.

Learn more at The Comptroller’s website

Pay Hikes in 2024: Employers Are Undecided

A report out this week from ResumeBuilder.com found that 18% of companies surveyed had not yet decided if they were going to give raises next year, and 8% won’t. While three-quarters plan to raise some salaries, at half of those companies, the raises will go to 50% or less of employees, according to a survey of 600 business leaders. Stacie Haller, chief career advisor at ResumeBuilder.com, told HRE that leadership universally understands that today’s employees expect yearly raises—and without them, productivity and retention will both take a hit. She suggests that companies considering restricting raises in 2024 may strategically be giving turnover a nudge—to avoid layoffs but still reduce headcount and costs in the ongoing uncertain economy.

Performance-based raises are the most common type of salary hike (82%) leaders are planning for 2024, although more than two-thirds of respondents say their organizations will offer cost-of-living adjustments. However, how employers assess that rate varies. For instance, the most common (32%) cost-of-living raise will be 3%, although 28% will set it at 4% and 27% at 5% or more. Twelve percent will give adjustments of 2% or less.

Read more at Human Resources Executive

US Goods Deficit Rises in September

The U.S. goods trade deficit rose from $84.64 billion in August to $85.78 billion in September. The higher trade deficit was the result of an increase in goods exports (up from $169.02 billion to $173.98 billion) that was outpaced by stronger growth in goods imports (up from $253.67 billion to $259.77 billion). Final data, which will include the service-sector trade surplus, will be released Nov. 7.

The increase in goods exports was led by strength in industrial supplies (up $1.56 billion), foods, feeds and beverages (up $1.31 billion) and industrial supplies (up $1.07 billion). Meanwhile, sizable gains in goods imports occurred for automotive vehicles (up $1.85 billion), consumer goods (up $1.78 billion), capital goods (up $1.31 billion) and industrial supplies (up $866 million).

Read more at Reuters

‘Makers’ Headline Fortune’s Fastest Growing Companies List

The biggest business trend of the last 50 years has been dematerialization. Creating economic value has become ever less about making, mining, and selling physical stuff, and ever more about software, services, and the like. But if you look at this year’s list of Fortune’s 100 Fastest Growing Companies, you may think you’ve entered a time warp. Gone are the tech companies—Amazon and Facebook are off the list this year—as well as the many finance and health care companies that dominated past lists. What’s in their place? A variety of companies that make, mine and sell physical stuff.

Builders FirstSource of Irving, Texas, is No. 1 on this year’s list. No. 2 on the list is Tesla, which of course makes cars. And then Encore Wire (No. 3). Also in the top 10 is Steel Dynamics (No. 9), which makes and recycles steel, as does Olympic Steel (No. 13) and Nucor (No. 14). Mining and oil companies also rank high, like Civitas (No. 8), Pioneer (No. 16), and Arch Resources of St. Louis (No. 18). Exxon Mobil (No. 60), Chevron (No. 57) and Conoco Phillips (No. 34) all make an appearance, as do Freeport-McMoRan (No. 68) and Winnebago Industries (No. 84). Oh yes, and Crocs comes in at an impressive No. 20, which may make you reconsider this fashion trend.

Read more at Fortune (Subscription)

Trucking Firm Prepares Long-Shot Bid for Yellow, Seeks US Treasury Support

One of the largest U.S. privately owned auto transport companies is quietly mounting a long-shot bid - with increasing interest from the Biden administration - to rescue trucking giant Yellow Corp from bankruptcy liquidation and bring back some 30,000 union jobs, according to multiple sources familiar with the discussions. The previously unreported effort by Jack Cooper Transport, a trucking company that counts General Motors, Ford and Stellantis as its main customers, has gained steam in recent weeks.

U.S. Senators including Democrat Sherrod Brown, Republican Roger Marshall and Bernie Sanders, an Independent, asked the Treasury Department in separate letters to extend the maturity date for $700 million in COVID pandemic loans given to Yellow Corp by the Trump administration in 2020, in exchange for the government taking a stake of nearly 30% in the company. The loans currently come due in September 2024. Jack Cooper's bid effort hinges largely on whether Treasury extends the payback period to 2026, allowing Jack Cooper to offer more favorable terms for Yellow.

Read more at Reuters

Report: Logistics Pros Cool on Automation Expenditures

Less than half (45.6%) of warehouse and logistics leaders see automation as necessary over the next five years, according to new research from ProGlove. The discovery from the wearable tech pioneer comes as nearly two-thirds have either already implemented or are currently implementing automation. The research polled over 1,000 Managers, Directors & C-Suite warehouse and logistics professionals across the US, UK, Germany, Italy, Spain, France, and the Nordics.

It found that just over a third (36.1%) are currently deploying warehouse automation technology. Only 16.3% successfully introduced warehouse automation within the last two years, showing the early stages of increasing adoption. An additional 30% say they are currently undertaking automation projects. However, over a third (36.9%) are not currently utilizing automation, ProGlove's research found. The remaining 27% are considering implementing the technology. Therefore, it is unlikely that automation will completely replace human workers any time soon, ProGlove added.

Read more Modern Material Handling

September Raw Steel Production Falls for Fourth Straight Month

Raw steel production declined for the fourth consecutive month in September, down -2.2% worldwide from August to 149.3 million metric tons across the 63 countries reporting to the World Steel Association. The new figure is -1.5% lower than the September 2022 total, and brings the year-to-date total for global output to 1.406 billion metric tons, nearly even (+0.1%) with the nine-month total for 2022 production. World Steel recently issued a new short-term forecast for global steel consumption, predicting that demand will grow +1.8% year-over-year to 1.814 billion metric tons for 2023.

The cuts in output have been most significant in China, the world’s largest steelmaking nation that consistently produces more the all the rest of the world combined. Chinese raw steel output declined by 4.3 million metric tons, or -5.2% from August to 82.1 million metric tons in September, which is -5.6% lower than the September 2022 result. It brings China’s YTD raw steel output to 795.1 million metric tons, which is +1.7% more than that nation’s steelmakers totaled for January-September 2022.

Read more at American Machinist

Biden Issues Sweeping Executive Order on AI

President Biden issued a highly anticipated, sweeping executive order on artificial intelligence (AI) on Monday, focused on seizing on the emerging technology and managing its risks. The executive order includes new standards for safety, including requiring companies developing models that pose a serious risk to national security, economic security or public health to notify the federal government when training the model, and they must share the results of all safety tests. The Commerce Department will also develop guidance for content authentication and watermarking to label AI-generated content.

The order directs federal agencies to accelerate the development of techniques so AI systems can be trained while preserving the privacy of the training data. The order will also evaluate how agencies collect and use commercially available information containing personal data. The order also aims to promote innovation and competition through a pilot of a tool, the National AI Research Resource, that will expand grants for AI research in areas such as health care and climate change. It will also use existing authorities to expand the ability of highly skilled immigrants and nonimmigrants with expertise in these critical areas to study, stay, and work in the U.S. by streamlining visa criteria and interviews.

Read more at The Hill

Member Briefing November 1, 2023November 1, 2023 Member Briefing October 30,2023October 30, 2023