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Member Briefing October 9, 2024

October 9, 2024

Posted By: Harold King in Daily Briefing,

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Trade Deficit Narrowed Sharply in August

The U.S. international trade deficit narrowed $8.5 billion to -$70.4 billion in August. The sharp narrowing brings the overall trade balance closer to where it started the year and marks the largest monthly change since early 2023. Behind the swing was a 2.0% rise in exports and a 0.9% decline in imports. The pickup in exports was broad-based across merchandise goods (+2.5%) and services (0.9%). On the goods side of the ledger, capital goods exports led the charge with support from civilian aircraft, telecommunications equipment and computer accessories. These categories have been some of the sole drivers of domestic durable goods demand and overall export growth this year; on a year-over-year basis, goods exports were up 4.5% in August, and capital goods account for nearly 4.0 percentage points of that annual gain.

The weakness in imports was concentrated in goods. Merchandise imports declined 1.4% over the month (chart), while services imports expanded 1.1%. Industrial supplies dragged down overall goods imports, as crude oil and finished metals each posted sharp contractions. Global oil prices declined roughly 2% in August and likely contributed to crude oil's nominal import decline. Despite the monthly slide, total goods imports were up 7.2% on a year-over-year basis in August, much stronger than goods exports.

Read more at Wells Fargo

NFIB: Main Street Uncertainty Reaches All-Time High

The NFIB Small Business Optimism Index rose by 0.3 points in September to 91.5. This is the 33rd consecutive month below the 50-year average of 98. The Uncertainty Index rose 11 points to 103, the highest reading recorded. Fifty-one percent of owners reported capital outlays in the last six months, down five points from August. Meanwhile, the number of owners reporting inventory gains fell four points to a net negative 13% (seasonally adjusted), the lowest reading since June 2020. Key findings include:

The average rate paid on short maturity loans was 10.1%, up 0.6 of a point from August. The last time it was this high was February 2001.
A net 12% of owners reported paying a higher rate on their most recent loan, down three points from August and the lowest reading since March 2022.
Fifty-one percent reported capital outlays in the last six months, down five points from August. The last time it was this low was July 2022.
Seasonally adjusted, a net 32% reported raising compensation, down one point from August and remaining the lowest reading since April 2021.
Twenty-three percent of owners reported that inflation was their single most important problem in operating their business (higher input and labor costs), down one point from August but remaining the top issue.

Read more at The NFIB

Hurricane Milton, A Powerful Category 4 Storm, Prompts New Warnings For Florida Amid Mass Evacuations

Hurricane Milton, a powerful Category 4 storm with maximum sustained winds of 145 miles per hour, kept tracking eastward early Tuesday as it churned just off the north coast of Mexico's Yucatan Peninsula. Milton's path is expected to bring life-threatening conditions to parts of Florida when it makes landfall early Thursday, forecasters said. Milton is slated to arrive on land early Thursday morning, said CBS News meteorologist Nikki Nolan, pushing the timeline slightly from a previous landfall prediction that suggested it would happen Wednesday night.

Milton is expected to continue weakening somewhat before making landfall, but projections have varied and the hurricane center stressed that "while fluctuations in intensity are expected, Milton is forecast to remain an extremely dangerous hurricane through landfall in Florida." Nolan and CBS News weather senior producer David Parkinson on Monday said the storm would likely be a still-powerful Category 3 — meaning wind speeds somewhere between 111 and 129 mph — when it strikes land.

Live Updates from NOAA Hurricane Center

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Policy and Politics

US Disaster Programs Are Teetering. Milton Could Topple Them.

Hurricane Milton, a Category 5 storm whose winds reached 180 mph late Monday but weakened to a Category 4 early Tuesday, is whirling toward a possible landfall in Tampa Bay just as the main federal disaster programs are facing financial instability amid a series of recent calamities, including Hurricane Helene’s flooding of communities throughout the Southeast. The concerns about federal resources are growing as lawmakers of both parties clamor for Congress to return to Washington before the November election to approve additional disaster funding.

The resources in question include the Federal Emergency Management Agency’s disaster fund, which pays for repair and rebuilding efforts; the Small Business Administration’s loans to stricken businesses and homeowners; and FEMA’s flood insurance program. All could be within weeks of running dry of cash, based on recent remarks by President Joe Biden, Homeland Security Secretary Alejandro Mayorkas and insurance analysts — even as FEMA sought to assure the public Monday that it has enough money to meet its “life-saving” responsibilities for Helene and Milton.

Read more at Politico

Appropriations Democrat Calls On Johnson To Convene House For Emergency Funding As Hurricane Milton Approaches

Rep. Marcy Kaptur (D-Ohio), a member of the House Appropriations Committee, led a letter to House Speaker Mike Johnson (R-La.) Tuesday calling on him to reconvene the House to allocate further disaster relief aid as Hurricane Milton bears down on Florida. In the letter, shared with The Hill, Kaptur and four other House Democrats wrote that recent disaster funding allocated by Congress falls “critically short” of what will be necessary for fiscal year 2025, citing the already-intense hurricane season.

Homeland Security Secretary Alejandro Mayorkas said Monday that the Federal Emergency Management Agency has the necessary resources to address Milton, but said after Helene that the agency will not have enough money to cover the remainder of hurricane season without further appropriations from Congress. A spokesperson for Johnson’s office referred The Hill to Mayorkas’s comments indicating FEMA has sufficient resources for Milton.

Read More at the Hill

Many Community Colleges Are Making A Comeback

Hard economic times have traditionally been good for community colleges, as laid-off workers return to school to learn new skills. But the Covid-19 pandemic that began in early 2020 and the sharp (if brief) recession it brought on were a whole different story. Community colleges, which serve about a third of all undergraduates in the United States, were hit harder by enrollment declines than any other type of higher education institution.

Now the steep enrollment declines are over and according to a new report from S&P Global Ratings, despite the end of extra Covid-era federal aid, the finances of the 199 community colleges (in 22 states) it rates have stabilized. The report credits increased state support and local tax revenues, as well as increased tuition receipts and prudent management for the stability. For community colleges nationwide, the enrollment swing has been a dramatic one. According to the National Student Clearinghouse, enrollment at two-year public colleges (as measured each March), fell 9.9% in 2021 and 8.6% in 2022 before creeping back up 1.5% in 2023 and rising a healthy 4.7% in 2024. That’s separate from the demographic challenges some of the schools may face in coming years, as the college-age population declines, particularly in certain states and in rural areas.

Read More at Forbes

Health and Wellness

World Mental Health Day: How Leaders Can Prioritize Well-Being In The Workplace

Mental Health at Work is the theme of this year’s World Mental Health Day on 10 October, with the World Health Organization (WHO) working with partners to highlight the connection between mental health and work. More than half of the global population (60%) works and around 15% of working-age adults live with a mental disorder, according to the WHO. Around 12 billion working days are estimated to be lost every year to depression and anxiety alone, which costs the global economy $1 trillion in lost productivity.

The WHO says that workplaces can protect mental health by providing financial stability, an inclusive community, building confidence and a sense of achievement, and creating a routine. But work can also be a source of risks to mental health, from job insecurity to discrimination, unsafe working conditions and excessive hours.

Read more at World Economic Forum

Election 2024

Industry News

Nobel Prize In Physics Goes To Pioneers In Artificial Intelligence

Two pioneers of artificial intelligence — John Hopfield and Geoffrey Hinton — won the Nobel Prize in physics Tuesday for helping create the building blocks of machine learning that is revolutionizing the way we work and live but also creates new threats for humanity. Hinton, who is known as the godfather of artificial intelligence, is a citizen of Canada and Britain who works at the University of Toronto, and Hopfield is an American working at Princeton.

The artificial neural networks — interconnected computer nodes inspired by neurons in the human brain — the researchers pioneered are used throughout science and medicine and “have also become part of our daily lives, for instance in facial recognition and language translation," said Ellen Moons, a member of the Nobel committee at the Royal Swedish Academy of Sciences.

Read more at ABC News

PepsiCo Trims Sales Forecast As Customers Tighten Purse Strings On Snacks, Sodas

PepsiCo cut its forecast for annual sales growth on Tuesday as picky consumers in North America limit their spending on sodas and savory snacks, while opting for cheaper private-label brands. The company, whose brands include Mountain Dew, 7up and Lays, now expects organic sales to grow in a low single-digit range for fiscal 2024. It had previously forecast a 4% rise. "The cumulative impacts of inflationary pressures and higher borrowing costs over the last few years have continued to impact consumer budgets and spending patterns," CEO Ramon Laguarta said.

A rise in prices for food and other products has forced consumers to curtail their spending habits, opt for smaller packages and portions, and shop less at convenience stores, which typically account for a bigger portion of PepsiCo's beverage sales. PepsiCo also posted a surprise drop in third-quarter revenue, driven in part by a 13% slump in sales at Quaker Foods, which is still reeling from the impact of product recalls earlier this year.

Read more at Reuters

Boeing Delivers 33 Jets In September But Strike Impact Looms

Boeing delivered 33 airplanes in September, six more than during the same period a year earlier, as the company and its customers keep an eye on the impact of a machinist strike, now in its fourth week. Through September, Boeing has handed over 291 aircraft, well below the 371 it had delivered in the first nine months of 2023. Rival Airbus has delivered 447 airplanes this year through August.

Last month’s deliveries were led by 27 of Boeing’s bestselling 737 Max aircraft to customers including United Airlines, which received five, and Ryanair and Southwest Airlines, which each took three. Deliveries are key to Boeing. It’s already burned through more than $8 billion this year since customers pay the bulk of the price when they receive the airplane. All but 10 of the 27 Maxes were handed over before the strike began, according to Jefferies aerospace analyst Sheila Kahyaoglu. In a note Monday, she forecast that Boeing will be producing 25 Max aircraft per month if the strike ends in October but the company’s planned ramp-up to 38 Maxes a month will be delayed by a year.

Read more at CNBC

NOAA Predicts Colder Winter Translating Into Higher Energy Prices

NOAA’s recently updated winter outlook suggests a typical La Niña weather pattern for December through February. Overall, La Niña typically produces colder-than-average winter temperatures in North America, resulting in short-term spikes in natural gas demand, according to S&P. La Niña can also cause the jet stream to be more variable, leading to more frequent cold air outbreaks. The most recent weak La Niña was 2022-23 with spot nat gas prices averaging $3.78/mmbtu. The most recent strong La Niña was 2010−11 when gas averaged $4.02/mmbtu.

NOAA fall forecast for New York:

The National Weather Service forecasts a 40% to 50% chance of above-average temperatures across all of New York state this fall, covering October, November, and into December.
Most of upstate New York has a 33% to 40% chance of experiencing above-average precipitation this fall.
The New York City metro area and Long Island have "equal chances" for normal precipitation, meaning no specific trend is favored in either direction. This indicates that in these areas, there's no strong likelihood of wetter or drier conditions this fall.
Read more at The Democrat & Chronicle

US FAA Issues Safety Alert Over Boeing 737 Rudder Issue

The Federal Aviation Administration on Tuesday said it issued, opens new tab a safety alert to airlines warning of the potential for limited or jammed rudder movement on certain Boeing 737 airplanes. Last week, the National Transportation Safety Board said more than 40 foreign operators of Boeing (BA.N), opens new tab 737 airplanes may be using MAX or 737 Next Generation planes with rudder components that could pose safety risks.

Last week, the NTSB said 271 impacted parts may be installed on aircraft in service operated by at least 40 foreign air carriers and 16 may still be installed on U.S.-registered aircraft and up to 75 may have been used in aftermarket installation. Boeing, which did not immediately comment Tuesday, said earlier it had informed affected 737 operators of a "potential condition with the rudder rollout guidance actuator" in August, in what is known as a Multi Operator Message.

Read more at Reuters

General Electric S.C. Facility Grows To Meet Engine Demand

In 2004, GE Aerospace was facing a challenge every company hopes for: massive growth. The GE90-115B, which entered service that year aboard the Boeing 777-300ER, was embarking on one of the most successful service entries ever for a high-thrust jet engine. Meanwhile, the new GEnx had just been selected to power Boeing’s 787 Dreamliner and was about to become the fastest-selling high-thrust engine in GE Aerospace history.

But before it began boosting engine production, the company knew it had to clear some manufacturing bottlenecks. For instance, at that time, most of GE Aerospace’s commercial turbine blades — highly complex parts that power the engine’s fan — were made at a single plant in Madisonville, Kentucky. As demand intensified, the blade business needed to scale along with it. So the company cleared 50,000ft2 of floor space at a GE Power manufacturing facility in Greenville, South Carolina, to make room for the overflow. On 12th July 2004, the Greenville blade operation opened for business, starting with a single production line run by some 40 employees. Fast-forward two decades and Greenville is one of the highest-revenue sites at GE Aerospace.

Read more at Aerospace Magazine

Decision Time for GM in China: Stay, Scale Back or Go

General Motors, long a dominant player in China, was hoping to reinvigorate its faltering business in the world’s largest car market with an influx of new models over the past two years. Among them was the electric Cadillac Lyriq, a flashy luxury car that executives hoped would appeal to Chinese consumers who were increasingly gravitating to plug-in cars. “We think that’s going to be a really, really strong vehicle for us in China and, I think, a good test of things to come,” GM Chief Financial Officer Paul Jacobson said in 2022.

Two years later, the Lyriq is barely a blip on GM’s sales charts in China, and the automaker’s market share in the country has shriveled. After years of consistent profits in China, GM swung to a loss in the first half of this year. Most every foreign automaker—from Volkswagen and Toyota Motor to Tesla—faces slowing or shrinking business in China, where consumers are flocking to Chinese cars that were once viewed as inferior to the larger global brands. Traditional automakers haven’t kept pace with the country’s rapid move to electric and plug-in hybrid vehicles. Chinese brands also have leapt ahead in tech features and often are priced well below their foreign rivals. GM Chief Executive Mary Barra has said the company will stick it out there.

Read More at The WSJ

Webinar: Global NY Export Assistance Program

Council Members interested in learning more about export assistance programs – including attending trade shows supported by New York State this year – are invited to attend a webinar hosted by Empire State Development’s Global NY Program. With 15 new foreign offices across Africa, Australia, Canada, the Caribbean, China, Europe, India, Israel, Japan, Mexico, the Middle East, Singapore, South America, South Korea, and Taiwan, Global NY is able to support your company in over 187 countries worldwide.

The webinar will is on Thursday, October 10th, at 9:00 a.m. The webinar will introduce Global NY’s new team and detail the launch of STEP 12, and announce the reopening of the Global NY Grant Fund. We'll also share information on our upcoming trade missions to the Caribbean, Dubai, Australia, and South America.

Register for the webinar here

Workforce Newsletter 37 - October 10, 2024October 10, 2024 Member Briefing October 8, 2024October 8, 2024