Monthly Archives : January 2020

National Association of Manufacturers Chief Economist Chad Moutray, however, commented in a statement that the report marked a “rebound” for manufacturing. He said that manufacturers are now seeing slow-moving “signs of stabilization,” and urged the United States to ratify USMCA, make progress on negotiations with China, and reauthorize the Export-Import bank long-term in order to keep the stabilization “on track.”

Federal Overtime Salaried Employees Change:

Employees who make less than $35,568 are now eligible for
overtime pay under a final rule issued today by the U.S. Department of Labor
(DOL). The new rate will take effect Jan. 1, 2020. To be exempt from overtime
under the federal Fair Labor Standards Act (FLSA), employees must be paid a
salary of at least the threshold amount and meet certain duties tests. If they
are paid less or do not meet the tests, they must be paid 1 1/2 times their
regular hourly rate for hours worked in excess of 40 in a workweek. Under the
new rule, nondiscretionary bonuses and incentive payments (including
commissions) paid on an annual or more frequent basis may be used to satisfy up
to 10 percent of the standard salary level.

In addition to raising the salary cutoff for exempt workers, the new
rule raises the threshold for highly compensated employees from $100,000 a year
to $107,432 (of which $684 must be paid weekly on a salary or fee basis). The
increase is about $40,000 less than what the DOL initially proposed because it
is based on the 80th percentile, rather than the 90th percentile, of all
full-time salaried workers’ earnings nationwide.

United
States factory production rebounded by more than forecast in November and rose
excluding a surge in auto production following the end of the General Motors
Co. strike, in a sign of stabilization in manufacturing.

• The 1.1% increase in manufacturing output, the
  biggest gain since early 2018, followed a 0.7% decrease in October, Federal
  Reserve data showed Tuesday, topping the median estimate of economists for a
  0.8% gain. The increase is welcome to manufacturers, who have faced
  headwinds throughout the year including persistent trade- policy uncertainty
  and slowing global demand. Even with the gain in November, though, factory
  output fell 0.8% from a year earlier, and figures were revised lower for
  September and October, indicating that activity remains relatively subdued.
  This month’s proposed initial trade accord between the U.S. and China could
  bode well for output in 2020 if confidence improves.

Whitehouse introduced the American Business Tariff Relief Act last year to address concerns raised by Rhode Island businesses regarding the process for companies to apply for exclusions from increased tariffs.  The legislation would require the U.S. Trade Representative and the Department of Commerce to establish a process under which U.S. businesses can request exclusions from increased tariffs prior to the imposition of the new tariffs.

Whitehouse has also introduced No Tax Breaks for Outsourcing Act to level the playing field for American companies by ensuring that multinationals pay the same tax rate on profits earned abroad as they do in the United States.  The legislation would end incentives created by President Trump’s tax law to outsource jobs and shift profits offshore.

Manufacturing
employment jumped by 54,000 workers in November, bouncing back from the loss of
43,000 employees in October. Much of that volatility stemmed from the effects
of the auto strike, with motor vehicles and parts employment up 41,300 in November,
rebounding from a similar loss in the prior report.

There were 12,865,000 manufacturing workers in November, the best reading in 11 years, with 1,412,000 employees added since the end of the Great Recession. Nonetheless, manufacturing job growth has slowed to an average of just more than 5,000 additional workers per month year to date. That contrasts with the average of 22,800 manufacturing employees created each month through the first 11 months of 2018.

• The
  ISM®
  Manufacturing Purchasing Managers’ Index®
  contracted for the fourth straight month, suggesting ongoing weaknesses in
  the sector in November. While production contracted for the month, it
  stabilized somewhat in the latest data, falling at a slower rate and
  bouncing back from the worst reading since April 2009.
• New
  orders for manufactured goods rose 0.3%
  in October, but were flat with defense sales excluded. Overall, the data
  continue to highlight weaknesses in the manufacturing sector across the
  past 12 months, with global softness and trade uncertainties weighing on
  activity and factory orders down 1.2% since October 2018. On a more
  positive note, core capital goods spending—a proxy for capital spending—rose
  1.1% in October, perhaps a sign of some stabilization in the measure.

 The Institute for Supply Management® reported that manufacturing activity contracted for the fifth straight month, falling to the lowest level since June 2009. Indeed, even as other measures have shown some stabilization in the sector, the headline index from ISM® declined from 48.1 in November to 47.2 in December.

This suggested that the manufacturing sector remained weak in December, with continued sales and export challenges and only cautious optimism for the coming months, according to the sample comments in the ISM® report.

United States manufacturers expect to reduce capital spending in 2020, a trend that could limit a rebound in the sector even as companies see profits improving.

Factory
executives forecast capital expenditures will decrease 2.1% in 2020, which if
realized would be the first annual decline in 11 years, according to a
semiannual survey from the Institute for Supply Management released Monday.
That compares to a reported increase of 6.4% in 2019. Managers at
non-manufacturing firms expect a 1.3% rise next year, slower than 2019’s
increase of 2%. While the group’s monthly data show the manufacturing sector is
currently contracting, the report indicates a turnaround may begin in the first
half of 2020 and pick up later in the year. Factories remain in a fragile
position after tumbling into recession earlier this year, though concerns have
abated that the weakness will spread into the broader economy amid strong job
gains.

Even so,
companies across the economy have held off on long-term investments amid
uncertain trade policies, escalating tariffs and a moderating growth outlook.
The pullback weighed on economic growth in both the second and third quarters.