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Manufacturing activity in New York state declined in January, with the headline general business activity index retreating 14.7 points to -12.6. In January, the new orders index decreased to -8.6, falling 12.9 points, while the shipments index fell 10.8 points to -1.7, reflecting modest declines in both orders and shipments. Unfilled orders improved slightly to -4.7 from -8.4, while inventories dropped from 10.5 to 5.8. Delivery times lengthened, rising 10.9 points to 3.5, while supply availability was unchanged, moving down to 0.0.

Employment increased slightly in January, with the index for the number of employees rising from -6.6 to 1.2, suggesting relatively steady employment levels. The average employee workweek fell from -2.3 to -15.1, signaling a significant decline in hours worked. Both input and selling price increases picked up, as reflected in the prices paid index rising 8.0 points to 29.1 and the prices received index increasing 5.1 points to 9.3.

Manufacturers feel more optimistic about the months ahead. The index for future business activity increased 9.8 points to 36.7, with more than 53% of respondents expecting conditions to improve over the next six months. Employment is forecasted to improve, but slightly less than previously anticipated, slipping 0.3 points from last month, while the average employee workweek is expected to increase, jumping 10.3 points. Meanwhile, inventories are forecasted to drop, and new orders are anticipated to increase, rising 5.9 points to 34.2 in January.

The Producer Price Index for final demand (also known as wholesale prices) increased 0.2% in December, after rising 0.4% in November. In 2024, the final demand index rose 3.3% on an unadjusted basis, which is the largest increase since the year-over-year gain in February 2023 of 4.7%. Prices for final demand excluding foods, energy and trade services inched up 0.1%, the same as November. Prices for these goods increased 3.3% in 2024 after moving up 2.7% in 2023.

In December, prices for final demand services stayed the same, after four consecutive increases, while prices for final demand goods rose 0.6%. The increase in the index can be attributed to prices for final demand energy, which rose 3.5%, and was led by a 9.7% increase in the index for gasoline. The index for final demand goods, excluding foods and energy, was unchanged.

Processed goods for intermediate demand increased 0.3% in December. This change was led by a 1.6% rise in the index for processed energy goods. On the other hand, prices for diesel fuel dropped 1.3%. Prices for processed goods for intermediate demand advanced 0.2% over 2024 after declining 2.8% in 2023.

Meanwhile, prices for unprocessed goods for intermediate demand moved up 3.2% in December, the largest increase since August 2022. The rise was driven by a 10.0% boost in energy materials, led by a 57.7% jump in the natural gas price index. Alternatively, prices for carbon steel scrap dropped 11.7%. Prices for unprocessed goods for intermediate demand rose 5.1% in 2024 after falling 18.7% in 2023.

Consumer prices increased 0.4% over the month and 2.9% over the year in December, accelerating from the 2.7% over-the-year rise in November. Core CPI, which excludes more volatile energy and food prices, edged down to a 3.2% over-the-year increase and rose 0.2% over the month, which is down from the 0.3% monthly gains from the four prior months.

Shelter rose 0.3% over the month and 4.6% over the year in December, the smallest 12-month increase since January 2022. On the other hand, food price increases are inching back up, rising 0.3% over the month and 2.5% over the year in December. Prices for transportation services climbed 0.5% over the month and 7.3% over the year, with motor vehicle insurance surging 11.3% over the year.

Energy costs soared 2.6% in December, accounting for more than 40% of the monthly increase of the all-items index, but fell 0.5% over the year. Price changes within the energy category varied widely. For example, energy commodity prices are down 3.9% over the year, while utility (piped) gas service prices are up 4.9%.

As the over-the-year headline rate has ticked up in previous months, markets are that the Federal Open Market Committee will keep rates steady at its meeting next week. As was exhibited in its December Summary of Economic Projections, the FOMC’s expected easing plan of 100 basis points of rate cuts in 2025 was dialed back to 50 bps as the Fed’s progress on inflation slows.

Industrial production increased 0.9% in December after rising 0.2% in November. Meanwhile, manufacturing output moved up 0.6%, with a 6.3% gain in the aerospace and miscellaneous transportation equipment index leading the increase. Despite the over-the-month gain, aerospace and miscellaneous transportation equipment output declined 5.6% over the year. At 103.2% of its 2017 average, total industrial production in December rose 0.5% from the same month last year. Capacity utilization stepped up to 77.6%, but remains 2.1 percentage points below its long-term average from 1972 to 2023.

In December, major market groups saw mixed results, but a majority posted gains. Among consumer goods, the production of durables decreased 0.4%, led by home electronics (-0.9) and automotive products (-0.4%), while the index for nondurables rose 0.7%, with the greatest increases in energy (1.9%) and clothing (0.9%). The business equipment index improved 1.4% in December, with transit equipment up 10.3% after rising 6.1% in November.

Durable goods manufacturing increased 0.4% in December, and most durable manufacturing industry groups posted gains. Meanwhile, nondurable goods manufacturing rose 0.7% in December, with the largest gain in petroleum and coal products (1.6%). Manufacturing capacity utilization increased 0.4% to 76.6%, which is 1.7 percentage points below the long-term average.

Preserving the pro-manufacturing policies of the Tax Cuts and Jobs Act will “ensure that manufacturing remains the driving force of the American economy,” small manufacturer Courtney Silver Congress this week.
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What’s going on: Silver—president and owner of third-generation, family-owned precision machining business Ketchie and immediate past chair of the 51�Թ���’s Small and Medium Manufacturers Group—testified Tuesday at a House Ways and Means Committee hearing on the necessity of preserving soon-to-expire tax reforms and reinstating provisions that have expired already.

• “Critical pro-growth provisions from tax reform have expired already, and more harmful changes are on the way at the end of this year,” she said. “This means that every member of this committee has the opportunity to take real action that supports manufacturing in America.”������

A critical moment: The stakes now are extremely high for manufacturing and the U.S. economy as a whole, she added, citing findings from an 51�Թ��� out this week showing that in the absence of congressional action to preserve pro-manufacturing tax policies:

• Nearly 6 million U.S. jobs (and more than 1 million manufacturing jobs) are at risk;
• American workers will lose more than $540 billion in wages; and
• U.S. GDP would fall by more than $1 trillion.

A recipe for success: The passage of tax reform led to a period of record business for Ketchie, which allowed the company to expand and reward its team members.

• “Over 2018 and 2019, we were able to invest more than $1 million into capital equipment and create new jobs within Ketchie,” Silver said. “We upgraded our security and our HVAC systems and invested in new technology on our shop floor. And most importantly, we provided raises and bonuses to all of our employees.”
• “Business boomed throughout our supply chain, and demand for our parts soared. Our typically organized shop floor was covered in pallets of materials to keep up with our customers’ orders.”

… and for stagnation: But that growth was stopped in its tracks in 2022, when measures from the TCJA began to expire. And more expirations are on the way.

• “The loss of the pass-through deduction, increased individual taxes and changes to the estate tax will hurt my ability to grow and create jobs,” Silver said.������

Ripple effect: What’s more, manufacturers rely on each other—so when one takes a hit, all their supply chain partners take it, too, Silver said.

• She told the committee that the software vendor Ketchie uses was “dramatically affected” by the 2022 expiration of first-year research-and-development expensing. “They have less ability to create new jobs, to innovate the product that I use every day to run my business,” Silver told the committee. “There’s a ripple effect.”��������

Complex work requires certainty: The manufacturing sector isn’t “me buying equipment, pressing a button and a widget comes out,” Silver continued. It is a complicated industry on which millions rely every day—and one whose players need consistent tax policies.

• “To take raw material and to transform it into a useful object that we all benefit from is extremely tough,” Silver went on.

The bottom line: “We need pro-growth tax policies that are permanent, that are consistent, that are predictable to help us be able to grow because our manufacturing supply chain in our country needs us,” Silver said.

A busy week: Silver also spoke at the 51�Թ���’s Tuesday Capitol Hill announcing the release of the tax study.

More than just the manufacturing sector depends on the preservation of key provisions from the 2017 Tax Cuts and Jobs Act. In fact, the health of the entire U.S. economy relies on it.
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What’s going on: The 51�Թ���, members of congressional leadership, the chairs of the House Ways and Means and Senate Finance Committees and manufacturing leaders came together at a Capitol Hill yesterday to announce the release of a new 51�Թ��� , which found that the American economy will face significant headwinds if Congress does not preserve pro-manufacturing tax policies. Specifically:

• Almost 6 million jobs will be put at risk;
• Approximately $540 billion in employee wages will be lost; and
• U.S. GDP will be reduced by $1.1 trillion.

A record of success: “We’re here today because we know what happens when policies empower manufacturers and their workers, and we know what happens when they don’t,” said 51�Թ��� President and CEO Jay Timmons, who was joined at the event by Johnson & Johnson Executive Vice President and Chief Technical Operations & Risk Officer and 51�Թ��� Board Chair Kathy Wengel, as well as leadership from Miles Fiberglass & Composites, Ketchie, Armstrong Industries, Smurfit Westrock, RCO Engineering and RCO Aerospace and Winton Machine Company. “When Congress passed and President Trump signed the Tax Cuts and Jobs Act law in 2017, it really wasn’t a victory just for manufacturers; it was a victory for the entire country.”

• Timmons mentioned the record job, wage and investment growth that followed tax reform’s passage, as well as the economic security achieved by families across the country.����

Too much at stake: “Now, as we know, the progress we’ve made is at stake,” Timmons continued. “And that’s why today we’re launching a landmark new study by the 51�Թ���, together with EY, and rolling out a major ad campaign that quantifies what’s at stake for the American economy … if pro-manufacturing provisions … are allowed to expire.” ��
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People first: Courtney Silver, president and owner of North Carolina–based precision machining company Ketchie and immediate past chair of the 51�Թ���’s Small and Medium Manufacturers Group, knows firsthand the devastation that can be wrought on a family-owned business when pro-growth tax provisions start expiring.

• “When the Tax Cuts and Jobs Act delivered for us, we invested in equipment, we invested in technology and most importantly, we invested in our people,” she told those at the press conference, adding that because of the reforms, Ketchie was able to give its entire workforce pay raises and quarterly bonuses in the years following tax reform’s enactment.
• “When [pro-growth policies] started expiring, it impacted Ketchie in a big way,” Silver went on. “These losses made it harder for us to do the work that matters to us. I have an empty spot on my shop floor held for a significant investment that the expiration of full expensing has made too costly to purchase.”

“Congress cannot delay”: “Failing to extend the pro-manufacturing tax policies Congress and President Trump provided in 2017 will destroy America’s competitive edge,” House Ways and Means Committee Chairman Jason Smith (R-MO) said.��“This study underscores the need to extend the Trump tax cuts this year as quickly as possible. Congress cannot delay.”
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Competitive edge: Tax reform gave the U.S. back its competitive edge, and to ensure we keep it, we need to reinstate expired provisions and prevent the expiration of measures due to end this year, House Majority Leader Steve Scalise (R-LA) said.

• Before tax reform, “we were getting our clocks cleaned by foreign countries because we had a 35% corporate [tax] rate, and the world average was 23%,” he said. “When you [asked], ‘How do we make America competitive again?’ everybody that works, everybody that creates jobs in America, said, ‘How about we get competitive in the tax code so we don’t lose jobs to foreign countries?’”
• Scalise added that congressional Republicans have a “very aggressive” timeline for restoring these tax provisions.

Strong economy, strong country: Senate Finance Committee Chairman (R-ID), whose remarks closed out the press conference, said “piling taxes upon taxes upon taxes” is no way to build a resilient, successful economy.

• “The way to make us strong is to build a strong, powerful economy, which we get with sensible, pro-growth tax reforms,” he concluded.

Allowing crucial pro-manufacturing tax provisions to expire will be devastating for the U.S. economy, according to a landmark EY released today by the 51�Թ���.
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What’s going on: “Pro-growth tax policies from President Trump’s 2017 tax reforms were rocket fuel for manufacturers and made the U.S. economy more competitive on a global scale,” 51�Թ��� President and CEO Jay Timmons .

But in 2022, key provisions began to expire—and additional tax reform measures are scheduled to sunset at the end of this year. If Congress doesn’t preserve these pro-growth policies, the U.S. economy will face dire consequences:

• Nearly 6 million jobs will be put at risk.
• Approximately $540 billion in employee compensation will be lost.
• U.S. GDP will be reduced by $1.1 trillion.

Manufacturing impact: The manufacturing industry will bear the brunt of this economic damage, according to the study.

• More than 1.1 million manufacturing jobs and $126 billion in manufacturing worker wages are on the line if Congress does not preserve critical pro-manufacturing policies from the Tax Cuts and Jobs Act.����

The onus is on Congress: “It is the responsibility of Congress to act quickly so we can protect Americans’ livelihoods, prevent wage decreases and avoid the largest tax hike in history,” said House Speaker Mike Johnson (R-LA).
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Critical players: The U.S. economy relies heavily on manufacturers, which in turn rely on competitive tax policy—and that makes these provisions’ renewal crucial, said Johnson & Johnson Executive Vice President and Chief Technical Operations & Risk Officer and 51�Թ��� Board Chair Kathy Wengel.

• “[M]anufacturers—both large and small—drive innovation, create opportunity and strengthen communities across the country. … Maintaining competitive tax policy is essential to sustaining this momentum.”������

What we’re doing: The 51�Թ��� continues its blitz following the study’s release.

• This morning, Courtney Silver, president and owner of North Carolina–based precision machining company Ketchie and immediate past chair of the 51�Թ���’s Small and Medium Manufacturers Group, is testifying at a House Ways and Means Committee hearing on the need to make pro-manufacturing TCJA reforms permanent.
• At 4:30 p.m. EST today, the 51�Թ��� will hold a press conference on Capitol Hill announcing the study’s launch. Speakers will include Timmons, Speaker Johnson, House Majority Leader Steve Scalise (R-LA), House Ways and Means Committee Chairman Jason Smith (R-MO) and Senate Finance Committee Chairman Mike Crapo (R-ID). Watch live .

New orders for manufactured goods fell 0.4% in November, after falling for three of the past four months. When excluding transportation, new orders edged up 0.2%. Orders for durable goods dropped -1.2% after rising 0.7% in October. Year to date, durable goods orders are down 1.3%. Nondurable goods ticked up 0.4% in November after increasing 0.2% in October. Nondurable goods orders are up 1.4% year to date.

New orders for photographic equipment experienced the greatest increase of any industry at 19.0%, while ship and boat transportation had the largest over-the-month decrease of 13.6%. The largest over-the-year changes occurred in nondefense aircraft and parts (down 34.3%) and computers (up 19.7%).

Factory shipments increased 0.1% in November, after falling 0.2% in October. Shipments excluding transportation edged up 0.4%, above the 0.2% increase the previous month. Shipments for durable goods declined 0.2% in November, falling for the three previous months, but are up 1.6% year to date. Meanwhile, nondurable goods shipments inched up 0.4% in November and are up 1.4% year to date.

Unfilled orders for all manufacturing and durable goods industries rose 0.3% in November, following a 0.5% increase in October. The unfilled orders-to-shipments ratio for durable goods increased to 7.07 from 7.04 in October. Inventories rose 0.3%, while the inventories-to-shipments ratio edged up to 1.47 from 1.46 in October.

In November, job openings for manufacturing dropped by 56,000 to 412,000, with the decrease entirely concentrated in durable goods. The manufacturing job openings rate fell 0.4% to 3.1% in November and declined from 4.1% the previous year. The rate for durable goods manufacturing decreased from 3.8% to 3.1%, while it stayed the same at 3.0% for nondurable goods.

In the larger economy, the number of job openings rose to 8.1 million, an increase of 259,000 from the previous month but a decrease of 833,000 from the previous year. The job openings rate increased to 4.8%, up from 4.7% in October, but declined from 5.4% last year. While this data reflects an overall labor market that remains solid despite cooling over the past year, it also exhibits continued weakness for the manufacturing industry.

The number of hires in the overall economy fell to 5.3 million from 5.4 million in October and dropped 300,000 from the previous year. The hires rate decreased 0.1% to 3.3%. Meanwhile, the hires rate for manufacturing declined 0.3% to 2.2%. The hires rate for durable goods fell to 1.8%, while it fell to 2.9% for nondurable goods.

Total separations, which includes quits, layoffs, discharges and other separations, fell 180,000 from October to 5.1 million and dropped 287,000 from the previous year. The total separations rate slipped 0.1% to 3.2% and declined to 2.4% from 2.7% for manufacturing. Within that rate, layoffs and discharges edged down by 2,000 in November for manufacturing, while quits decreased by 24,000. The quit and layoff rates continue to remain lower for manufacturing than the total nonfarm sector.

Nonfarm payroll employment increased by 256,000 in December, blowing past the expectation of 155,000. October’s job gain was revised upward by 7,000 jobs to 43,000, while November’s job gain was revised downward by 15,000 to 212,000. The 12-month average stands at 186,000 job gains per month. The unemployment rate ticked down 0.1% to 4.1%, while the labor force participation rate stayed the same at 62.5%.

Manufacturing employment fell by 13,000, after the November gain of 25,000 jobs didn’t fully recoup the 52,000 jobs lost in October. For a second consecutive month, the most significant losses in manufacturing in December occurred in computer and electronic products, which shed 6,200 jobs over the month.

The employment-population ratio rose 0.2% to 60.0% but is down a slight 0.1 percentage point from a year ago. Employed persons who are part-time workers for economic reasons decreased by 111,000 to 4.36 million but are up from 4.22 million in December 2023. Native-born employment is down 68,000 over the month and 198,000 over the year. Meanwhile, foreign-born employment is also down over the month but up 342,000 over the year.

Average hourly earnings for all private nonfarm payroll employees rose 0.3%, or 10 cents, reaching $35.69. Over the past year, earnings have grown 3.9%. The average workweek for all employees stayed the same at 34.3 hours in December.