forecasting
freightcast
As schools let out and families settle into summer routines, the markets are rallying—but not without underlying tensions. A strong jobs report gave stocks a boost, and the S&P 500 pushed past 6,000 for the first time since February. Yet beneath the headline gains lies a more uncertain macro picture.
💼 Labor Markets: Holding for Now, but Cracks Show
The May employment report showed job gains of 139,000—better than expected—but downward revisions to March and April (-95,000 combined) point to a softer trend.
- Where the jobs are: Leisure & Hospitality (+48K) and Healthcare (+78K) accounted for nearly all the growth.
- Private sector caution: JOLTS data showed a declining quits rate and rising layoffs, reinforcing a cautious tone among employers.
Join us for Key Issues in Transportation, a complimentary mid-year webinar that delivers expert insights on how tariffs, capacity shifts, and rate trends are shaping the freight landscape across all modes. Whether you're moving goods by truck, rail, or intermodal, this session will help you stay ahead of change and plan smarter for what's next. Register here.
🏭 Manufacturing & Services: Tariffs Bite, Confidence Wanes
ISM data reflects persistent stress in both manufacturing and services:
- Manufacturing Index: Fell to 48.5, with export orders at a 50-year low and imports at their weakest since the Great Recession.
- Services Index: Declined for the first time in nearly a year. New orders and backlogs softened, and prices paid rose to a 2.5-year high.
💬 “The daily changes in the trade schedule have wreaked havoc on suppliers’ ability to react.” — ISM Respondent, Commercial Vehicle Sector
🏗️ Construction & Factory Activity: Stuck in a Tariff Trap
Construction spending fell for the third straight month, dragged down by high interest rates and rising input costs. Tariffs are making matters worse:
- Residential and nonresidential construction both declined.
- Architecture Billings Index is signaling continued weakness.
Factory orders dropped sharply, led by transportation (-17.1%) and aircraft (-51.5%). Core capital goods fell 1.5%, a sign of weakened business investment.
🌐 Trade: A Temporary Boost for GDP?
The April trade deficit narrowed sharply as imports fell faster than exports. While this may lift Q2 GDP, it reflects the unwinding of earlier “pull-forward” activity driven by tariff fears. That sugar high is now fading.
- Net exports: Likely to support Q2 GDP
- Outlook: Legal challenges and unpredictable tariff changes make trade a moving target
📈 Inflation: Will the Consumer Blink?
May’s CPI report will be pivotal. So far, inflation has followed a modest trend—but the full effects of tariffs may still be working their way through the system.
- Headline CPI: Projected at 0.2% due to lower food and energy
- Core inflation: Expected to rise 0.3% in May, bringing Q4 year-over-year average to ~3.3%
- Risks: Core goods inflation could peak at 4–5% by early fall
🛒 With margins absorbing some cost so far, the big question: how much more will the consumer tolerate?
🔍 Strategic Takeaways
- Labor resilience is narrowing to a few sectors; breadth is weakening.
- Tariff pressure is clearly visible across trade, construction, and industrial sectors.
- Fed watch: The jobs report buys some time, but inflation trends will drive rate decisions.
- Business investment is on pause as trade policy whiplash undermines confidence.
As we head into the summer, the real story is not whether markets hit new highs—but whether the foundation supporting them can hold amid a shifting trade landscape and a wary consumer.
📅 Next up: All eyes on the June 11 CPI release.
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