The Bureau of Labor Statistics reported that producer prices rose 0.2 percent in January, the first increase since September. With that said, inflationary pressures remain modest, with core finished goods prices up just 1.8 percent over the past year. This is below the 2 percent goal stated by the Federal Reserve Board, and it reflects significant easing over the course of 2012, as described last month and as can be seen in the attached graphic.

More specifically, in January, energy costs continued to fall, down 0.4 percent for the month. Prices for finished energy goods – mostly from gasoline – have declined for four straight months, helping to lowering inflationary pressures. Food costs rose 0.7 percent in January, reversing the 0.8 percent increase in December. The largest contributor to this gain was higher vegetable prices. Outside of energy and food costs, other increases were found in the pharmaceutical sector and with some types of capital equipment.

A similar picture emerges for the manufacturing sector, which has experienced only a 0.7 percent increase in producer prices year-over-year. This is largely due to reduced energy costs, with raw materials for petroleum and coal products manufacturers down 4.4 percent since January 2012. Nonetheless, these costs were 0.9 percent higher in January on crude petroleum prices. (continue reading…)

The Census Bureau and the U.S. Department of Housing and Urban Development said that new residential construction declined from a revised 973,000 in December to 890,000 in January. It is important not to over read this 8.5 percent drop. The decrease was due to a fall in multi-family housing starts, down from 365,000 to 277,000. This highly-volatile figure still represents an upward trend for multi-family units, which have risen 32.5 percent year-over-year. Instead, it appears that December’s multi-family starts number was an outlier.

New single-family residential construction, meanwhile, reached a high not seen since July 2008. Single-family housing starts rose from 608,000 to 613,000, and they were up 20.0 percent over the past year. The monthly and annual increases were primarily in the South and the West, with softness observed in the Northeast and Midwest.

The other positive news out of this report was the housing permits data, which grew from 909,000 to 925,000 for the month. Like the single-family numbers, the housing permits figure was at its highest point since July 2008. Housing permits were up 35.2 percent year-over-year. Both single-family and multi-family unit permits increased in January, and total permits were higher in all regions of the country. Single-family permits were down in the Northeast and Midwest, mirroring the starts data.

Overall, the new residential construction data suggest that the housing market remains a strong suit in the nation’s economy, even with the lower decline in multi-family starts. The longer-term trend suggests that more Americans are building or planning to build homes. The tremendous gains in housing starts and housing permits over the past year have helped to boost real GDP and provide much-needed support to the manufacturing sector. Still, while I suspect that housing starts will surpass the 1 million mark by year’s end, there is much work to be done, as housing sector activity remains well below the levels seen before the bubble burst. (continue reading…)

President Obama speaks about the sequester this morning. He will urge Congress to avert the automatic budget cuts set to take effect at the end of next week. On Friday, the President meets with Japan’s prime minister.

The House and Senate are out this week.

Executive Branch: Vice President Joe Biden takes part in an event on gun violence today. On Thursday, he travels to Connecticut to deliver remarks on gun control. Secretary of State John Kerry delivers his first speech as the nation’s top diplomat on Wednesday.

Economic Reports: From The New York Times: “Economic data to be released include the Producer Price Index for January and housing starts for January (Wednesday); and weekly jobless claims, the Consumer Price Index for January, used home sales for January, the Philadelphia Fed index for February and leading economic indicators for January (Thursday).”

This morning the House Energy and Commerce Subcommittee on Commerce, Manufacturing, and Trade held a manufacturing showcase before the first subcommittee hearing of the new Congress on manufacturing titled, “Our Nation of Builders: Manufacturing in America.” The showcase featured a variety of manufactured products from Congressional districts of different members on the subcommittee ranging from medical devices to high-tech electronics and 3D printers.

Corning Senior Vice President of Specialty Materials James Steiner shows Subcommittee Chairman Lee Terry a few of Corning's products.

Manufacturer Corning featured optical fiber that is produced in Congressman Brett Guthrie’s district in Harrodsburg, Kentucky. Corning invented the world’s first low-loss optical fiber for communications more than 40 years ago and today produces a wide range of fibers for different use.

Other products included a 5 gallon safety can and F-15 funnel made by Eagle Manufacturing in Wellsburgh, West Virginia in Congressman McKinley’s district.

Chairman Lee Terry’s district featured a City of Omaha manhole cover made by Neenah Foundry in Omaha, Nebraska. Other products featured from his district included respirators, earmuffs and safety eyewear produced by 3M who have 300 employees in his district.

One of the most popular items at the showcase was the 3D printer from Direct Dimensions in Owings Mill, Maryland. New 3D printers can produces 3D images of scanned products or even people. It’ is truly amazing technology.

Today’s event was a fantastic way to show members of Congress the great products that are being manufactured right in their own backyards.

Today NAM President and CEO Jay Timmons was interviewed by WWJ AM radio about the State of the Union address and his speech today at the Detroit Economic Club. Please click below to listen to the interview.

NAM President and CEO on WWJ AM Radio

The U.S. House of Representatives voted overwhelmingly, 422-0, in favor of a bi-partisan piece of legislation, H.R. 267, would streamline the process for approving certain hydroelectric development and thus allow the use of smaller hydro projects and conduit hydro projects.  The legislation also directs Department of Energy (DOE) to conduct a study on pumped storage project opportunities and to study potential hydropower from existing conduits.

There are two things that strike me about this legislation. First, it appears sensible and straight forward. It has a goal of increasing electricity generated from a renewable source. Second, it is a bi-partisan piece of legislation with members like Reps Rogers, Terry, Walden and Latta supporting it from one side of the isle and Reps. DeGette, Dingell, Markey, Matheson and Lujan on the other side. This is exactly the kind of legislating that we should be doing more of where we find areas that we can agree and we then go out and get it done!

The NAM supports the streamlining of the regulatory process for hydroelectric power development through the elimination of redundant or contradictory regulatory steps and avoiding the imposition of conflicting clauses in other legislative initiatives.

The NAM embraces an “all of the above” energy strategy and hydroelectric power certainly fall into that category. Hydropower is a renewable resource that is clean, efficient and is responsible for more of the Nation’s renewable energy supply than any other source of renewable energy. Hydro provides 67% of the domestic renewable energy and 7% of the total electricity generation. As we streamline the regulatory process and build more hydroelectricity capacity there are job opportunities. (continue reading…)

Manufacturers appreciated the highlight of the industry from the President last night. And, as long-time advocates for pro-growth tax reform, we were glad to hear the President calling for “comprehensive” reform, that is an effort that includes both corporate and individual tax reform.

While many larger manufacturers operate in corporate firm, about two-thirds of manufacturers—mostly small and medium-size companies—operate as a “flow through” and are taxed as individuals. Unfortunately, the good news on taxes stopped there.

The President made clear that he looks at tax reform as a way to help “bring down the deficit.”  The NAM, on the other hand, doesn’t view tax reform as a revenue raiser, but as an engine for much-needed economic growth and competitiveness.

Speaking of competitiveness, we were dismayed to hear the Administration again bring up the illusory “tax breaks for companies to ship jobs overseas.” Manufacturers in the United States know firsthand the challenges of competing in a global marketplace under our outdated world-wide tax system.  Making the current system worse—as the President suggested—is going to make manufacturers in America even less competitive. In order to promote competitiveness, we need to move to a territorial tax system, similar to systems in most industrial countries, structured to enhance U.S. competitiveness, not raise additional revenue.

Dorothy Coleman is vice president of  tax and domestic economic policy, National Association of Manufacturers.

Articulating the federal role of transportation was the key theme in today’s inaugural House Transportation and Infrastructure Committee hearing for the 113th Congress. Chairman Shuster set the tone by referencing the Constitution’s Commerce Clause and the settling of an early navigation dispute between Maryland and Virginia. Manufacturers in America have benefited greatly from the nation’s long-standing commitment to infrastructure and need seamless connectivity to survive in today’s competitive climate.

The two-year MAP-21 expires in September 2014 and the Chairman is beginning the reauthorization effort now. While issues like the overdue Water Resources and Development Act (WRDA) and passenger rail reauthorization are top on the agenda this year, getting back to a well-funded, long-term surface transportation authorization is a goal manufacturers are fully behind.

Improving our nation’s aging infrastructure is part of the NAM’s Growth Agenda. We must invest and modernize our roads in order to compete and make the United States the best place in the world to manufacture.

Today’s witness former Pennsylvania Governor Ed Rendell said it best today, “We can’t be an exceptional country without a world-class infrastructure.”

The President reintroduced some ideas last night on infrastructure. We look forward to working with the Administration to advance rebuilding the nation’s infrastructure and dealing with the most pressing challenges facing the transportation network. This will best be achieved by passing a well-funded, multi-year authorization immediately following the expiration of MAP-21 in 2014. (continue reading…)

Yesterday, the NAM co-hosted an Economic Forum at the Boeing Company headquarters in Chicago. This forum was part an ongoing effort to hold discussions with senior-level executives and economists around the country to listen and discuss the current state of the economic and political landscape.

The Economic Forum in Chicago was hosted by Greg Smith, the Chief Financial Officer of Boeing, who highlighted the importance of manufacturing and exports for Boeing. Business at Boeing continues to grow and the company currently has a record order backlog.

Economists discuss manufacturing and the economy during a forum at the Boeing Company

Boeing is the largest commercial airplane manufacturer by plane output. Yet, aerospace is becoming increasingly more competitive globally and the largest challenges in the short-term stem from shrinking spending levels on defense and the prospects of devastating across-the-board federal spending cuts – including cuts to civil government agencies which will affect manufacturers from every sector.

The issue of the automatic spending cuts came up at multiple points during the discussion today. William Strauss, a senior economist with the Federal Reserve Bank of Chicago, noted the slow pace of growth in the economy that we have experienced since the end of the Great Recession. He anticipates growth of around 2.5 percent this year. While this is better than in 2012, it is modest at best.  He said repeatedly we are missing a significant opportunity to grow faster based on the “slack” in the economy created from the 2008-09 downturn – opportunities that could be realized through more agile and manufacturing-friendly policy implementation.

The other experts on the economic panel made up of Peter Hamilton, Chief Financial Officer, Brunswick; Hui Jiang, Business Analytics and Strategy Director, Navistar; and Chad Moutray, NAM Chief Economist tended to concur with this assessment.  Moutray presented compelling data that showed rapid expansion in manufacturing in the first quarter of 2012, but a serious decline for the remainder of the year.  Much of the cooling of manufacturing growth, Moutray said, was attributable to the uncertainty about the direction of economic and tax policies in Washington. (continue reading…)

Manufacturers welcome the President’s announcement during last night’s State of the Union address that the United States and European Union will launch formal trade agreement negotiations. We are pleased with the release of the U.S.-EU High Level Working Group’s (HLWG) final report, which calls for “a comprehensive agreement that addresses a broad range of bilateral trade and investment issues, including regulatory issues, and contributes to the development of global rules…”

The NAM has long supported the launch of formal trade talks between the United States and the EU, and previously submitted these comments to the OMB. Manufacturers will continue advocating for negotiations that result in the elimination of tariff and non-tariff barriers to trade, cutting the cost of doing business across the Atlantic, and increasing economic growth and employment in both the United States and EU.

The United States and the EU already have the world’s largest commercial relationship but major opportunities for increased trade, investment and cooperation remain. A trade-liberalizing agreement could demonstrate the strong leadership of the United States and the EU to the rest of the world and put both our economies in a stronger position in the global marketplace. Ultimately, this agreement can establish the real parameters of 21^st century trade – addressing barriers to global supply chains and worldwide investment.

A key objective for the NAM in U.S.-EU negotiations is promoting regulatory cooperation and coordination in order to remove technical barriers to trade and reduce unnecessary divergence between EU and U.S. regulations. Eliminating redundancies and inconsistencies in regulations, standards, and conformity assessment and certification procedures will concretely lower the costs of doing business for manufacturers on both sides of the Atlantic, and create new market opportunities, thereby enhancing U.S. and EU competitiveness around the world. Such barriers not only limit market access and consumer choice, they substantially increase costs for U.S. and EU manufacturers, undermining their global competitiveness. A U.S.-EU agreement should eliminate duplicative and redundant technical regulations, standards and conformity assessment procedures.

It is vital that U.S. and EU negotiators aim to promote compatibility with respect to standards, regulations and requirements in order to improve efficiency and remove barriers to trade and investment across the Atlantic. A final agreement must result in reduced regulatory costs, the elimination of tariffs, and mutual economic benefits and job creation for both economies. The benefits of such an agreement would be substantial for manufacturers both in the United States and the EU.

Jessica Lemos is director of international trade policy, National Association of Manufacturers.