Freight's Economic Picture Brightens—But Housing Continues to Hold Back Growth

The latest economic data presents a transportation market with improving industrial momentum, resilient consumer spending, and sharply lower energy costs. At the same time, housing remains a notable weak spot, while trade flows and inflation continue to send mixed signals.

For transportation decision-makers, these indicators provide valuable context for understanding freight demand in the months ahead.

Manufacturing Activity Continues to Strengthen

Industrial demand showed renewed momentum as durable goods orders posted another strong month, led by heavy manufacturing sectors.

Key developments include:

• Durable goods orders (excluding transportation equipment) increased 1.3% month-over-month.
• Primary metals orders rose 3.0%.
• Machinery orders increased 1.9%.
• Fabricated metal products gained 1.5%.
• Core capital goods orders also returned to growth after a brief pullback.

The strength remains concentrated in industrial production and capital investment—two areas that typically support freight demand across multiple transportation modes.

Energy Costs Ease Significantly

One of the week's biggest developments came from fuel markets.

Diesel prices recorded one of the largest weekly declines ever measured, while crude oil prices retreated toward $70 per barrel following easing geopolitical concerns. Although prices remain elevated compared to levels before recent Middle East tensions, transportation operating costs have moved sharply lower over the past several weeks.

Why it matters:

• Diesel prices have fallen roughly 81 cents per gallon in seven weeks.
• Lower fuel costs reduce operating expenses throughout the freight supply chain.
• Energy prices should also help moderate inflation readings over the coming months.

Consumers Continue Spending Despite Inflation

Consumer spending remained resilient during May, supported by gains across both durable and nondurable goods.

Highlights included:

• Real consumer spending increased 0.3%.
• Durable goods spending climbed 0.9%.
• Broad-based gains occurred across vehicles, recreational products, furnishings, and household equipment.
• Inflation remains elevated, although lower energy prices could provide relief in upcoming reports.

Consumer demand continues to support freight activity even as inflation remains higher than many businesses would prefer.

Housing Remains the Largest Economic Headwind

While many economic indicators improved, residential housing continues to struggle.

New home sales declined for the second consecutive month, inventories increased, and mortgage rates remain near levels that continue to pressure affordability.

Current housing signals:

• New home sales fell 7.3% month-over-month.
• Sales are down 6.8% year-over-year.
• Housing inventory reached 10.3 months of supply, the highest level since 2022.
• Average 30-year mortgage rates edged back up to 6.49%.

For freight markets tied to construction materials, appliances, furniture, and home improvement products, housing remains an area to watch closely.

Trade Activity Shows Growing Volatility

International trade data shifted noticeably during May.

Goods exports declined while imports increased, pushing the U.S. goods trade deficit sharply higher.

At the same time:

• Capital goods imports remained strong.
• Automotive imports increased.
• Grain exports continued to normalize following last year's trade disruptions.

These shifting trade patterns continue to reshape freight flows across ports, rail, trucking, and intermodal networks.

Looking Ahead

The latest economic data points to an economy that remains supported by manufacturing investment, consumer spending, and easing energy costs, even as housing and inflation continue to create areas of uncertainty. Together, these indicators provide important context for understanding where freight demand may strengthen—and where challenges may persist—in the second half of the year.

Join the Conversation at the FTR Transportation Conference

Economic data tells only part of the story.

At the FTR Transportation Conference, our economists and transportation analysts will connect these macroeconomic trends with freight demand, equipment markets, supply chain strategy, and transportation forecasting across truck, rail, and intermodal markets.

Join us in Indianapolis to explore:

• The economic outlook for freight markets
• Manufacturing, consumer, and trade trends
• Equipment demand and capacity expectations
• Fuel, inflation, and policy impacts
• What transportation leaders should be watching through 2027

Register today and gain the insight needed to stay ahead of the next market shift.