Overview
This week was rather light for monthly economic indicators with the principal ones being inventories and sales in the wholesale sector and U.S. international trade in goods. However, a set of weekly indicators – claims for unemployment benefits – garnered the most attention, especially on Wall Street.
While this week did not tell us much about the state of the economy, we get a flood of data next week, including industrial production, retail sales, residential construction, and inflation at the consumer and producer levels.
Unemployment benefits
Weekly data on unemployment claims has rarely made headlines over the past couple of years, but suddenly everyone is looking for signs of whether the labor market is just cooling or is perhaps deteriorating more significantly. Although unemployment figures for a given week are volatile and not particularly meaningful, they were at least reassuring.
Initial claims for unemployment benefits fell by 17,000, seasonally adjusted, in the latest week for the largest single-week drop since June of last year, according to preliminary data from the Department of Labor. The decrease matches one of the same scope in September of last year.
First-time claims totaled 233,000. The drop in initial claims in the latest week brings the total back below the 2015-2019 average of 244,275 first-time claims. The economy has been running mostly below that threshold since late 2022.
Continued claims for benefits increased by 6,000 from a downwardly revised total in the previous week. Although the latest week saw the most continued claims since late November 2021, the preliminary figure is slightly below the initial figure DOL had reported for the previous week.
Last week, DOL’s report of higher first-time and continued claims sparked a Wall Street sell-off that continued after the Bureau of Labor Statistics reported weak payroll employment growth for July.
Wholesale inventories and sales
Inventories in the wholesale sector inched higher in June while sales declined, producing the highest inventories-to-sales ratio for wholesale since July of last year. However, as often is the case, petroleum products distorted the figures substantially.
Total wholesale inventories ticked up 0.2% m/m, seasonally adjusted, in June. However, inventories of durable goods eased 0.1% while inventories of nondurable goods increased 0.7%. Among nondurable goods, the biggest change by far was a 3.8% increase in petroleum products. The largest change in any other category was about 1%.
On the other side of the ledger, petroleum suffered the largest drop is sales, presumably due mostly to pricing. Petroleum products sales fell 6.6% m/m. Total wholesale sector sales were down 0.6%, but sales of durable goods increased 0.4% while sales of nondurable goods fell 1.6%.
International trade in goods
Adjusted for inflation, both U.S. imports and U.S. exports of goods were higher in June, but exports outpaced imports by a considerable margin. Both recorded solid gains y/y.
Real goods exports rose 3.2% m/m, seasonally adjusted, for the largest increase of 2024 so far. The last time exports rose by more was July of last year. Aside from “other goods,” real goods exports rose m/m in all major categories, ranging from just 0.4% for consumer goods to 5.0% for automotive.
Year over year, real exports were up 4.8%. Automotive was down 4.6%, but all other categories were up y/y, led by foods, feeds, and beverages at a 12.7% gain.
Trucking
Broker-posted spot rates in the Truckstop system for dry van and refrigerated van equipment both rose for the first time in four weeks in keeping with seasonal expectations during the week ended August 2 (week 31), but rates weakened relative to the same 2023 week.
Dry van spot rates remained positive y/y but only by a tiny margin. Refrigerated spot rates were negative y/y for the first time since late June. Flatbed spot rates fell for the seventh straight week and deteriorated slightly y/y.
Due mostly to lower flatbed rates, the total broker posted rate decreased 1.5 cents after easing by slightly less in the previous week. Total rates were 0.7% below the same 2023 week – the first negative comparison in four weeks – and 7.5% below the five-year average for the week.
Total market rates fall more often than not during week 31, but the weakness typically is from flatbed rates, which usually fall during the week while rates for van equipment usually rise. Dry van spot rates have fallen week-over-week only three times during week 31 since 2008. Refrigerated rates have not fallen during week 31 since 2013.
The current week (week 32) has proven to be reliably weak over the years, especially for dry van and flatbed, although refrigerated has not performed much better.
For more on week 31 spot metrics for truck freight, visit https://freight.ftrintel.com/spotmarketinsights.
Canadian rail labor situation
Today, the Canada Industrial Relations Board (CIRB) ruled that a rail strike can proceed at both Canadian Class I carriers, CN and CPKC. If the railroads and the union cannot reach an agreement, a work stoppage can begin as early as Thursday, August 22. The Teamsters union said it would give a 72-hour notice before beginning a work stoppage.
With the ruling, CIRB deemed that the strike does not pose an immediate threat to public safety or health, and thus no commodities need to be exempted from a rail strike, should one occur.
