Market Update - January 2025

US ISM (Institute for Supply Management) Manufacturing PMI came in at 49.3 in December.

• New orders: 52.5, the strongest demand for new goods in eleven months.
• Production: 50.3, the first expansion in six months.
• Prices: 52.5, a sign of inflation pressures.
• Backlog of orders: 45.9, up from 41.8 in November.
• Employment: 45.3, down from 48.1 in November.

The Chicago Business Barometer, also known as the Chicago PMI, dropped further to 36.9 in December 2024, compared to November’s 40.2 and missed market forecasts of 42.5. The latest data indicated that Chicago’s economic activity contracted for the 13th consecutive month, recording its steepest decline since May. New orders fell 13.5 points to the second lowest since May 2020, with more than half of respondents reporting fewer new orders for the first time since June 2020. Historical readings at these levels have been harbingers for recessions.

University of Michigan’s consumer sentiment was 74.0 in December and recently released January’s number was 73.2. Although slowly trending higher since May 2022, the indicator remains well below pre-Covid numbers.

Annual U.S. inflation rate rose for the third straight month to 2.9% for December. The annual core CPI inflation fell 0.1% to 3.2%. Economists will closely watch inflation trends over 2025, given the potential for a vast array of new tariffs.

U.S. GDP grew 2.5% in 2024, slightly below 2023 but well above initial 2024 forecasts of 1.7%.

The US economy recorded 265,000 jobs in December, above analyst’s estimates.

The unemployment rate ticked downward to 4.1% for December.

The most recent job-quitting rate data showed a 0.2% drop from the previous month. The rate has been trending lower since 2022 – usually suggesting that workers are seeing fewer new opportunities at other companies. However, the latest job openings to unemployment ratio stands at 1.13 - near 2019 pre-pandemic highs and well above 2002-2018 levels.

The average monthly car payment on a new vehicle is now around $753/month vs. $738/month from a year earlier. High auto loan rates, higher manufacturing costs, and possible new tariffs on parts could create headwinds for 2025 sales. However, industry analysts still forecast about a 1% increase in auto sales this year vs 2024.

Sales of existing homes in the US fell last year to their lowest level in almost three decades, as high home prices and elevated mortgage rates squeezed potential home buyers. Sales of previously owned homes totaled 4.06M in 2024.

The median price of an existing home reached a record high of $407,500 during mid 2024. It has since retrenched to about $404,000 by year end.

Sales of new homes totaled 664,000 last year, slightly above its long-term annual average.

The median price of new homes sold was $402,600.

The average rate on a conventional 30-year fixed mortgage reached a peak of 7.22% last year. After briefly slipping to around 6%, it has again ratcheted up to nearly 7%.

The annual CEO Outlook Survey from The Conference Board cites some of their key concerns for 2025:

Trade tensions:

• CEOs cited trade wars as the biggest issue facing their business in 2025.

Supply chains:

• 71% of US CEOs plan to alter their supply chains over the next five years, a significant increase from 54% last year.

Inflation:

• Just 13% expect prices to increase this year. Instead, 37% say innovation is their top priority for growing profits, followed by introducing new products (29%) and investing in technology, including AI (26%).

Cyberattacks:

• Fears of foreign cyberattacks are cited by 45% of American CEOs.

Recession:

• 46% of CEOs are concerned about an economic downturn, down from 53% last year.

National debt:

• 51% of American CEOs see US national debt and deficits as the greatest geopolitical concern for their business.

A Few Key Executive Actions by the new Trump Administration during his first few days in office:

Ending birthright citizenship:

• On his first day in office, Trump enacted several immigration-related executive orders, including one that would move to end recognition of automatic birthright citizenship.
• On Tuesday, attorneys general from more than a dozen states filed a lawsuit stating that the order violates the 14th Amendment.

Jan. 6 pardons:

• Trump indicated Monday that he granted full pardons to nearly all defendants involved in the Jan. 6, 2021, attack on the Capitol and commuted the sentence of six.

Halting federal government DEI programs:

• The president has signed an order to end diversity, equity and inclusion programs across the federal government.

Trade and tariffs:

• Trump said he was aiming to place 25% tariffs on imports from Canada and Mexico on Feb. 1.
• Trump made the comment even as he plans to direct federal agencies to analyze federal trade practices and policies with China and North American allies, saying he is not ready to move ahead with universal tariffs on goods from around the world.

Pausing the TikTok ban:

• Trump signed an executive order giving more time for TikTok to work out a deal to prevent a ban in the U.S.
• A document posted on the White House website says Trump was instructing the attorney general not to enforce the ban “for a period of 75 days from today to allow my Administration an opportunity to determine the appropriate course forward.”

Withdrawing from the Paris climate accord:

• The president signed orders withdrawing from the Paris climate accord and revoked several executive orders related to the previous administration’s efforts to fight climate change.

Declaring a national energy emergency:

• President Trump also declared a national energy emergency, an action that will enable the federal government to slash permitting requirements for energy projects, fast-track power-plant construction and loosen curbs on fossil-fuel export.

According to the Associated Builders and Contractors trade group, the Construction Industry needs to attract 439,000 new workers to meet current demand. Immigration policies may impact their ability to do so, which may constrict industry growth.

Hot Rolled Coil for January reporting an average of $690, up from December $675/ton (SMU).

The lead time range on Hot Rolled Coil remains at 4-6 weeks on average.

#1 Bush Scrap remains level at $390/ton, $10/ton up from last month. This is the first change since mid 2024.

The 4 week production interruption at Welded Tube of Canada, has ended and a new 3-year contract has been ratified.

Hollow Structural Steel mills announced increases supported by all this month. The increase value equals $40/ton.

Steel production capacity utilization, according to AISI (American Iron and Steel Institute), closed week ending January 25 at 1.641 million net tons and 73.7% utilization. Year to date overall production is 1% ahead of 2024 production totaling 5.878 million net tons through same period.

Nickel closed trading on January 28th at $15,380/ton. This is near 4-year lows.

Reports indicated that top producer Indonesia is considering policy to reduce nickel mining quotas to 150 million tons this year from 270 million tons in 2024, enough to reduce global supply by 35%.

Stainless pipe surcharges will again decrease in February to $1.06/lb. for 304 and $1.76/lb. for 316 grades.

December Midwest Average was at $1.376/lb., slightly lower than November’s $1.386/lb. (Kaiser)

Alcoa recently noted that a 25% tariff on aluminum products coming in from Canada would have a $1.5 billion to $2 billion negative impact on consumers and would have a quieting effect on demand in the U.S.

In the U.S., about 92% of people ring in the New Year with friends and family either in their own home or at friend or family member’s home. About 5% celebrate at a bar, restaurant, or event, and 3% do not celebrate at all.

Those who head to the famous Times Square party throw 1.5 tons of confetti. The trash generated takes 300 sanitation workers 15 to 16 hours to clean up.

An average of 44% of Americans make a New Year’s resolution before the night is over.

Only 31% of people stick with the promises they made to themselves the prior year. A whopping 81% fail by February. In fact, the second Friday in January has been dubbed Quitters Day, when many people abandon their New Year’s resolutions.

The four most popular types of goals people set are to exercise, eat well, lose weight, and save money.

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