This afternoon President Obama toured the facility and spoke at of Ellicott Dredges in Maryland. During his visit the President spoke about the importance of infrastructure projects. He announced a Presidential Memorandum to modernize infrastructure review and permitting regulations, policies and procedures.

Our nation’s infrastructure is in need of investment and repair. Manufacturers rely on our rails, roads, ports and waterways to deliver billions worth of commodities annually. It is a positive step that President Obama is discussing the need for reforms but we need real action to speed up the review process of many infrastructure projects. The environmental streamlining reforms in the Water Resources Development Act, which passed the Senate this week, are the types of reforms that we would need to see for future projects.

Just yesterday Peter Bowe, President and CEO of Ellicott Dredge Enterprises, testified before the House Small Business Subcommittee on Agriculutre, Energy and Trade about the benefits of Keystone XL.

“So what does the Keystone pipeline have to do with us, and why do we care? For us, it’s all about jobs, not construction jobs for the pipeline itself, but ongoing jobs every year for decades to come, all related to the production of oil from the Alberta oil sands deposits. This oil needs the Keystone pipeline. The oil sands in Alberta are one of the largest markets worldwide for dredging equipment. Our dredges are used to rehandle the tailings generated by the mining process. Tailings are the wet waste which is a combination of clay, sand, and water after the oil- bearing bitumen has been removed. All the oil sands projects generate substantial amounts of tailings which are deposited into ponds. Oil sands producers have been criticized for water usage, but now, thanks to tailings reclamation, they recycle 85% to 90% of water used, and dredges are an integral part of the recycling process.”

Keystone XL will create thousands of jobs and is critical for the competitiveness of companies like Ellicott Dredges. Keystone XL has been pending for more than 5 years, the time has come to approve this important energy and infrastructure project.

Chip Yost is assistant vice president of energy and resources policy, National Association of Manufacturers.

The Conference Board said that its Leading Economic Index rose 0.6 percent in April. The largest component of the increase stemmed from the jump in housing permits for the month, which exceeded the 1 million mark for the first time since June 2008. This factor alone added 0.4 percentage points to the Leading Economic Index. The other major factor helping to push this forward-looking measure higher were measures of credit, including the interest rate spread and the Conference Board’s index of credit conditions.

At the same time, the Leading index also highlighted some of the current weaknesses in the economy, particularly for manufacturers. Measures for new orders and the average workweek of production workers were net drags on the index. Indeed, manufacturing employment has been quite sluggish of late, with hiring unchanged in April. In addition, while consumer confidence did improve in April, it remains sub-par, lowering the index somewhat.

Meanwhile, the Coincident Economic Index – which measures the current climate – increased 0.1 percent in April. The higher figure resulted from stronger growth in nonfarm payrolls and personal income, with modest growth in new manufacturing sales. These increases, though, were mitigated by the 0.5 percent decline in industrial production in the month. As such, softness in the manufacturing sector has dampened the U.S. economy, something we continue to see in a number of economic indicators lately.

Chad Moutray is chief economist, National Association of Manufacturers.

Consumer confidence rebounded in May, according to the University of Michigan and Thomson Reuters. The Consumer Sentiment Survey’s overall index rose from 76.4 in April to 83.7 in May, its highest level since July 2007. It is also a sign that the lull that we have seen in consumer confidence since November has dissipated, at least in this preliminary figure. (A revised number, with more complete information, will be released on May 31.)

The gain in confidence was more than expected, with a consensus estimate of 78.0. Perceptions about the current and future economic environment improved, with the largest gains regarding present conditions. The index for the current situation increased from 89.9 to 97.5; whereas, the forward-looking component moved from 67.8 to 74.8.

Surveys such as this one tend to rise and fall on pocketbook issues, and manufacturers tend to focus in particular on confidence indices to see if they might impact consumer behavior. The recent declines were in large part due to fiscal uncertainties, higher payroll taxes, and persistent economic worries. These issues have not necessarily gone away, but Americans are more than likely reacting to lower energy costs, decent nonfarm payroll gains, and modest growth in the U.S. economy. Earlier in the week, we did learn that retail sales – particularly when you exclude gasoline station spending – rose, a sign that consumers have picked up their purchases of late.

Moreover, the University of Michigan data tend to mirror similar upticks in confidence from the National Federation of Independent Business on small business sentiment and the most recent consumer survey from the Conference Board.

Chad Moutray is chief economist, National Association of Manufacturers.

Yesterday the House Committee on Small Business’s Subcommittee on Agriculture, Energy and Trade held a hearing on the Keystone XL and Small Business.  This hearing is that most recent in a number of hearings held by the House to talk about the importance of the Keystone XL pipeline project.

There were four witnesses, one of which was Mr. Peter Bowe, an NAM member, the President and CEO of Ellicott Dredge Enterprises, LCC. Ellicott Dredge makes dredging equipment that is used in the processing and the reclamation of tailing ponds at the mining site. President Obama is visiting the Ellicott Dredge facility in Maryland today to discuss infrastructure.

The other witnesses included Mr. Brent Booker, Secretary Treasurer, Building and Construction Trades Department, Department, AFL-CIO, ; Mr. Mat Brainerd, President, Brainerd Chemical Company, Tulsa, OK; and Mr. Christopher Knittel from the Center of Energy and Environmental Policy Research, Massachusetts Institute of Technology.

Peter’s business is a small business with about 200 employees in four locations, Maryland, Wisconsin and Europe. For Peter and the Ellicott Dredge organization, the Keystone XL is critical because it will move oil more quickly and result in additional demand. As oil demand increases so does the demand for his products and will result in $10s of millions of dollars being spend within his supply chain. These are small and large companies located throughout the United States. The ripple effect of spending within his supply chain is substantial and impacts a number of smaller communities throughout the country. (continue reading…)

Manufacturers that sell/and or distribute  their products outside of their home state—and that’s most Manufacturers—currently face a myriad of confusing and conflicting tax rules that cost them time, money and sometimes, business.  In a tax reform options paper  on Economic and Community Development released May 15th, the Senate Finance Committee did a good job of outlining some changes Congress could make to ensure that tax rules are consistent among the states, thus reducing potential double taxation and compliance costs, while also providing some certainty to states struggling to balance their budget.  And that’s a win-win in our eyes.

The NAM-supported chances include:

• Establishing uniform rules for taxing digital goods and services so that manufacturers would no longer be subject to taxation from multiple states based on just one online transaction.  The Digital Goods and Services Tax Fairness Act, introduced last Congress by Sens. John Thune (R-SD) and Ron Wyden (D-OR) would eliminate duplicative taxes on digital goods;
• Creating a bright-line test for when a state can assess income tax on an out-of-state employee who is temporarily working in that state.  The Mobile Workforce State Income Tax Simplification Act, introduced by Rep. Howard Coble (R-NC), would establish a 30 day bright-line test before states could tax these employees.
• Permanently extending the moratorium on Internet access taxes and multiple and discriminatory taxes on electronic commerce.  Without an extension of this moratorium, which expires in 2014, businesses of all sizes could be facing new taxes, further increasing the cost of doing business in the United States.  The Permanent Internet Tax Freedom Act of 2013 introduced by Sen. Kelly Ayotte (R-NH) in the Senate and Steve Chabot (R-OH) in the House, would permanently ban the internet tax; and,
• Clarifying how much activity a business must engage in within a state to become subject to that state’s business activity taxes.  The NAM has supported legislation (Business Activity Tax Simplification Act) to establish a bright-line, physical presence test clarifying when states can impose business activity taxes so that manufacturers will no longer be subject to punitive tax assessments by states where they have no plant or employees in the state.

While the Senate taxwriters make it clear that their paper discusses options, not proposals, we’re glad that these common-sense clarifications were part of the mix.  Each of the options outlined above would further spur economic and job growth by reducing the complexities brought on by having a plethora of differing state taxation rules creating administrative, compliance, and duplicative taxation burdens for manufacturers in the United States.

Christina Crooks is director of tax policy, National Association of Manufacturers.

It seems like each new week brings another setback for the National Labor Relations Board. This morning, the U.S. Court of Appeals for the Third Circuit issued a ruling invalidating President Obama’s recess appointments to the Board. The Third Circuit ruling was essentially the same as the conclusion reached by the Court of Appeals for the D.C. Circuit – the President’s recess appointment power was intended for times between sessions of Congress not simply short breaks taken during a session for lawmakers to return home to their states.

This week’s ruling follows on the heels of another defeat for the Board last week that invalidated its notice posting rule after nearly two years of legal wrangling. The U.S. Court of Appeals for the D.C. Circuit invalidated the notice posting rule as a result of a suit filed by the NAM in September of 2011.

Joe Trauger is vice president of human resources policy, National Association of Manufacturers.

The Federal Reserve Bank of Philadelphia’s Business Outlook Survey contracted again in May, declining for the first time since February. The composite index of general business conditions declined from 1.3 in April to -5.2 in May. The index was brought lower by reductions in new orders, shipments, and employment. Specifically, the new orders index dropped from -1.0 to -7.9, with over one-third of respondents saying that their sales had declined in the past month.

The indices looking at current activity declined, indicating some sluggishness this month. For instance, the shipments index shifted from modest growth in April (9.1) to a modest contraction in May (-8.5). The percentage of respondents saying that their shipments had declined from the previous month increased from 18.8 percent in April to 32.4 percent in May. The average workweek, unfilled orders, and delivery times were all negative, as well.

Unlike the Empire State Manufacturing Survey from the New York Fed, which was released yesterday, manufacturers in the Philly region were hiring fewer workers in May. The index for employment declined from -6.8 to -8.7. The two surveys did agree, though, on the forward-looking hiring measures. The index of expected employment six months from now rose from 8.2 to 10.0, suggesting that manufacturers plan to increase their hiring in the coming months moderately.

Indeed, manufacturers in the Philly Fed region remain cautiously optimistic about the future. The general business activity measure for six months from now rose from 19.5 to 32.3. Almost 45 percent of those completing the survey anticipate better economic conditions in the coming months, with 36.3 expecting them to be the same. Manufacturers are also planning for increased sales, shipments, and capital spending in the second half of 2013.

Regarding inventories, 58.1 percent of those answering a special question on the topic said that their stockpiles were “about right for current economic conditions.” Just over one-quarter of them expect to decrease their inventories in the second quarter, and in fact, the forward-looking index for inventories reflects a slight contraction.

Chad Moutray is the chief economist, National Association of Manufacturers.

Consumer prices declined for the second straight month, according to the Bureau of Labor Statistics. The consumer price index (CPI) was down 0.4 percent in April, building on the 0.2 percent decrease in March. These declines have helped to decelerate the year-over-year pace in inflation, falling from 2.0 percent in February to 1.5 percent in March to 1.1 percent in April. This suggests that Americans have generally benefited from mild inflationary pressures, with lower energy costs helping to provide a buffer for other increases.

Indeed, the decrease in the price of gasoline was the main contributor to reduction in the CPI in both March and April, with gasoline costs down 4.4 percent and 8.1 percent in those two months, respectively. On a year-over-year basis, gasoline costs were off 8.3 percent. These declines more than offset increases in electricity and natural gas.

Food prices were up a very modest 0.2 percent, with the largest increases in cereals and baking products (up 0.6 percent) and meats, poultry, fish and eggs (up 0.4 percent). The cost of fruits and vegetables declined 1.4 percent, offsetting some past increases. Overall food costs continue to experience moderate gains, up 1.5 percent on annual basis. This represents a slight pullback from the 1.8 percent pace of December.

Core inflation, which excludes food and energy costs, remains in the acceptable range. The year-over-year pace is currently 1.7 percent, down from 1.9 percent in March and 2.0 percent in February. This is below the stated goal of the Federal Reserve Board of 2.0 percent, enabling the Federal Open Market Committee to continue to pursue expansionary policies. As such, it also mirrors the producer price index data released yesterday. Both consumers and manufacturers continue to benefit from the slower pace of growth in prices, with inflationary pressures in-check, at least for now.

Chad Moutray is chief economist, National Association of Manufacturers.

The Census Bureau and the U.S. Department of Housing and Urban Development said that new residential construction declined significantly. New housing starts were down from an annualized 1,036,000 units in March to 853,000 units in April. These numbers illustrate the choppiness of the housing market from month-to-month that occurs even with seasonally-adjusted data. While the longer-term trend line remains positive (up 13.1 percent year-over-year), it is hard not to say that the construction figures were not disappointing.

The largest factor behind the decline in housing starts was the plummeting of multi-family housing starts, down from 398,000 in March to 243,000 in April. These declines appear to have taken place in all regions of the country except for the Midwest. Multi-family starts nationally are now slightly lower than they were 12 months ago, reversing the healthy gains seen in recent months. Meanwhile, new single-family construction starts decreased less dramatically, down from 623,000 to 610,000. These losses were primarily in the South. The year-over-year pace for single-family starts is still quite impressive, up 20.8 percent.

At the same time, housing permits soared to 1,017,000 annualized units in April from 890,000 in March. The permits data are important because they serve as a proxy for future construction activity, and as such, they allow us to get less worried about the declines in starts. The good news is that this is the first time that housing permits have been above 1 million since June 2008 (when they were headed lower). The year-over-year growth in housing permits between April 2012 and April 2013 was a very healthy 35.8 percent. (continue reading…)

Today the Senate passed the Water Resources Development Act (WRDA) of 2013 by a vote of 83 to 14. This legislation will ensure the continued investment in our coastal and inland waterways.

It’s no secret that our nation’s aging system of inland waterways and ports are in need of modernization. The lack of investment is catching up to us. Our inland waterways system averages 52 service disruptions per day throughout the system. Manufacturers rely on these waterways to move commodities, finished products and inputs vital to their supply chains. Continued disruptions in the system drive up costs and makes manufacturers less competitive.

The WRDA bill passed by the Senate includes important reforms to improve project delivery and streamline the environmental review process for infrastructure projects sponsored by the Army Corps of Engineers. The legislation also includes a Water Infrastructure Finance and Innovation Act (WIFIA) pilot program which will help to leverage investments in critical water infrastructure projects. And importantly the bill assesses the critical issue of under-investment in our ports and harbors by increasing authorized funding from the Harbor Maintenance Trust Fund for harbor maintenance dredging.

The National Association of Manufacturers sent a Key Vote letter to Senators yesterday urging them to support this important bill. We strongly urge the House to take up and pass a WRDA bill as soon as possible. America’s infrastructure is in great need of investment and WRDA provides us an opportunity to start making investments no in our waterways and ports.