In the Beige Book released last week, the Federal Reserve Board observed "modest to moderate" growth in economic activity over the past month. That trend extends to all facets of the domestic economy, with notable improvements in confidence and manufacturing activity in a number of indicators and regions of the country. Respondents to the Manufacturers Alliance for Productivity and Innovation's (MAPI) outlook survey were strongly positive about production, new orders, employment and capital spending (even as there was some easing in MAPI's findings from the past survey). The sector is expected to experience moderate growth this year.
Perhaps because of these measures, businesses and consumers have become more positive, as well. The University of Michigan's Survey of Consumer Sentiment indicated a rebound in confidence to levels seen earlier in the year, with Americans more optimistic about both the current and future outlook. Likewise, the National Federation of Independent Business noted much-improved sentiment among small business owners, and more of these individuals said that the next three months might be a "good time to expand." While these sentiment surveys still have sub-par readings, the improvements of late show a trend that is headed in the right direction.
With that said, not all of the economic news released last week was good. Retail sales in December were disappointing, up just 0.1 percent. Despite much of the hype over larger Christmas sales – particularly around Black Friday and just before the holiday – overall sales growth was weak, and excluding auto sales, retail sales were negative for the month. In addition, the trade deficit widened in November. Global economic weaknesses, particularly in Europe, are having an impact on growth prospects. On Friday, Standard & Poor's downgraded several European countries' debt ratings, with France and Austria losing their AAA rating. Such moves help to reinforce economic anxieties, but they also highlight the reality that Europe's problems are having a real impact. Forty-five percent of the MAPI respondents said that their exports to Europe have been negatively affected by Europe's weaknesses.
When discussing the latest economic trends, there is a split between the U.S. domestic economy and the rest of the world. While U.S. economic activity has seen noticeable improvements recently, weaknesses abound elsewhere. This is particularly true in manufacturing, as seen in this table of world-wide factory activity. The worry – at least among those who closely follow the European crisis – is that those problems will spill over into domestic concerns.
This week, we will gain further insights into the U.S. market, with new industrial production numbers out tomorrow. Some regional production figures from the New York and Philadelphia Federal Reserve Banks and Chapman University (regarding California) also will be released this week. In addition to manufacturing activity, other data highlights for the week include consumer and producer price indices and new housing starts.
Chad Moutray
Chief Economist
National Association of Manufacturers
CHINA'S ECONOMIC GROWTH EBBS TO LOWEST IN 2 YEARS
Today in Manufacturing
The slowdown was in line with government plans to have the booming economic growth come to a 'soft landing' that would avoid global repercussions ... continue
INNOVATION IS AS MUCH CONNECTION AS INVENTION
Today in Manufacturing
Some of the greatest game-changing innovations resulted only when the idea was connected with the capability to pull it off ... continue
OBAMA'S NLRB APPOINTMENTS CHALLENGED
Bloomberg News
The Bloomberg News reported, "President Barack Obama's recess appointment of three members to the National Labor Relations Board was challenged in court by the National Federation of Independent Business, which claims a constitutional violation." The filing "may be the first legal action targeting the White House appointments made without Senate confirmation on Jan. 4 during a brief congressional break. It was made as part of an existing lawsuit in federal court in Washington over a new NLRB rule that requires employers to notify workers of their rights to form a union." The article noted, "The case is National Association of Manufacturers v. National Labor Relations Board, 1:11-cv-1629, US District Court, District of Columbia (Washington)."
NAM PUSHS LAWMAKERS TO ACT QUICKLY TO EXTEND TAX BREAKS THAT EXPIRED LAST YEAR The HillThe Hill’s, "On The Money" blog reported, "Business advocates are hoping Congress, which returns for another session in the coming weeks, will be able to quickly extend a number of tax provisions that expired at the end of" last year. "I'm as hopeful as I can be that Congress will act, that they want to act," Monica McGuire, the senior director for tax policy at the National Association of Manufacturers, told The Hill. "They recognize the impact of these provisions, and that's encouraging."
BUSINESSES BENEFIT IN WASHINGTON WHEN INJURED WORKERS STAY ON THE JOB
Quick Manufacturing News
Employers who help their injured workers stay on the job by creating or providing light-duty jobs for them may be eligible for reimbursement through Washington state's new Stay at Work program. Click to continue
COMPENSATION CHALLENGES IN 2012: FINDING THE RIGHT MIX
Quick Manufacturing News
As companies move away from the economic turmoil of the last few years and further into a recovering economy, they need to refocus on their compensation choices and mix. Moreover, CFOs need to consider how employees view the company's overall value proposition—that is, everything of value the company provides to employees, including nonfinancial reward. Click to continue
A WIN FOR MANUFACTURERS IN THE CALIFORNIA SUPREME COURT
FLAGG Weekly Communications
The California Supreme Court recently decided a case that limits a manufacturer’s liability for products made by other manufacturers. The National Association of Manufacturers had filed an amicus brief in the case.
The Consumer Class Actions and Mass Torts blog has a thorough analysis of the decision. An excerpt from that analysis:
In a decision that harkens back to the fundamental precepts underlying strict liability and the whole concept of product liability, the California Supreme Court reversed. In a series of very quotable passages, the court hewed to the notion that liability must be tied to the product that the manufacturer made, and that manufacturers have no duties to end users that arise from the use of other manufacturers’ products.
With respect to strict liability claims, the court held that there could be no strict liability design claim because the alleged design defect in Crane’s and Warren’s products -- the inclusion of asbestos-containing gaskets -- was not a legal cause of Mr. O’Neil’s injury because these asbestos-containing parts were not on the ship by the time Mr. O’Neil got there. As for the strict liability failure to warn claim, the court held that defendants had no duty to warn of risks arising from other manufacturers’ products, namely other asbestos-containing valves and insulation that the Navy used with Crane’s and Warren’s products.
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