Posts for July 6, 2010

July 6 , 2010

Last week's economic news again was more bad than good. Of the nine major economic indicators that came out last week, six declined, one moderated and just two improved. (To read all of last week's indicators, see the Latest Economic Reports section below.)

Several June reports, including a report on Texas manufacturing activity by the Dallas Federal Reserve and a national report by the Institute for Supply Management, showed that manufacturing activity slowed last month. This supports last Friday's employment report, which showed that manufacturers continued to add jobs last month, but the pace of employment growth was the mildest so far this year.

The Labor Department reported that overall employment fell by 125,000 in June. Similar to May, June was driven by wild swings in temporary employment to conduct the decennial census. After rising by over 400,000 in May, temporary Census jobs fell by 225,000 last month.
Stripping away government employment, June private-sector employment showed the labor market downshifting into low gear. After accelerating through the first four months of the year, private-sector employment edged up just 32,000 in May and 83,000 in June (see brown bars in the chart above).

For the manufacturing sector, last week's June report was both good and bad. On the positive side, manufacturers increased employment for a sixth consecutive month.

Through the first half of the year, manufacturers added 136,000 jobs, accounting for nearly a quarter of private-sector job growth so far this year. This also was the largest number of jobs added over a six-month period by manufacturers in a dozen years.

The bad news is that the 9,000 gain in June was the smallest increase so far this year and not very widespread. Outside of fabricated metals and machinery, which accounted for all of the job increases in manufacturing last month, most industries reduced employment modestly.

Last week's reports of moderating manufacturing activity were consistent with a number of regional manufacturing surveys which showed that manufacturing activity slowed across the country last month. Part of the slowdown was driven by government stimulus programs that either expired or are expiring soon.

Overall, the deceleration in private sector-job growth over the past several months is a concerning signal that the economic recovery is hitting a rough patch at mid-year.

Dave Huether

Chief Economist

National Association of Manufacturers

AON HEALTH CARE UPDATE

July 6, 2010 – AON Consulting
Last Week in Washington

U.S. Health and Human Services (HHS) Accepts Applications for Early Retiree

Reinsurance ProgramOn June 29, the Department of Health and Human Services’ Office of Consumer Information and Insurance Oversight (OCIIO) announced they will begin accepting applications for the Early Retiree Reinsurance Program (ERRP). The Affordable Care Act appropriated $5 billion to create the program to reimburse employers for medical claims for retirees, ages 55 to 64, who are not eligible for Medicare, including their spouses, surviving spouses, and dependents. The interim rule was effective on June 1, 2010, and applications are expected to be processed on a first-come basis. The program is scheduled to end on January 1, 2014, but many experts believe the funding will run out long before 2014. HHS has posted an information update and FAQ page to help facilitate the application process. A comprehensive list of rules and regulations can be found at the Office of Consumer Information and Oversight.

Secretary Sebelius Announces Pre-Existing Condition Insurance Plan
On July 1, HHS announced the details of the new Pre-Existing Condition Insurance Plan (PCIP), which provides coverage to uninsured legal U.S. residents who are unable to obtain health coverage due to a pre-existing condition. The Affordable Care Act appropriated $5 billion for the Pre-Existing Condition Insurance Plan, which will be administered by the state or the U.S. Department of Health and Human Services. Like the Early Retiree Reinsurance Program, the PCIP program is a transitional program made available until the 2014, when all insurers are required to ban discrimination against adults with pre-existing conditions. According to HHS administrators, 29 states and the District of Columbia have chosen to administer their own plans.

U.S. Congress Adjourns Without Extending COBRA and Unemployment Benefits
On June 30, the U.S. Senate fell two votes short of passing the American Workers, State, and Business Relief Act of 2010 (H.R. 4213), which included a six-month extension of COBRA and unemployment benefits. Senate Republicans rejected the $34 billion bill due the overall costs and impact on the federal deficit. The Senate is expected to resume consideration after the July 4 Holiday recess.

In Case You Missed It: HHS Early Retiree Reinsurance Application HHS Early Retiree Reinsurance: Application Dos and Don’tsHHS Information Pamphlet on the Pre-Existing Condition Insurance Plan Administration Launches New Health Care Reform Website

AP: ECONOMIC STRESS EASES IN MAY

July 6, 2010 – Today in Manufacturing.net

Two-thirds of U.S. counties became economically healthier in May, thanks to more Midwest manufacturing jobs and fewer home foreclosures in the Sun Belt, according to AP analysis... continue

EPA’S UNILATERAL ADMINISTRATIVE ORDERS ARE CONSTITUTIONAL

July 6, 2010 – Flagg Weekly Communications

When the EPA determines that an environmental cleanup is required at a contaminated site, it has three options, one of which is to issue a Unilateral Administrative Order (UAO) compelling a potentially responsible party to undertake a specified action. This case involves the constitutionality of UAOs, which are issued without any right to a hearing prior to their issuance. Last September, the NAM filed a brief arguing that such orders constitute immediate and substantial deprivations of property without any opportunity for a pre-deprivation hearing before a neutral decision-maker. On June 29, the Supreme Court affirmed the lower court’s ruling, finding that manufacturers have the option of refusing to comply with a UAO, thus forcing the EPA to go to court to enforce the order and providing companies with a hearing. For more on the litigation, see the NAM’s Manufacturing Law Center entry, General Electric Co. v. Jackson (D.C. Cir.).

PROSPECTIVE GREENHOUSE GAS REGULATION VIA PERMITTING

July 6, 2010 – Flagg Weekly Communications

Various environmental groups are challenging permits issued for exploratory oil and gas drilling operations in the Chukchi and Beaufort Seas north of Alaska. They argue to the EPA's Environmental Appeals Board that carbon dioxide emitted during exploration is currently subject to regulation, despite EPA's conclusion that greenhouse gases will not be subject to regulation until January 2011. The NAM brief filed June 25 argues that this type of challenge should be directed to notice-and-comment rulemakings, not raised in the context of permit decisions. In re Shell Gulf of Mexico, Inc. (Environmental Appeals Bd.).

UTAH DEPARTMENT OF WORKFORCE SERVICES PUBLISHES TRENDLINES EXTRA

July 6, 2010 – UB Daily

The Utah Department of Workforce Services has published the June results of TrendLines Extra, featuring Utah’s current economic news and data. Utah has moved beyond the worst of job losses caused by the recession of late 2008 and is once again beginning to add positions. However, a federal finding of 900 new jobs in the Beehive state is probably erroneous.
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WHEN DO GREENHOUSE GASES BECOME SUBJECT TO REGULATION?

July 6, 2010 – Flagg Weekly Communciations

On June 28, the NAM and 17 other business associations moved to intervene [motion here] in a lawsuit brought against the EPA over the agency’s interpretation of when greenhouse gases become subject to regulation under the Clean Air Act. If accepted by a federal court, thousands of business association members could be forced to obtain permits and install costly control technology to try to reduce greenhouse gas emissions. Center for Biological Diversity v. EPA (D.C. Cir.).