Member Briefing October 7, 2024
Factory Orders Dropped In August, The Third Decline In The Past Four Months
Orders for manufactured goods fell 0.2% in August after a strong gain in the prior month, the Commerce Department said last Thursday. It is the third decline in orders in the past four months. Economists surveyed by the Wall Street Journal expected a flat reading. According to the report, durable-goods orders were revised to a flat reading in August after a 9.8% gain in the prior month. That’s down slightly from the initial estimate of a 0.1% gain.
Orders for defense goods have been driving growth in factory orders this year. Excluding defense goods, total orders were down 0.4% in August. Orders for nondefense capital goods, excluding aircraft, rose 0.3% in August, up slightly from the initial estimate of a 0.2% gain. Shipments of these key orders, which feeds into the government’s estimate of gross domestic product, fell 0.1% after a 0.4% drop in July. Overall, the manufacturing sector has been weak. The Institute for Supply Management’s manufacturing PMI has been in contractionary territory every month this year except March.
US Adds 254,000 Jobs in September. Mfg Employment Shrinks by 7000
Nonfarm payrolls jumped by 254K in the month, the hottest reading since March, and job growth in August and July was revised higher by a cumulative 72K. Coming into today, the three-month moving average on monthly nonfarm payroll growth was 116K. Today's print, when paired with the upward revisions, pushes the three-month moving average up to a much more robust 186K. The separate household survey from which the unemployment rate is derived also showed signs of a labor market that is coming into balance rather than collapsing. Employment as measured by the household survey outpaced growth in the labor force, pushing the unemployment rate down by one-tenth to 4.1%.
Friday's employment report is welcome news and suggests that the soft readings over the prior few months were not a sign of an imminent and sharp increase in unemployment. That said, one point does not make a trend, and there is still plenty of evidence to suggest that the labor market is cooling. That this cooling appears to be gradual rather than sudden reinforces the view that the FOMC will opt for a 25 bps reduction in the fed funds rate at its November 7 meeting instead of a second-straight 50 bps rate cut.
CNBC Chart of Growth by Sector
NFIB Jobs Report: Main Street Job Openings Fall to Three-Year Low
NFIB’s September jobs report found that 34% of small business owners reported job openings they could not fill in September, down 6 points from August and the lowest reading since January 2021. Seasonally adjusted, a net 32% of small business owners reported raising compensation in September, down one point from August and the lowest reading since April 2021. A net 23% plan to raise compensation in the next three months, up three points from August.
- Overall, 59% of small business owners reported hiring or trying to hire in September, down three points from August.
- Fifty-two percent (90% of those hiring or trying to hire) of owners reported few or no qualified applicants for the positions they were trying to fill.
- Thirty percent have openings for skilled workers (down six points) and 14% have openings for unskilled labor (down one point).
- Job openings were the highest in the construction, transportation, and manufacturing sectors, and the lowest in the agriculture and finance sectors.
- The percent of small business owners reporting labor quality as their top small business operating problem fell four points from August to 17%.
Global Headlines
Middle East
- Israel And Hamas: The Latest News – The Guardian
- FBI Warns of Potential 'Violent Attacks' on October 7 - Newsweek
- One Year Of War In Gaza: The Key Dates In The Israel-Hamas Conflict – France 24
- Governor Hochul Directs Flags To Half-Staff And Landmarks Lit Yellow In Remembrance Of October 7 Hamas Victims – Mid- Hudson News
- Khamenei Says Iran Will Not Back Down - Reuters
- Israel Intensifies Bombardment Of Northern Gaza, Southern Beirut – The Hill
- UN Security Council Backs Guterres After Israel Bars Him From Country - Reuters
- Tensions Are Rising In The Middle East, But The Rise In Oil Prices Is Muted – So Far - NPR
- Israeli Strikes Cut Off Key Crossing To Syria That Thousands Of Lebanese Are Using To Flee - AP
- America Needs a New Strategy to Avert Even Greater Catastrophe in the Middle East – Foreign Affairs
- 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 Targets Kyiv, Odesa In Latest Drone Attack - Reuters
- Russia Shoots Down Own Military Jet on Bombing Mission: Reports - Newsweek
- Ukraine Kills Nuclear Plant’s Pro-Russian Security Chief With Car Bomb - Politico
- Russia’s Global Information Operations Have Grown Up – Foreign Policy
- Ukraine Video Shows Battles for Gas Platforms Near Snake Island - 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
- Russia Set To Remove Taliban From Terrorist List, Says Putin’s Envoy - Politico
- The Majority Of Mpox Cases Can't Be Tracked - Devex
- Brazil Votes In Local Elections With Eyes On 2026 Presidential Showdown - Reuters
- You Could Kill The EU, Says France. No, You Could, Germany Replies. - Politico
- Pakistan Locks Down Capital As Jailed Ex-PM Khan Calls For Protests – Nikkei Asia
- Thousands Protest In Hungary Demanding End To State Media 'Propaganda' - Reuters
- DR Congo Begins Mpox Vaccination Campaign In Bid To Curb Outbreak – France 24
- Diarra V Fifa: Some Transfer Rules Break EU Law - Top Court - BBC
Policy and Politics
Supreme Court Allows Enforcement Of Biden Methane And Mercury Rules
The Supreme Court left in place Friday two Biden administration environmental regulations aimed at reducing industry emissions of planet-warming methane and toxic mercury. The justices did not detail their reasoning in the orders. There were no noted dissents. The rulings don’t uphold the methane and mercury rules but rather allow the administration to enforce it while underlying legal challenges continue – a process that could take years. The high court is still considering challenges to a third Environmental Protection Agency rule aimed at curbing planet-warming pollution from coal-fired power plants.
The regulations are part of a broader effort by the Biden administration aimed at curbing climate change that includes financial incentives to buy electric vehicles and upgrade infrastructure, and rules tightening tailpipe pollution standards for cars and trucks. Industry groups and states had argued the EPA overstepped its authority and set unattainable standards with the new regulations. The EPA, though, said the rules are squarely within its legal responsibilities and would protect the public.
New York Comptroller's Office: Eight More Local Governments In Fiscal Stress
Fourteen New York local governments have been designated as "some level of fiscal stress," according to a new report from state Comptroller Thomas DiNapoli's office. The state capital of Albany is one of them. The report, recapping fiscal year 2023 in the state, shows that under the Fiscal Stress Monitoring System, 14 governments in fiscal stress is unchanged from fiscal 2022, and remains the lowest number the state have seen since the Fiscal Stress Monitoring System was introduced for fiscal 2013. Of the local governments in fiscal stress, DiNapoli's office indicates:
- Municipalities susceptible to financial stress — Philipstown (Putnam County); Poughkeepsie (Dutchess County); Schroeppel (Oswego County), Sackets Harbor (Jefferson County), Chateaugay (Franklin County), South Dayton (Cattaraugus County), Whitehall (Washington County)
- Municipalities in moderate financial stress — Yates (Orleans County); Albany; Bennington (Wyoming County); West Turin (Lewis County), Coxsackie (Greene County)
- Municipalities in significant financial stress — Little Falls (Herkimer County), Saugerties (Ulster County)
Small Manufacturers Sound the Alarm on Uncompetitive R&D Tax Policy
As part of its “Manufacturing Wins” tax campaign, the NAM’s small and medium-sized manufacturers are drawing lawmakers’ attention to R&D amortization, an uncompetitive tax policy that’s killing jobs and dragging down the world’s most innovative economy. “Allowing companies like Sukup Manufacturing to immediately expense R&D investments had been part of the tax code for more than 70 years,” explained Steve Sukup, president and CEO of the Sheffield, Iowa–based company. “But since 2022, we have had to amortize our R&D expenses over five years.”
“Limiting R&D doesn’t just limit innovation—it also has a direct impact on people’s jobs here,” said Tom Tredway, president of Erie Molded Packaging in Pennsylvania. “And these are quality, high-paying jobs—but they are at risk if immediate R&D expensing isn’t restored. Congress not allowing manufacturers to immediately expense R&D expenses directly translates to fewer quality jobs in the manufacturing sector while our foreign competitors are implementing vastly more beneficial R&D benefits,” Tredway concluded.
Listen to Manufacturers’ stories at The NAM
Health and Wellness
Alzheimer's 'First' Achieved With Drug That Hits Hotspots
In a study published in the journal Alzheimer's & Dementia, a team of researchers report the development of a new compound that they say is a "promising" candidate in the search for new therapies for neurodegenerative diseases, such as Alzheimer's. The compound, called RI-AG03, is a novel peptide inhibitor—a short chain of amino acids designed to block the activity of specific proteins. In fruit fly models and lab experiments on human-derived cells, the team demonstrated that RI-AG03 was effective at preventing the harmful clumping of tau proteins—which is linked to neurodegeneration—in two particular "hotspots."
"The drug prevented tau clumping in human cells and also reduced symptoms of neurodegeneration and extended lifespan in living organisms," Anthony Aggidis, lead author of the paper with the University of Southampton, told Newsweek. The global societal cost of dementia—of which Alzheimer's is the most common form—is predicted to increase to $2 trillion by 2030, highlighting the "pressing" need to develop disease-modifying treatments, according to the study authors.
NYS COVID Update
The Governor updated COVID data for the week ending October 4th.
Deaths:
- Weekly: 32
- Total Reported to CDC: 84,169
Hospitalizations:
- Average Daily Patients in Hospital statewide: 852
- Patients in ICU Beds: 91
7 Day Average Cases per 100K population
- 6.0 positive cases per 100,00 population, Statewide
- 7.1 positive cases per 100,00 population, Mid-Hudson
Useful Websites:
Election 2024
- Liz Cheney and Kamala Harris Team Up in Wisconsin - Dispatch
- Swing-State Breakdown: Here’s Where The Harris-Trump Race Stands – The Hill
- Obama To Hit The Campaign Trail For Harris In Battleground States - Politico
- The 10 Senate seats most likely to flip in 2024 - CNN
- Trump Appears Before Large Crowd At Site Of Assassination Attempt In Pennsylvania - Reuters
- Fires At Home And Abroad Fuel Anxieties In Campaign Homestretch – The Hill
- Russia, Iran, China Expected To Use AI To Try To Influence US Election, Report Says - Reuters
- Republicans Are Trying To Up Their Early Voting Game — But Trump Keeps Getting In The Way - Politico
- Real Clear Politics Latest General Election Polls – Real Clear Politics
- Real Clear Politics Electoral Map
- Latest Polls - FiveThirtyEight
Industry News
US Port Strike Suspended, But Backlog Remains
U.S. East Coast and Gulf Coast ports were reopened on Friday after dockworkers and port operators reached a wage deal to settle the industry's biggest work stoppage in nearly half a century, but clearing the cargo backlog will take time. The strike ended sooner than investors had expected. "The port strike ended fairly quickly, removing any significant downside risk to the economy this quarter," said Ryan Sweet, chief U.S. economist at Oxford Economics. At least 54 container ships had lined up outside the ports as the strike prevented unloading, according to Everstream Analytics, threatening shortages of anything from bananas to auto parts. More ships are sure to arrive.
The International Longshoremen's Association workers union and United States Maritime Alliance (USMX) port operators announced the deal late last Thursday. Sources said they had agreed a wage hike of around 62% over six years, raising average wages to about $63 an hour from $39 an hour.
The tentative deal on wages has ended the strike, but only extends the current contract to Jan. 15. The two sides will continue to talk about other issues, such as the ports' use of automation that workers say will lead to job losses.
Italian Prosecutors Accuse 7 People, 2 Firms Over Flawed Boeing Plane Parts
Italian prosecutors on Saturday accused seven people and two sub-contractors of crimes including fraud and breaching airplane safety rules following an investigation into suspected flawed parts produced by an Italian company for Boeing. The prosecutors launched their investigation in late 2021 after Boeing said some parts for its 787 Dreamliner plane supplied by a company working for Italian aerospace group Leonardo had been improperly manufactured.
Investigators found that two Italian sub-contractors used cheaper and non-compliant forms of titanium and aluminium to make certain parts, saving significant sums of money on their raw material costs, the prosecutors said in a statement, without naming the sub-contractors or the seven people. "This resulted in the realisation of airplane parts with significantly lower static and stress resistance characteristics, with repercussions on aviation safety," the prosecutors in the southern city of Brindisi said.
EU Executive To Adopt Tariffs On Chinese EVs After Vote
The European Commission said on Friday it had received enough support from EU members to impose tariffs of up to 45% on Chinese electric vehicle imports in the bloc's highest profile trade case, but would continue to negotiate with Beijing. The Commission, which oversees the bloc's trade policy, has proposed final duties on Chinese-built EVs for the next five years to counter what it sees as unfair Chinese subsidies after a year-long anti-subsidy investigation.
In a vote on Friday, 10 EU members backed tariffs and five voted against, with 12 abstentions, EU sources said. It would have taken opposition from a qualified majority of 15 EU members, representing 65% of the EU population, to block the proposal. Reuters reported on Wednesday that the measure was likely to pass with France, Italy and Poland planning to vote in favor. The EU executive said it had obtained "the necessary support" to adopt the tariffs, although it would continue talks with Beijing to find an alternative solution.
Toyota To Delay EV Production In North America Due To Slowing Sales
Toyota Motor Corporation will reportedly delay electric vehicle (EV) production in North America to the first half of 2026 due to slowing sales in the key auto market. The car manufacturer cited design adjustments as a factor for the postponement and will reconsider the start date, reported Nikkei. The company plans to launch 10 new EV models globally by 2026, with the Kentucky plant’s SUV anticipated to be part of its next-generation EVs featuring an updated chassis.
In September, Toyota stated it plans to cut its electric vehicle production target for 2026 to a million cars, 30% below its earlier forecast, amid a slowdown in global demand. As per the new strategy, Toyota aims to produce over 400,000 EVs in 2025 and more than double that number the following year. This marks a significant reduction from its previous target of 1.5 million EVs by 2026. This month, Toyota reported September U.S. sales of 162,595 vehicles, with electrified models accounting for 48.4% of total sales. Lexus sales declined by 14.5% in September, while third-quarter sales for Lexus increased by 8.1% on a volume basis. As per the report, Toyota abandoned plans to manufacture electric Lexus SUVs in North America by 2030. Instead, they will import them from Japan.
Tariff Plans Spark Concern For US Auto Industry
Donald Trump last week pledged to stop U.S. businesses from shipping jobs overseas and to take other countries’ jobs and factories by relying heavily on sweeping tariffs to boost auto manufacturing. Trump added that, if elected, he’d put a 100% tariff on every car imported from Mexico and that the only way to avoid those charges would be for an automaker to build the cars in the U.S.
If enacted this could cause a huge upheaval in the American auto industry. Many automakers now build smaller, lower-priced vehicles in Mexico — facilitated by a trade agreement Trump negotiated while president — or in other countries because their profit margins are slim. The lower labor costs help the companies make money on those vehicles.
Hurricane Helene Threatens to Plunge Automakers Into Semiconductor Chaos Yet Again
Hurricane Helene's devastating impact on North Carolina has gone far beyond the initial destruction as the storm disrupts crucial supply chains which have now come to a stop at the Spruce Pine mines. The state, already grappling with the aftermath of at least 200 reported deaths and sweeping destruction, faces another crisis — a potential semiconductor shortage that threatens the automotive, motorsports, and electronics industries worldwide.
North Carolina's New Spruce Pine region is home to the world's purest quartz mines, vital for semiconductor chip production. These chips are integral to modern vehicles and electronic gadgets, but Hurricane Helene has now thrown this production into disarray. The mines, managed by Sibelco and The Quartz Corp, have temporarily stopped operations since September 26, with no clear timeline for repair. The full extent of the damage remains unknown, but a shadow has certainly been cast over the global semiconductor supply, which was already affected earlier this decade. Analysts warn of possible production delays, limited chip supply, and rising vehicle prices should the situation remain unmanaged, echoing the semiconductor crisis exacerbated by the COVID-19 pandemic, which saw automakers forced to navigate through production issues and inflated market prices.
Boeing, Striking Machinists to Restart Talks Today After Stalemate
Boeing and the Machinists union will return to the bargaining table Monday, resuming negotiations as the strike enters its fourth week. This will be the third meeting between the company and the union for mediated negotiations since the Machinists walked out Sept. 13, leaving Boeing’s Puget Sound factories idle. In the weeks since then, Boeing has raised its offer, expanding the proposed wage increase and preserving an annual bonus. But the Machinists union has said the latest proposal still does not go far enough and has declined to vote on the offer. The union’s negotiating committee said the latest round of negotiations last week ended without significant progress.
Both the company and its workers will feel the financial pressure of a prolonged strike. Without the roughly 33,000 Machinists powering its factories, Boeing hasn’t been able to make deliveries or ramp up production rates as it had planned. Under the latest company proposal, average annual pay for Machinists would increase from $75,608 to $111,115 in four years. The Machinists union has said neither offer goes far enough. More than 94% of members voted to reject Boeing’s initial offer and a union-led survey found the latest proposal “didn’t meet the needs of our members.”
Read more at The Seattle Times
The World’s Most Innovative Country.
Which country leads the world in innovation? Most people would say America. A few might say China. But according to the Global Innovation Index, published by the World Intellectual Property Organisation (WIPO), America only ranks third; China 11th. By these metrics the top performer on the index is Switzerland. Small countries can outrank scientific superpowers such as America and China because many of the indicators are scaled according to a country’s population or GDP.
The index adopts a broad definition of innovation. It includes “outputs”, such as patents, scientific publications and high-tech exports, as well as “inputs”, such as spending on research and development (R&D), the number of engineering graduates, and venture-capital deals. The index takes into account a country’s adoption and use of technology, as well as its production of it. Countries that import a lot of high-tech products and spend liberally on intellectual property from abroad score better on the index. Some of the indicators are unconventional, including the number of feature films a country makes and the amount of changes it makes to collaborative software projects on GitHub, a popular platform for sharing data and code.