The Empire State Manufacturing Survey reflected contracting levels of activity for the fourth straight month in November. The composite index of general business conditions improved slightly from -11.4 in October to -10.7 in November, even as this measure has been in solid negative territory since July. The underlying data were also negative across-the-board, even as there was some easing in the pace of decline for most of them. This included new orders (up from -18.9 to -11.8), with one-third of respondents saying that their sales had declined for the month, down from 37.2 percent who said the same thing in the prior report. At the same time, 21.4 percent of those completing the survey cited increased new orders in November, up from 18.3 percent in October. Data for shipments (up from -13.6 to -4.1) were similar. (continue reading…)
NAM Vice President of Tax and Domestic Economic Policy Dorothy Coleman today joined U.S. Sen. Rob Portman (R-OH) and a panel of experts, including representatives from the Organisation for Economic Co-operation and Development (OECD), to discuss key international tax issues, including the Base Erosion and Profit Shifting (BEPS) project recommendations recently released by the OECD. (continue reading…)
The National Federation of Independent Business (NFIB) said that optimism was unchanged in October. The Small Business Optimism Index remained at 96.1 in October, representing some progress since the 94.1 reading observed in June. Coincidently, the index was 96.1 in October 2014, as well. Overall, it is also clear that small business owners remain anxious about the economy, with index values under 100 typically coinciding with softer economic growth. With that said, there were also positive developments for the month. For instance, the percentage of respondents saying that the next three months were a “good time to expand” increased from 12 percent to 13 percent, its highest level since February. This figure has trended higher over the past year, averaging 9.8 for all of 2014 and 11.6 year-to-date for 2015. Meanwhile, the percent planning capital expenditures over the next three to six months rose from 25 percent to 26 percent. (continue reading…)
The Bureau of Labor Statistics said that nonfarm payrolls increased by a surprisingly strong 271,000 workers in October. This was well above the consensus estimate of around 180,000, and it suggests that hiring has begun to rebound again after a lull in August (153,000) and September (137,000). Even with some progress this month, it is worth noting that nonfarm payroll growth has averaged 206,200 per month year-to-date, down from 280,833 per month in the second half of last year. Meanwhile, the unemployment rate fell to 5.0 percent, which was the lowest level seen since April 2008. Moreover, the so-called “real” unemployment rate – which includes marginally attached workers by those employed part-time for economic reasons – was 9.8 percent, the first time this rate has fallen below 10 percent since May 2008. It peaked at 17.1 percent six years ago.
The overall strength in this report should serve to enhance the chances that the Federal Reserve will begin to raise short-term interest rates at its December meeting, which was already becoming the conventional wisdom. (continue reading…)
The Bureau of Labor Statistics said that manufacturing labor productivity jumped 4.9 percent in the third quarter, up from 2.1 percent in the second quarter. It was the fastest quarterly increase in four years, and mostly reflected a modest increase in output (up 2.7 percent) combined with a decline in the number of hours worked (down 2.1 percent). Despite the significant increase in output per hour for all persons working, the decrease in hours worked resulted in a 5.9 percent jump in hourly compensation, and therefore, unit labor costs rose 0.9 percent. In general, we want unit labor costs to fall, as the improvements in efficiency help to make manufacturers more competitive globally. (continue reading…)
The Bureau of Economic Analysis and the Census Bureau said that the U.S. trade deficit narrowed, down from $48.02 billion in August to $40.81 billion in September. The August figure was the second-highest of the year, with the September reading reflecting an increase in goods exports (up from $124.44 billion to $127.32 billion) and a decrease in goods imports (down from $192.00 billion to $187.62 billion). The bulk of these shifts came from non-petroleum sources, but the petroleum trade deficit also narrowed, down from $6.95 billion to $5.58 billion. Petroleum imports were at their lowest level since May 2004. At the same time, the service-sector trade surplus was off marginally, down from $19.55 billion to $19.48 billion. (continue reading…)
ADP said that manufacturing employment fell by 2,000 on net in October, declining for the sixth time year-to-date. Indeed, the sector has shed 12,000 workers through the first ten months of 2015, according to ADP, reflecting the significant challenges faced by manufacturers right now. A number of headwinds have hampered demand, production and hiring growth, ranging from the strong dollar to economic softness abroad to lower crude oil prices. To illustrate just how much has changed in the labor market so far this year, manufacturers hired roughly 19,000 new workers per month on average in the second half of 2014, when activity was growing more robustly. (continue reading…)
The Bureau of Economic Analysis said that personal income growth slowed to 0.1 percent in September, down from 0.4 percent growth in each of the prior five months. As such, it was the slowest income growth since March. With that said, personal income growth has remained at fairly decent levels, up 4.1 percent year-over-year in September, but this was down from 5.2 percent in December. Total manufacturing wages and salaries declined from $797.7 billion in August to $792.8 billion in September. Nonetheless, the longer-term trend has been mainly positive for the sector, with manufacturing wages and salaries totaling $746.8 billion and $780.9 billion on average in 2013 and 2014, respectively. (continue reading…)
Since August, the NAM has been at the forefront of efforts to push back against the National Labor Relations Board’s (NLRB) highly anticipated decision in Browning-Ferris Industries, which created a new “joint employer” standard in federal labor law. This new standard turned 30 years of precedent on its head by stating that two companies are joint employers if the host employer has any indirect or potential control of the contracted entity’s employees. Previously, a company had to have actual or direct control over these employees.
With the stroke of a pen, the NLRB disrupted the economic and business models that represent a modernized, 21st-century workplace that includes temporary contracts, subcontracting and other practices that allow businesses to focus on their core competencies, which are all critical tenets of modern manufacturing facilities. For manufacturers who use subcontractors for services, such as payroll, janitorial, food, security and law enforcement, hiring and temporary worker placement, just to name a few, they will now be subjected to this new standard. (continue reading…)
The Bureau of Economic Analysis said that the U.S. economy grew 1.5 percent at the annual rate in the third quarter, down from 3.9 percent in the second quarter. This was in-line with the consensus estimate, with real GDP slowing from reduced inventory spending and a continued drag from net exports. Indeed, the pullback in inventories alone reduced real GDP by 1.44 percentage points in the third quarter as businesses did not need to replenish their stockpiles as much as desired. For manufacturers, this report was a mixed bag, with modest growth in consumer spending on goods but international demand sapped by the strong dollar and weaknesses abroad. Output is likely to be 2.2 percent for 2014 as a whole, essentially maintaining the more-sluggish pace of growth experienced in recent years, and yet, on the positive side, economic growth remains modest overall. The current outlook is for 2.5 percent growth in 2016. (continue reading…)