Today we see more news of the devastating impact of the Environmental Protection Agency’s (EPA) overreaching Utility MACT regulations. FirstEnergy Corp. announced today that the company will be closing three power plants in West Virginia by September.

The closing of these plants will result in the loss of more than 100 jobs not to mention how it will impact the economies of the communities where the plants are located. We often forget about indirect impact of closings such as this which tends to ripple through the entire community.

Also, the reliability of our power grid is put at risk by the EPA’s regulations. Manufacturers are looking for certainty and regulations such as Utility MACT will only increase energy costs and cause them to at times wonder about the reliability of their power grid. Manufacturers consume one-third of our nation’s power and need access to all sources of energy.

An “All-of-the-Above” approach to energy should include everything including clean coal, manufacturers can’t afford increasing energy prices at a time when they are trying to recover, hire and create new jobs.

Today, the House Energy and Commerce Committee’s Subcommittee on Energy and Power held a hearing about the impact of the Environmental Protection Agency’s (EPA) Utility MACT regulation on electricity costs. The regulation, finalized in December 2011, requires the installation of emission control technologies by many coal-fired power plants over a relatively short time frame of three years.

The EPA estimates that the rule will have an annual cost of $9.6 billion, making it one of the most costly rules in the history of the agency. Manufacturers, as users of one-third of the energy consumed in this country, are extremely concerned that the regulation will increase electricity rates and also cause grid reliability issues.

One of the witnesses, Anne Smith of the National Economic Research Associates (NERA), argued that the EPA has made some “misleading public statements” about the health benefits of the rule in its Regulatory Impact Analysis (RIA). Her testimony states:

“A closer read of the RIA reveals that all the “saved lives” and virtually all of the $33 billion to $90 billion of estimated benefits EPA has attributed to the MATS [or MACT] Rule are for purported coincidental reductions of . . . fine particulate matter (PM_2.5) that is already regulated to safe levels separately under the [Clean Air Act].”

Thus, the EPA is “padding” its RIA with supposed health benefits that occur because of reductions in emissions not covered by the Utility MACT rule.

Her own economic analysis also indicates that the rule’s net impact to U.S. workers in 2015 will be a reduction in worker income that is the equivalent to approximately 200,000 full-time jobs.

Darren MacDonald, Director of Energy at Gerdau Long Steel North America, expressed concern that the regulations would increase electricity prices, hurt the company’s competitiveness and put jobs in jeopardy. He also noted that the Utility MACT regulation will place increased demand on the suppliers and installers of pollution control technology which could also drive up costs for manufacturers.

The NAM applauds the House of Representatives for passing legislation such as the TRAIN Act (H.R. 2401) which would delay implementation of the Utility MACT rule until an interagency economic study is completed. We urge similar action in the Senate.

Aicia Meads is director of resources and energy policy, National Association of Manufacturers.

New Job Openings and Labor Turnover Survey (JOLTS) data from the Bureau of Labor Statistics show that manufacturing hiring was up in December, mirroring other employment data released by the agency. There were 264,000 job openings in the sector in December, up from 242,000 in November. The increase occurred in both the durable and nondurable goods sectors.

In addition, there were 261,000 hires and 226,000 separations in the month. This suggests net hiring of 35,000, an improvement from the 19,000 gain in November. This can be seen in the attached graphic.

For the macroeconomy as a whole, the number of job openings rose from 3,118,000 in November to 3,376,000 in December – an increase of 258,000. The hiring rate is currently 2.5 percent of the labor market, up from 2.3 percent in November. This brings it back to its level in September, right before the falloff in October in labor market activity. Despite the uptick, the hiring rate was little changed in December from November.

Given that these numbers overlap with strong improvements in U.S. employment in December and January, there is little new news here. The manufacturing jobs picture is improving, and yet, overall, hiring remains a challenge. With modest growth in production this year, we will hopefully see increased hiring in the coming months.

Chad Moutray is Chief Economist, National Association of Manufacturers.

Furthering its commitment to sustainability, NAM member Bayer Corporation last week opened an electric vehicle charging station for employees at its U.S. headquarters in Pittsburgh. The Bayer charging station is one of the 45 stations that will be built along Pennsylvania Interstate 376 as part of the “Energy 376 Corridor” project. The project’s goal is to create one of the most extensive charging station networks in the country. The station is located next to Bayer’s EcoCommercial Building Conference Center, which is a net-zero energy facility.

Dan Santmyer, Director of Operations at the Bayer Pittsburgh site, said in a press release, “the installation of the EV charging station is part of the company’s global commitment to sustainability. We are proud to provide our employees with the infrastructure that supports their efforts to drive, rent or purchase EV’s and reduce their personal footprint on the environment.”

Learn more about Bayer’s comprehensive sustainability program here.

President Obama highlights science, technology, engineering and math (STEM) education tomorrow as part of the White House Science Fair. On Thursday, he welcomes Italian Prime Minister Mario Monti to the White House.

The Senate convenes this afternoon and considers the Federal Aviation Administration reauthorization bill (H.R. 658).

The House meets today to consider several bills on the extension calendar. Later this week, it will consider several budget process reforms as well as the congressional insider trading bill (S. 2038). See the Majority Leader’s schedule here.

Senate Hearings: TUESDAY—The Budget Committee holds a hearing on U.S. monetary and fiscal policy. THURSDAY—The Energy and Natural Resources Committee reviews legislation that would facilitate a mining project. The Budget Committee holds a hearing on income inequality.

House Hearings: TUESDAY—A Homeland Security subcommittee holds a hearing on maritime security and trade. The Education and Workforce Committee considers the recess appointments to the National Labor Relations Board. The Foreign Affairs Committee holds a hearing on export controls. WEDNESDAY—The Ways and Means Committee looks at accounting rules. An Energy and Commerce subcommittee holds a hearing on cybersecurity. The Science, Space and Technology Committee considers “America’s Nuclear Future.” An Energy and Commerce subcommittee holds a hearing on the Utility MACT rule. THURSDAY—An Energy and Commerce subcommittee looks at drug shortages. A Small Business subcommittee holds a hearing on small business contracting.

Executive Branch: Vice President Joe Biden is in Tallahassee, Fla., today to deliver remarks on the cost of college at Florida State University. On Thursday, he is on Ohio for the Ohio Newspaper Association Convention. U.S. Trade Representative Ron Kirk meets with the Singaporean Second Minister of Trade and Industry today. Tomorrow, Acting Deputy Secretary of Commerce Rebecca Blank is in Madison, Wis., to highlight a workforce training program. On Friday, Commerce Secretary John Bryson is in Minneapolis, Minn., to visit a community college and highlight the country’s workforce needs.

Economic Reports: From the New York Times: “Data will include consumer credit for December (Tuesday); weekly jobless claims and wholesale trade inventories for December (Thursday); and the trade deficit for December and the Thomson Reuters/University of Michigan consumer sentiment index for February (Friday).”

Below is my commentary for the Monday Economic Report.

The U.S. economy picked up some steam in the past couple of months, with several economic reports showing increased business activity and cautious optimism. Even with that positive trend, the Bureau of Labor Statistics surprised many economists with robust employment growth in January. Manufacturers added 82,000 net new jobs in the past two months, and the unemployment rate fell to 8.3 percent – a level not seen since February 2009.

Much of this recent manufacturing growth occurred in the durable goods sector. The Census Bureau reported a 1.1 percent increase in new orders for manufactured goods in December, which was led by sizable increases from the machinery, metals and transportation sectors. These areas also had the largest employment gains in January. Broadly speaking, though, the gains experienced lately have not been limited to just durables. The Institute for Supply Management’s purchasing managers’ index found that the sector as a whole continues to expand, with new orders growing stronger from the previous month. The Dallas Federal Reserve Bank’s survey had a similar finding.

Of course, businesses and consumers remain cautious in their optimism. Even with an improved economy, weaknesses remain, and the public’s perception of the current environment can often shift with the latest information. As evidence of this, the Conference Board’s measure of consumer confidence dipped in January, mostly on a dampened mood about the current economic climate. The Conference Board cited higher gasoline prices as one explanation, but it was also clear that respondents were more worried about pocketbook issues than in the month before. Perhaps these thoughts crept into their spending habits, as well, with the government reporting personal spending unchanged in December. Even with higher personal income for the month, consumers opted to control their purchases. (We saw this in an earlier report, as well, suggesting that holiday spending was more lackluster than originally hyped.)

While much has been made of the fiscal challenges in Europe, the Congressional Budget Office (CBO) last week brought the domestic deficit problems back into focus with the release of its latest budget outlook through fiscal year 2022. Its baseline budget for FY 2012 is for a deficit of $1.08 trillion, with total deficits exceeding $3 trillion over the next 10 years. Under an alternate fiscal scenario, these deficits could add to nearly $11 trillion through FY 2022. In looking at this in-depth report, it is clear that budgetary discussions will need to focus on both discretionary and mandatory spending in the years ahead. For instance, defense spending is expected to fall from 4.7 percent of GDP to 3.0 percent in that time frame; meanwhile, entitlement spending (not including interest on the debt) will grow from $2 trillion to $3.5 trillion. Overall, CBO’s baseline analysis paints a picture in which economic growth will be modest at best and the nation’s fiscal budgetary challenges will only become more serious with time.

This week will be slower on the data front. The biggest number will come on Friday, with the release of new export data from the Census Bureau. Given the importance of trade to many manufacturers’ growth plans, we will look for an improvement in manufactured goods exports from the decline in November. In addition to international trade, we will also learn about labor turnover rates, new consumer sentiment data from the University of Michigan and wholesale trade information.

Chad Moutray is Chief Economist, National Association of Manufacturers.

U.S. employment numbers jumped significantly higher in January, according to the Bureau of Labor Statistics, with the unemployment rate dropping to 8.3 percent.  Moreover, nonfarm payrolls grew by 243,000, and manufacturers added 50,000 net new workers. These gains were greater than expected, and certainly, much higher than the estimates from ADP released two days ago. Consensus estimates had been for around 150,000 net new jobs with the unemployment rate remaining around 8.5 percent.

These numbers continue to affirm the rebound and importance of manufacturing to our economic recovery. There were 82,000 net new jobs created in the sector in the past two months. This is definitely a sign that manufacturers have picked up their activity of late. Moreover, manufacturers have added 287,000 of the 2,063,000 net new nonfarm payroll jobs generated in the last 13 months (since December 2010); this suggests that nearly 14 percent of all of the jobs generated in that time frame stemmed from manufacturing.

As I noted last month, though, we would be remiss without mentioning the fact that employment remains a significant challenge, even with today’s good news. The “real” unemployment rate – which includes discouraged and underemployed workers – is now 15.1 percent, down from 15.2 percent in December and 16.1 percent last year at this time.

There are currently 2.81 million Americans who are classified as “marginally attached to the labor force,” with 1.06 million being discouraged workers. This is up slightly from last month. (The civilian labor force also grew last month, from 240.58 million to 242.27 million.)

Looking specifically at the January 2012 figures, the bulk of the new jobs in manufacturing came from the durable goods sector, which was up 44,000 for the month. The largest gains came in fabricated metal products (up 10,900), machinery (up 10,500) and transportation equipment (up 10,300). Nondurable goods sector employment rose by 6,000 in January. In that sector, the strongest growth came in the chemicals (up 2,200), printing and related support services (up 1,700) and beverages and tobacco products (up 1,300) sectors.

The average workweek for manufacturers rose from 40.6 hours in December to 40.0 hours in January. The average amount of overtime edged slightly higher from 3.3 to 3.4 hours. Therefore, the average weekly earnings for manufacturing workers rose from $969.93 to $977.51.

Overall, these numbers show renewed strength in the domestic economy, with employment growth in almost every major industrial sector except information, financial services and government. It mirrors other recent economic indicators showing an uptick in activity since October. Moreover, several sentiment surveys suggest that manufacturers are optimistic about future production and employment in 2012, which should bode well for this year’s numbers.

Yet, it is important to remember that significant headwinds exist both in Europe and in the U.S. The labor and housing markets – while improving – still have a long way to go before they are healthy, and consumer and business optimism is mixed with persistent anxieties. Still, we will take good news when we can get it.

Chad Moutray is chief economist, National Association of Manufacturers.

Today Vice President Joe Biden was in Grand Rapids, MI talking about manufacturing and following up on the proposals laid out last week by President Obama in the State of the Union.

We are happy to see the President and Vice President are continuing to talk about manufacturing and realize how important it is to the economy and job creation. However, manufacturers need the right policies to grow and create jobs.

Manufacturers are looking for the “All-of-the-Above” energy policy that includes the Keystone XL pipeline. If they Administration wants to create manufacturing jobs, the perfect project was right before them. Keystone XL will create 20,000 construction and manufacturing jobs and more than 118,000 spin-off jobs.

As the discussion continues about manufacturing and how to create jobs we hope that both Congress and the Administration will move forward with policies to let manufacturers lead the economic recovery and create quality, high-paying jobs.

The Institute for Supply Management (ISM) released it purchasing managers index (PMI) this morning, showing a modest uptick in the pace of overall manufacturing activity in January. Note that much of the data for 2011 were revised due to new seasonal adjustment factors. With that revision, the PMI rose from 53.1 in December to 54.1 in January. The index has been above 50 – its threshold for expansion in the sector – for 30 months, or since August 2009.

Looking at the various components the news is more mixed. While all of the key areas are over 50 except for inventories, a couple did reflect some easing in their pace of growth. On the positive side, the new orders variable grew stronger, up from 54.8 to 57.6. Supplier deliveries and new export orders also improved in the month.

However, production, employment and imports rose at a slower rate. Inventories continued to contract, but neared the neutral point.  The pace of price increases for raw materials also gained some steam after contracting in the previous three months.

Most of the sample comments provided by ISM echoed these sentiments. A machinery respondent, for instance, said, “Year starting a little slow, but customers are positive about increased business in 2012.” This sums up the bulk of the comments, with optimism for a stronger year.

Interestingly, one individual in the computer and electronics manufacturing sector added, “Business lost to offshore is coming back.” We continue to hear such anecdotal pieces of evidence about reshoring, and if nothing else, it provides another hint of American competitiveness in light of recent labor productivity gains. The Bureau of Economic Analysis is releasing new productivity data for the fourth quarter tomorrow.

Overall, the ISM data shows the manufacturing sector continues to recover. But, like other data released this week it is clear that growth has been modest at best. January appears to be growing less strongly than in November or December. While the new orders figures in this report bode well for future activity, it would be nice to see that translate into higher production and employment growth in the months ahead.

Chad Moutray is chief economist, National Association of Manufacturers.

Consumers were slightly less optimistic this month, according to the Conference Board’s Consumer Confidence Index. The overall index fell from 64.8 in December to 61.1 in January. The leading driver of this decline was a diminishment in people’s perception of the current economic environment, with the index for present conditions down from 46.5 to 38.4. This is essentially where the index stood in November, essentially erasing the improvements observed in December. Nonetheless, individual assessments of future conditions remained about the same, down to 76.2 from 77.0.

This index rises and falls with pocketbook issues, and in this survey, Americans felt that jobs were harder to get. Also, fewer of them anticipated increases in their incomes. The result was a decrease in the percent planning to purchase a home, automobile or major appliance.

Lynn Franco, the Director of The Conference Board Consumer Research Center, cites one other factor which might be providing a drag to these numbers. In the press release she says, “Recent increases in gasoline prices may have consumers feeling a little less confident this month.” Indeed, there is a long history of consumer confidence being shifted by the price that Americans pay at the gas pump.

For manufacturers, this is obviously not a positive way to enter the new year. We need the consumer to pick up their spending, helping to drive more demand for our goods. While over sentiment is much-improved from the lows seen in late summer and early fall, there is still much work to do to get the public less anxious about the economy.

Chad Moutray is chief economist, National Association of Manufacturers