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Monday Economic Report – May 18, 2015

Here is the summary for this week’s Monday Economic Report:

One of the larger headlines of the past week was the renewed strength of the euro, which closed at $1.1449 on Friday. To put that exchange rate in perspective, the euro traded for $1.0582 on April 13, and Friday’s close was the highest level for the euro since February 2. To be fair, the U.S. dollar remains strong against the euro, up 17.8 percent since May 6, 2014. Yet, the recent weakness in the dollar (and strength in the euro) has been the result of weaker-than-expected economic data in the United States and better-than-anticipated numbers coming out of Europe. Many of the underlying long-term fundamentals in these two regions remain the same, but those manufacturers worried about the negative impact of a soaring dollar got some welcome relief last week in the recent easing of the greenback. (continue reading…)

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Reduced Energy Costs Continue to Push Producer Prices Lower in April

The Bureau of Labor Statistics said that producer prices for final demand goods and services fell 0.4 percent in April, with prices for goods down 0.7 percent. Final demand goods prices have declined in nine of the past ten months, driven lower largely on reduced energy costs. Final demand energy goods were off 2.9 percent in April, or 24.3 percent since peaking 10 months ago in June. Producer prices for final demand food goods also declined in April, down 0.9 percent. Sharply lower egg prices helped push overall food costs down, along with chicken, cooking oils, oilseeds, pork, processed fruits and vegetables and roasted coffee. Through the first four months of 2015, food costs have declined 4.2 percent. (continue reading…)

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Consumers Remained Cautious in their Spending in April

Consumers remained cautious in their spending in April, according to the Census Bureau. Retail sales were unchanged for the month, softening from the rebound seen in March. Overall, spending has decelerated significantly over the past few months, down from a year-over-year rate of 4.7 percent in November to just 0.9 percent in April.

With that said, the longer-term view is perhaps more encouraging than the headline number might suggest. Total retail spending includes gasoline station sales, which have fallen 22.0 percent since April 2014 on lower prices. Excluding gasoline stations, retail sales grew 3.6 percent year-over-year. This suggests modest growth in the broader retail market over the past 12 months. Still, this figure has also eased recently, down from 5.8 percent year-over-year in November. (continue reading…)

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BLS: Manufacturers Added 1,000 Workers in April

Manufacturers added 1,000 net new workers in April, according to the Bureau of Labor Statistics. This was an ever-so-slight improvement after being unchanged in March. Overall, though, it was the third consecutive month of hiring weakness in the manufacturing sector. There have been a number of significant headwinds buffeting the U.S. economy in the early months of 2015, including a strong dollar, slowing growth abroad, lower crude oil prices, residual effects from the West Coast ports slowdown, a cautious consumer and weather. Each of these challenges has dampened overall activity in the sector, including employment growth. (continue reading…)

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Manufacturers Are Ready for TSCA Reform

Today’s announcement that 36 bipartisan U.S. Senators have now joined the Frank R. Lautenberg Chemical Safety for the 21st Century Act is proof that compromise is still possible in the halls of the United States Congress and that Washington can still work for manufacturers and citizens across the country.

It’s past time for TSCA Reform, and this year—likely this summer—presents a far too infrequent opportunity to pass bipartisan legislation to vastly improve an outdated environmental statute. Manufacturers are ready for TSCA Reform.

We need a modern federal chemical regulatory system that fosters manufacturing innovation and future technological breakthroughs in areas like energy, sustainability, healthcare and countless others while ensuring the public and environment are protected. The bipartisan legislative proposals before both the Senate (the Frank R. Lautenberg Chemical Safety for the 21st Century Act) and the House (the TSCA Modernization Act of 2015) would strengthen our federal chemical regulations while increasing regulatory certainty and removing barriers to economic growth. They would further protect the public while promoting investments, improving the flow of interstate commerce and appropriately protecting intellectual capital.

This is a win-win-win situation. A win for the public, who deserves safe and sustainable products that provide essential benefits to everyday life.  A win for manufacturers, the nation’s job creators, who will have greater regulatory certainty to continue making better products while growing the economy. And a win for our government who far too often is caught up in partisan politics at the expense of passing policies that will make life better in this country.

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The U.S. Trade Deficit Widened to a 6 1/2-Year High in March

The Census Bureau said that the U.S. trade deficit widened substantially, up from $35.89 billion in February to $51.37 billion in March. This was the largest monthly trade deficit since October 2008, or roughly 6 1/2 years. There were two primary factors for this. First, goods imports soared for the month, up from $181.27 billion to $197.63 billion. To be fair, however, the February figure was exceptionally low, with March’s value essentially equal to the 2014 goods imports average of $197.58 billion. The larger factor was on the goods exports side. Goods exports rose from $125.59 billion to $127.07 billion, not enough to counteract the gain in imports. Moreover, goods exports in March were well below the 2014 average of $136.26 billion, helping to explain the large shift in the headline trade deficit number over the past few months. Indeed, sluggish growth abroad and a stronger U.S. dollar have combined to present a major headwind for manufacturers seeking to grow demand overseas.  (continue reading…)

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5 Issues Small Manufacturers Face

It’s National Small Business Week and we will be highlighting stories each day about the issues that small manufacturers face.  Check our website, www.nam.org/Advocacy/National-Small-Business-Week, as we share stories on addressing the skills gap, working with the Export-Import Bank to reach new markets, fighting for common-sense regulatory reform, and advocating for strong Trade Promotion Authority legislation that helps small exporters compete globally.

Today’s Story:

 

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Monday Economic Report – May 4, 2015

Here is the summary for this week’s Monday Economic Report: 

The U.S. economy stagnated in the first quarter, with real GDP growing by just 0.2 percent. This compares to a consensus estimate of 1.1 percent, and it was lower than the 5.0 percent and 2.2 percent growth rates observed in the third and fourth quarters of 2014, respectively. As one might expect from a data point that is just shy of zero, the underlying contributions to growth were mixed. Net exports and government spending were drags on activity in the first quarter, particularly with headwinds from a stronger dollar. Consumer spending on goods and nonresidential fixed investment were also weak, with the latter experiencing sharp declines stemming from the energy market and its supply chain. The bright spots—to the extent that you could call them that—were service-sector spending and a rebound in inventories. (continue reading…)

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To Foster Economic Development in India, Concrete Action is Needed

Today, the Office of the United States Trade Representative released its annual Special 301 report which analyzes the state of intellectual property rights (IPR) among U.S. trading partners and also marks the first full review of India’s IPR regime since Prime Minister Modi took office. As in past reports, USTR once again placed India on the Priority Watch List due to ongoing concerns with the country’s lack of protections for innovators.

The report confirms that, despite ongoing dialogues and increasingly strong statements from Prime Minister Modi regarding his commitment to increasing protections for innovators in India, there has been no actual concrete action to improve IP protections. USTR expects ongoing dialogues to “bring about substantive and measurable improvements in India’s IPR regime for the benefit of a broad range of innovative and creative industries” and will “take further action, if necessary.”

As the NAM explained in its Special 301 comments filed in advance of the report, there are many areas where there has been dialogue, but no real improvement to India’s IPR policies including patent and data protection, compulsory licensing, and copyright piracy. This lack of progress and backward action in a number of areas from IPR to localization policies was also detailed just last week in the NAM’s pre pre-hearing statement filed with the U.S. International Trade Commission, which is conducting a second investigation into India’s trade and investment practices and their input on U.S. industries. These policy failures have a significant impact on businesses’ ability to innovate, create jobs, and grow the economy.

But businesses and industry leaders are not the only ones taking notice of India’s lack of progress in IPR and market-opening measures. India’s policies are impacting their global image as a country committed to innovation as reflected in India’s decline in various innovation and other measures. U.S. lawmakers are also taking note of the lack of concrete improvement in IPR in the country.

The NAM is committed to increasing commercial ties through a fair and more open trading relationship with India. To achieve that type of relationship – and for India to grow its economy and become the innovation leader it seeks to be – there must be more than talk and vague promises. It is time for India to take measures to bring its IPR regime up to global standards, to respect private property and innovation and seek to grow its economy through encouraging trade and investment.

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ISDS is All About Fair Play and American Values

From soccer matches in Europe to Monday Night Football in the United States, referees are a critical component of competitive sports, acting as an impartial party that ensures rules are followed by members of both teams. For small and large manufacturers, Investor-State Dispute Settlement (ISDS) provisions fill this this critical role of referee, ensuring that basic rules of due process, non-discrimination, fair treatment and property protection. In short, ISDS ensures fair play in the global economy.

Manufacturers typically make the vast majority of their investments domestically. Yet, just as companies from Europe, Asia, Latin America and beyond invest in America to reach the American consumer, many U.S. manufacturers also need to invest overseas to sell more successfully to the 95 percent of consumers that live outside our borders. By reaching millions of new customers overseas, U.S. investment overseas helps strengthen America’s manufacturing base, spurring approximately 50 percent of U.S. exports and supporting higher-paying American jobs, R&D and capital investment. When companies investment overseas, some 90 percent of their sales stay outside the United States. (continue reading…)

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