Weekly Transportation Update: Automotive sector rebound bolsters manufacturing output

Overview

The economic news generally was positive this week. Retail sales were solid, especially considering the drag represented by falling gasoline prices. Industrial production and manufacturing output rose, although those figures were distorted to the upside by the resolution of the recent automotive strikes.

Inflation remained fairly cool at both the consumer and producer levels even discounting the effects of falling fuel prices. Diesel prices fell below $4 on average for the first time since July. Mortgage rates dipped below 7% for the first time since August.

Retail and food service sales

Retail and food service sales edged higher in November, but falling gasoline prices were a major drag on the figures. Sales overall increased 0.3% m/m, but they were up 0.6% excluding gasoline station sales, which fell 2.9%.

Overall retail sector pricing inflated sales figures slightly. Retail and food service sales increased 0.2% adjusted for inflation, according to estimates from the St. Louis Federal Reserve. In current dollars, retail and food service sales were up 4.1% y/y. Real sales were up 0.9%.

Changes m/m in nominal-dollar sales varied notably by retail sector. In addition to gas station sales, sectors posting notable sales drops included department stores (2.5%), miscellaneous store retailers (2.0%), and electronics and appliance stores (1.1%). Despite a sharp drop in department store sales, total general merchandise sales were down just 0.2%.

Retail segments posting notable sales increases included food services and drinking services (1.6%), sporting goods and related stores (1.3%), and nonstore retailers (1.0%). Furniture stores and health and personal care stores each recorded a gain of 0.9%. Motor vehicle and parts dealer sales were up 0.5% m/m in November.

Consumer Price Index

Consumer inflation remained tame overall in November as a decrease in gasoline prices essentially offset an increase in pricing for shelter. The Consumer Price Index for all items ticked up 0.1% m/m after holding flat in October. Over the past 12 months, the unadjusted all-items CPI was up 3.1%, down slightly from 3.2% in October.

The CPI excluding the volatile food and energy sectors increased 0.3% m/m after rising 0.2% in October. The unadjusted index less food and energy was up 4.0% for the last 12 months, which is the same as October’s figure.

Trucking

Broker-posted spot rates in the Truckstop system during the week ended December 8 (week 49) fell by the most since early October, but rate decreases during the second week following Thanksgiving usually are even sharper. Dry van and refrigerated equipment saw notable spot rate decreases during the week while flatbed spot rates held steady.

Total spot rates usually are relatively weak during the first couple of weeks of December before spiking during the holidays due to lack of capacity. Total rates declined 3.4 cents, which is the largest decrease since early October. Rates were less than 9% below the same 2022 week – the least negative y/y comparison since August 2022 – and about 4% below the five-year average.

For more on week 49 spot metrics for truck freight, visit https://freight.ftrintel.com/spotmarketinsights.

Rail/Intermodal

Intermodal and carload traffic volumes showed normal seasonal behavior ahead of the coming lull during the Christmas and New Year’s holiday period. Intermodal volumes ticked down slightly on a sequential basis with what little weakness there was focused on the container market. The trailer side of intermodal has likely reached its seasonal parcel peak for the year near 16,500 trailers and is likely to move back lower from that high water mark.

On the carload side, volumes moved back a bit as most categories dipped to their five-year average levels in the latest week. Chemicals in particular suffered a significant decline, but it remained near its average 2023 result of 45,000 carloads per week in the latest result. Automotive traffic was an outlier with volumes surging past 28,000 carloads in the latest week to hit their 2023 weekly volume high.