Industrial production and manufacturing
The manufacturing sector saw broad-based production gains in May versus April with the second strongest increase in more than a year. Manufacturing output rose 0.9% m/m, seasonally adjusted, as non-durable goods production rose 1.1% and durable goods output was up 0.6%. Manufacturing production was up 0.1% y/y.
Within durable goods, the largest increases were in wood products (2.6%), machinery (2.3%), and computer and electronic products (0.8%). Motor vehicle and parts production, which has proven volatile, posted a modest increase of 0.6% m/m. The largest decrease was in furniture and related products (2.6%). Durable goods output was flat y/y.
All categories of non-durable goods posted m/m increases except for printing and support, which fell 1.5% m/m. Non-durable goods output was up 0.1% y/y. One of the big weaknesses for non-durable goods has been food production, which is down 1.9% y/y. However, food output has been stronger than that only twice in the past year.
Like manufacturing, total industrial production (IP) was up 0.9% in May. Mining output was up 0.3% while utilities output rose 1.6%. IP was up 0.4% y/y.
Retail and food service sales
In current dollars, retail and food service sales ticked up 0.1% m/m, seasonally adjusted, in May, although the Census Bureau revised figures for April slightly downward. The upshot is that the preliminary estimate for May is about 0.3% below the initial estimate for April. Sales were up 2.3% y/y in May.
Because of the large divergence in inflation for goods versus services, FTR has begun isolating retail trade sales, which excludes food services, and adjusting those figures by the Consumer Price Index for commodities. Seen through this prism, real retail trade sales rose 0.5% m/m in May and were up 1.9% y/y. Nominal retail trade sales increased 0.2% m/m and were up 2.0% y/y.
In current dollars, the largest gain m/m by far was in the small-volume category of sporting goods and similar stores, up 2.8%. Most other retail categories saw m/m gains of less than 1%.
The largest m/m drag on retail sales in nominal terms was gasoline stations due principally to falling gasoline prices. Other declines include furniture and home furnishings stores, building and garden equipment and supplies dealers, food service and drinking places, and food and beverage stores.
Residential construction
Volatility in the residential construction sector continued in May as housing starts fell 5.5% m/m, seasonally adjusted, following a downwardly revised 4.1% gain in April.
Starts were down 19.3% y/y – the weakest comparison since April of last year – and were 16.9% below the level in the pre-pandemic month of February 2020. The 1.277 million annualized rate of housing starts is the lowest since June 2020.
Starts were down m/m for both single-family homes and units in multi-family dwellings with five or more units. Multi-family starts were down nearly 52% y/y. Single-family starts were down 1.7%, which is the first negative y/y comparison since June 2023.
Permits authorized for future residential construction fell 3.8% m/m and were down 9.5% y/y. As with housing starts, the 1.386 million annualized permits were the lowest since June 2020. Permits fell for both single-family and multi-family units. Single-family permits were still up more than 3% y/y while multi-family permits were down more than 31%.
The number of homes under construction continued to fall in May as it has done for six straight months. Multi-family units account for most of that decline, but units under construction were down m/m for both categories in May.
Trucking
Although rates increased for two of the three principal equipment types, total broker-posted spot rates in the Truckstop system were essentially unchanged during the week ended June 14 (week 24) due to changes in the freight mix. Total rates had barely moved in the previous two weeks.
Refrigerated spot rates rose after two down weeks, and flatbed rates were up for a fifth straight week – a streak that had not occurred in more than two years. Dry van rates eased marginally from the prior week.
The total broker-posted rate was unchanged from the previous week. Rates were 2.6% below the same 2023 week and about 7% below the five-year average for the week.
Total rates were flat despite higher flatbed and refrigerated rates and barely any change in dry van rates largely because of a big drop in volume for flatbed, which has the highest rates. If total rates were to continue holding steady, by week 27 they would be higher y/y for the first time since June 2022.
For more on week 24 spot metrics for truck freight, visit https://freight.ftrintel.com/spotmarketinsights.
Rail/Intermodal
Total rail traffic was up 2.8% y/y for the week ended June 15, according to Association of American Railroads data.
Carloads were down 1.1% y/y in the latest week –the strongest y/y comparison since late March. This improved carload number can be attributed primarily to sustained w/w increases in coal traffic as well as a particularly strong week for chemicals, grain, and petroleum, up 10.0%, 16.6% and 9.9% respectively.
Intermodal had another strong week, up 6.7% y/y, but down from the four-week average of 7.3%. Growth continues to be driven by container traffic, up 8.1% y/y and offset somewhat by the much smaller category of trailer traffic, down 22.8% y/y.
Year to date, total rail traffic is up 2.0%, with carloads down 3.6% and intermodal up 8.0%. Of the 10 commodity carload groups reported by AAR, four show positive YTD y/y growth, unchanged from last week. These commodities include petroleum products (8.0%), chemicals (4.0%), motor vehicles & parts (2.4%), and grain (1.4%).
