Strong growth in pricing
The stress in the freight transportation system continues to show up as strong growth in pricing. The Producer Price (PPI) for rail intermodal freight transportation in March jumped 4.2% from February for the largest gain on record. The PPI is the Bureau of Labor Statistics’ estimate of pricing at the producer level (as opposed to the consumer level, which is the Consumer Price Index.)
PPI gains in trucking didn’t set records, but they were hardly weak. The PPI for truckload primary services rose 2.2%, which is the fifth-largest monthly increase on record. And the PPI for LTL primary services rose 4.1%, also the fifth largest increase, with data going back to 1992.
The intermodal, truckload, and LTL PPIs were strong y/y, too, but that comparison will not mean much for the next few months as the U.S. economy had basically shut down from late March through early May 2020. Pricing, like volume, essentially collapsed during that period.
Meanwhile, pricing in key production commodities for manufacturing and housing continues to soar. The PPI for hot-rolled steel jumped about 25% m/m in March following an increase of more than 19% in February. The steel PPI was up 66% y/y in March, but that was not just a function of a weak comparison period. The PPI had been up 33% y/y in February.
The lumber PPI rose 6.2% m/m, which was stronger than the February gain but down from the double-digit increases seen in most of the months since July. The lum-ber PPI was up 65% y/y in March, but it also was up 59% y/y in February, showing that the strength is not simply a favorable prior-year comparison.
Are there enough workers?
One of many factors causing stress in the economy is the diﬃculty that many industries are facing in adding enough workers at a time when the U.S. labor participation rate remains nearly 2 percentage points below the February 2020 level. One sign of that challenge is a big rebound in the number of job openings.
Between March 2018 and February 2020, job openings in the U.S. economy were consistently higher than the number of unemployed individuals, a situation that had never occurred before in the 20 years such data had been collected. Then came the pandemic.
Today, the number of unemployed people remains more than 2 million higher than the number of job openings, but in February the number of job openings rose by 268,000 to 7.4 million – the strongest level since January 2019. The increase followed an even-sharper gain of 347,000 job openings in January.