Monday Economic Report – February 23, 2015

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

In the minutes of its January 27–28 meeting, the Federal Open Market Committee (FOMC) provided a nuanced view of the economic outlook. Participants noted that “economic activity had been expanding at a solid pace,” and they were mostly optimistic about the “prospects for further improvement in 2015.” Yet, the FOMC also pointed to some significant headwinds in the U.S. economy, including sluggish global growth, a stronger U.S. dollar, federal government sequestration and reduced crude oil prices. Regarding the latter, the Federal Reserve said that it was concerned that “persistently low energy prices might prompt a larger retrenchment of employment [and capital investment] in these industries.” (continue reading…)

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Let’s Set the Record Straight on “Transparency” and “Loopholes

One of NAM’s goals is to make the United States the best place to manufacture and attract foreign direct investment. There are many things policy makers can do to help achieve this goal, including creating a favorable tax climate. On the flip side, there are a number of ways policy makers can make this goal even harder to achieve, for example by imposing costly, unnecessary, anti-competitive rules and regulations. A case in point is legislation—the Truth in Settlements Act—introduced by Sen. Elizabeth Warren (D-MA) and Rep. Matt Cartwright (D-PA) and several other bills that aim to change the tax treatment of fines and penalties. (continue reading…)

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Markit: European Manufacturing Activity Improved in February Ever-So-Slightly

The Markit Flash Eurozone Manufacturing PMI edged ever-so-slightly higher, up from 51.0 in January to 51.1 in February. This suggests very modest growth in manufacturing activity in February, with better data for new orders (up from 50.6 to 50.9), output (up from 52.1 to 52.2) and exports (up from 50.7 to 51.8). Hiring in the Flash Eurozone Composite PMI, which includes all segments of the economy, rose to its highest level since August 2011, but this was primarily in the service sector. Indeed, for manufacturers, the pace of employment growth was unchanged in February at 50.6. (continue reading…)

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Philly Fed: Manufacturing Activity Expanded at a Slightly Slower Pace in February

The Federal Reserve Bank of Philadelphia said that manufacturing activity expanded at a slightly slower pace in February than in January. The composite index of general business activity declined from 6.3 to 5.2. Overall activity was softer in both January and February than in prior months, with the headline index averaging 21.5 over the 10-month period from March through December. Nonetheless, the Manufacturing Business Outlook Survey continues to reflect mostly positive attitudes about the economy, with 55.0 percent of respondents suggesting that demand had increased so far in 2015 relative to the last quarter of 2014. (continue reading…)

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Ex-Im Bank Fuels Alabama Exporters

Earlier today in Hope Hull, Ala., National Association of Manufacturers (NAM) President and CEO Jay Timmons Jay VT Miltopetoured the shopfloor at VT Miltope, a leading U.S. manufacturer of computers and computer peripheral equipment for military, industrial and commercial tactical and aviation applications.

Joined by VT Miltope Executive Vice President Brigadier- General Edward F. Crowell (USAF Retired) and Business Council of Alabama President and CEO Billy Canary, Timmons continued to emphasize the importance of securing a long-term reauthorization of the Export-Import Bank in Congress on one of the final legs of the State of Manufacturing tour.

“Suppliers like VT Miltope are the backbone of our nation’s manufacturing economy. A long-term reauthorization of the Export-Import Bank is a necessary step that this Congress needs to take action on immediately to support job-creators. The debate over the future of the Ex-Im Bank boils down to whether we want manufacturers in the United States to win overseas, or whether we want our foreign competitors and their workers to swoop in and seize these opportunities,” Timmons said. (continue reading…)

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Cost Estimates for EPA’s Greenhouse Gas Regulations Continue to Rise

Last week, the Obama Administration’s former regulatory gatekeeper, Cass Sunstein, penned what I thought was a very realistic article on climate change attitudes in the U.S. He noted, quite correctly, that it is a paradox: a majority of Americans believe we need to act, but they also refuse to pay anything in exchange for that action. This, as Sunstein notes, is not a new problem, but rather one that stretches as far back as the Kyoto Protocol in 1990.  We found this in a poll of our own just a few months ago: more than half of the respondents polled on the EPA’s greenhouse gas regulations were unwilling to pay a single dollar more for energy to accommodate the new requirements. (continue reading…)

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State of Manufacturing: Manufacturing Plays Key Role in Texas Economy

This State of Manufacturing blog is authored by Greater Houston Partnership President and CEO Bob Harvey. To learn more about the 2015 State of Manufacturing Tour, visit http://www.nam.org/stateofmfg.

In the digital age, the latest app or gadget may get all the buzz, but the truth is manufacturing remains the lifeblood of any modern economy. That is certainly true here in Houston and across Texas, where a thriving manufacturing sector has helped lead a flourishing economy. As President and CEO of the Greater Houston Partnership, I am proud of the role we’ve played in building our dynamic and growing manufacturing base. (continue reading…)

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Producer Prices Fell 0.8 Percent in January

The Bureau of Labor Statistics said that producer prices for final demand goods and services declined 0.8 percent in January, falling for the fifth time in the past six months. Looking just at final demand goods, producer prices plummeted in January, down 2.1 percent and off for the seventh consecutive month. Reduced energy prices have contributed to the sharp decline in producer prices, with final demand energy goods down 10.3 percent in January alone. Indeed, West Texas intermediate crude sold for an average of $47.22 a barrel in January, down from the monthly average of $59.29 in December. (continue reading…)

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Housing Starts and Permits Pulled Back a Little in January

The Census Bureau and the U.S. Department of Housing and Urban Development said that residential construction activity pulled back a little in January. New housing starts declined from an annualized 1,087,000 in December to 1,065,000 in January. The good news was that starts have exceeded one million for five straight months, averaging 1,057,400 over that time period. Yet, the numbers for January were also somewhat softer than expected. (continue reading…)

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Manufacturing Production Edged Marginally Higher in January

Manufacturing production edged marginally higher in January, up 0.2 percent, according to the Federal Reserve Board. This represented an improvement from being flat in December, and yet, these data also suggest that output in the sector has been quite soft in both December and January. On the positive side, manufacturing production has risen a whopping 5.6 percent over the past 12 months.  Of course, sharply reduced output in January 2014 due to a number of winter storms helped to buoy this year-over-year figure. Still, the year-over-year pace last month was 4.3 percent, illustrating decent growth in manufacturing output last year overall. (continue reading…)

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