COVID-19
Economic Recovery
Dashboard

The global pandemic has impacted our state, nation, and the world in extraordinary ways. Illinois is on the road to recovery, led by our state’s manufacturing sector that has helped meet every challenge in our nation’s history. The Illinois Manufacturers’ Association is a trusted partner, working side-by-side with our state’s manufacturers and businesses during the crisis, to provide accurate and timely information to ensure your business can continue operating safely and efficiently.

The IMA drafted the essential manufacturing designation in Illinois and helped develop reopening guidelines in Illinois and Chicago. Now, we are sharply focused on rebuilding and recovering our economy to move Illinois forward including working with the Administration to help with the vaccine distribution. This dashboard spotlights key indicators to help guide business investment and policy decisions by our elected officials.

A bright spot in the economy, manufacturing added 38,000 jobs in December making eight straight months of job growth while an index from Institute for Supply Chain Management (ISM) showed an increase in their December Manufacturing PMI. Increases were registered in new orders, production, and backlog of orders. Concerns were noted in the employment arena where manufacturers continue struggling to find workers and a 12.2 percent increase in the Price Index.

The Illinois Department of Employment Security publishes monthly Unemployment Rates, comparing Illinois’ rate to the United States’ national rate.

The Illinois Department of Employment Security publishes Unemployment Insurance (UI) data. UI statistics are derived from administrative data collected on individuals currently applying for and those receiving Unemployment Insurance. Current and historical data is also available monthly, quarterly, semiannually and annually.

The State of Illinois Department of Employment Security (IDES) publishes monthly Current Employment Statistics (CES). CES are available in aggregate (Total Nofarm) and by industry/sector.

The State of Illinois Department of Employment Security (IDES) publishes monthly Current Employment Statistics (CES). CES are available in aggregate (Total Nofarm) and by industry/sector.

The Job Openings and Labor Turnover Survey (JOLTS) program produces experimental estimates for all 50 States and the District of Columbia at the total nonfarm level on job openings, hires, and separations.

The State of Illinois Department of Employment Security publishes Local Area Unemployment Statistics (LAUS), monthly and annual estimates of the labor force, employed, unemployed and the unemployment rate for the State, metropolitan areas, counties and municipalities that have a population of at least 25,000.

Mapped below is the current unemployment rate for each County in Illinois.

An indicator of the economic health of the manufacturing sector, the Purchasing Managers Index (PMI) is based on five major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment. The PMI is a measure of the prevailing direction of economic trends in manufacturing. The index is based on a survey of manufacturing supply executives conducted by the Institute of Supply Management. Participants are asked to gauge activity in a number of categories like new orders, inventories, and production and these sub-indices are then combined to create the PMI. A PMI above 50 would designates an overall expansion of the manufacturing economy whereas a PMI below 50 signifies a shrinking of the manufacturing economy.

The US Census Bureau collects and publishes data to provide broad and timely measures of combined changes in domestic retail trade, wholesale trade and manufacturers’ activities. The estimates in this report are based on data from three surveys: the Monthly Retail Trade Survey, the Monthly Wholesale Trade Survey, and the Manufacturers’ Shipments, Inventories, and Orders Survey.

  • Monthly Retail Trade: Companies with one or more establishments that sell merchandise and related services to final consumers.
  • Monthly Wholesale Trade: Companies with employment that are primarily engaged in merchant wholesale trade in the U.S. These include merchant wholesalers that take title to the goods they sell, and jobbers, industrial distributors, exporters, and importers. Excluded are non-merchant wholesalers such as manufacturers sales branches and offices; agents, merchandise or commodity brokers, and commission merchants; and other businesses whose primary activity is other than wholesale trade.
  • Manufacturers: Companies that have employees and are classified in Manufacturing. Participating companies include most with 1,000 or more employees and a sample of smaller companies; changes in their performance are assumed to represent all employers.

Note from the Census Bureau: Due to recent events surrounding COVID-19, many businesses are operating on a limited capacity or have ceased operations completely. The Census Bureau has monitored response and data quality and determined estimates in this release meet publication standards.

Published by the Chicago brand of the United State Federal Reserve Bank (Chicago Fed), this series represents the contributions of the manufacturing sector to the Midwest Economy Index (MEI). This series is a weighted average of state and regional indicators encompassing the entirety of the five states in the Seventh Federal Reserve District (Illinois, Iowa, Iowa, Michigan, and Wisconsin). The series measures the growth in nonfarm business activity in the Midwest Region based on the manufacturing sector. A zero value represents an average contribution to the MEI by the manufacturing, whereas a positive value indicates that an above-average contribution to MEI; and negative values indicate below-average contribution to MEI.

The Illinois Department of Revenue publishes monthly data on tax collections by source. Below is corporate (business) income tax collections, and individual income tax collections since January 2019.

The Illinois Department of Revenue publishes monthly data on tax collections by source. Below is retail sales tax collections, and motor fuel (gasoline) tax collections since January 2019.

The Illinois Commission on Government Forecasting & Accountability (COGFA) publishes monthly data that includes the previous month’s number of construction permits issued for new single family homes.

The Illinois Commission on Government Forecasting & Accountability (COGFA) publishes monthly data that includes the previous month’s number of new car and truck registrations.

The Illinois Commission on Government Forecasting & Accountability (COGFA) publishes monthly data that includes the previous month’s total exports from the state of Illinois.

Defining the Future of Made in America

The acronym ESG is frequently bandied about, but its meaning is often ill-defined. To the minds of many it simply implies investing in solar panels and wind turbines instead of “dirty” conventional energy. In reality, Environmental, Social, and Governance (ESG) is a much broader notion, and President-elect Biden has made defining and advancing ESG issues a clear centerpiece of his impending presidential tenure. While the breadth of President Biden’s final ESG program will be impacted by the outcome of Senate runoff elections in Georgia, much of his platform can be advanced independent of the balance of power in Congress. Biden has indicated that he will look to immediately rejoin the Paris Climate Agreement (COP21) and push through domestic ESG policies via executive order, while coordinating efforts across government agencies. Key pillars of the Biden platform include jobs creation (good paying/union), socioeconomic and racial inclusion, modernization of infrastructure, advancing environmental standards/justice, and a significant reduction in greenhouse gas (GHG) emissions.

Throughout Biden’s policy white paper (The Biden Plan to Build a Modern, Sustainable, Infrastructure and an Equitable Clean Energy Future) job creation is listed again and again as a key priority with an emphasis on good pay, labor protections, diversity, and expansion of unions. Federal government investment in American manufacturing and innovation is forecast to create at least 5 million new jobs. The goal is to leave no one behind on the journey and ensure that labor participates as an important stakeholder rather than just a means to an end. Many in corporate America are implementing – or have already implemented – policies which align with Biden’s labor policy goals. In August of 2019, Business Roundtable called on corporate America to “promote an economy that serves all Americans.” The OneTen Initiative has pledged $100m to help train and hire one million Black Americans for good-paying jobs over the next 10 years citing an effort to “address persistent inter-generational gaps in opportunity and wealth.” The group’s 37 founding members include General Motors, Trane Technologies, Roper, Caterpillar, Walmart, Target, Illinois Tool Works, and Delta Airlines. OneTen’s stated objectives fall in line with Biden’s call for a diverse, local, and well-trained workforce while broadening the labor talent pool for employers. Similarly, Graco has invested in vocational training schools as a source for new talent and long touted the benefits of considering its employees equal stake holders in the success of the company. Eaton Corp follows a similar strategy with both companies also looking to give back to the communities in which they operate. In each case treating employees as equal stakeholders is not just a box to check but a means to providing a superior customer experience, which should ultimately flow through to improved corporate revenues and earnings.

Achieving these labor goals requires a strong manufacturing sector. The Biden “Build Back Better” economic platform states US manufacturing “must be part of the arsenal of American prosperity.” The ammunition feeding this arsenal will include $400B in federal procurement, tighter domestic content rules, $300B in funding for research & development, investment credits, improved access to capital, and supportive trade policies. While there is an emphasis on supporting small and medium sized businesses, Biden views the auto industry as “the heart of American manufacturing.” This fact was highlighted with the proposed appointment of former Michigan Governor Jennifer Granholm as head of the Department of Energy. The governor and president-elect worked together in 2009 to rescue the auto industry, and in 2005 Granholm provided tax relief “in Michigan to help our manufacturers compete and to protect jobs.” Biden’s plan looks to create one million new jobs within the US auto supply chain. After a virtual meeting with the president-elect in November, General Motors CEO Mary Barra threw her full support behind Biden’s goal for the United States to “own the 21st century car market again by moving to electric vehicles.” Strength of domestic supply chains across manufacturing sectors is viewed by the new administration as critical to building a “new American infrastructure and clean energy economy.”

Both sides of the aisle have long spoken to the need to rebuild America’s infrastructure, but divergent views on just how to pay for a large program had stymied Congress. According to Bloomberg, the US only spends 2.4% of GDP on infrastructure vs. 5% on average in Europe and more than 8% in China. Biden’s massive $2T infrastructure spending proposal widens the definition to not only include roads and bridges, but seeks to rebuild the power grid, upgrade buildings, and transform transportation and communication networks. US manufacturers are well placed to be the beneficiaries should some or all of Biden’s plan come to fruition. Additional spending on traditional construction projects could spur a boom for construction equipment and rental companies. Biden has thrown down the gauntlet in calling for a carbon-free US power sector by 2035. Wind, solar, batteries, hydrogen, and carbon sequestration would all be part of the solution. The addition of intermittent power sources such as wind and solar have boosted – and will continue to boost – the demand for low- and medium-voltage components to ensure grid reliability. Eaton Corp notes that if its own corporate offices went from the current 7 electric vehicle charging stations to 25, as much as a 30% increase in electrical componentry would be required. Now multiply that across the US power grid as EV adoption rates continue to accelerate. According to the US Energy Information Association (EIA), US residential and commercial buildings account for a combined 39% of total primary energy consumption in the United States. This makes energy efficiency an important plank of Biden’s ESG platform. The president-elect targets upgrading four million commercial and two million residential buildings during his first term in office. Beneficiaries of an efficiency mandate include manufacturers of advanced HVAC, lighting, insulation, and building management products. While much attention is rightly directed at tax risk associated with a Democrat-led administration, there is potentially significant upside potential for manufacturers under Biden’s “Build Back Better” plan.

While researching this paper I asked Yan Jin, Senior Vice President of Investor Relations at Eaton Corp, what he thought might be an important idea for US manufacturers to understand about ESG. He responded that the United States has fallen behind China and the European Union on multiple ESG fronts. New US administration or not, the winds of change are already blowing around the globe. Biden’s goal is to set the United States on an “irreversible course” to help lead the world’s social and environmental agenda while becoming a leader in transformative technologies. A nationwide ESG agenda can only be led by the Federal government but will only find success when implemented in partnership with US manufacturers. I recently ask the Chief Financial Officer of a large manufacturer to describe his company’s ESG strategy. The response, ESG is not well defined and we are still trying to understand exactly what investors and the Securities Exchange Commission want. Hopefully the incoming administration will at least be able to help set some parameters that all can agree on. According to Deloitte, 75% of global investors now factor some sort of ESG metrics into their evaluation process and funds under ESG mandates are growing at an annual rate of 16%. McKinsey & Company reminds us that “a strong ESG proposition can create value,” going on to say, “the overwhelming weight of accumulated research finds that companies that pay attention to environmental, social, and governance concerns do not experience a drag on value creation, in fact, quite the opposite. A strong ESG proposition correlates with higher equity returns.” A great deal of uncertainty overhangs the fate of President-elect Biden’s ESG agenda, but manufacturing companies are still likely best served by skating to where the ESG puck is headed.

Additional BMO Harris Bank Insights:

For more information, please contact:
BMO Wealth Management
Michael D. Blanton, JD CPA CFA
Managing Director, BMO Private Bank
Email: michael.blanton@bmo.com
(T): 630.420.3547
wealth.bmoharris.com

 

BMO Commercial Bank
Ron Davidson, Vice President
BMO Commercial Middle Market Banking
Email: ron.davidson@bmo.com
(T): 630.420.3514
www.bmoharris.com

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