Consumer Price Index
Higher prices for shelter in May more than offset a decrease in gasoline prices, but pricing relief elsewhere yielded a Consumer Price Index for all items that was unchanged from April. Other categories with m/m price decreases include new vehicles, apparel, and transportation services.
The U.S. economy had not seen a month without overall consumer inflation since July 2022. The CPI for all items has not been negative m/m since the lockdowns period in 2020. Prior to the pandemic, occasional months with negative pricing were common. The 12-month change in the unadjusted all-items CPI was 3.3%, which is a tenth of a point lower than in April.
Producer Price Index
Overall pricing within the supply chain fell m/m in May. The Producer Price Index for final demand declined 0.2%, seasonally adjusted, for the largest decrease since October. The PPI had risen 0.5% in April. The 12-month change in the unadjusted PPI was 2.2%, down marginally from April.
The May decrease in final demand prices can be attributed to a 0.8-percent decline in the index for final demand goods, mostly due to gasoline prices. The indices for diesel and jet fuel also were down. Prices for final demand services were unchanged. A significant weakness in that category was the PPI for transportation and warehousing services, which was down 1.4% m/m.
The PPIs for major truck transportation categories – general freight truckload, LTL, and long-distance specialized – declined m/m while the rail intermodal PPI saw its strongest increase since October.
The most notable move within freight transportation was a 6.7% m/m jump in the PPI for freight transportation arrangement, or freight brokerage. The increase was the largest since December and the sixth largest on record. The PPI represents prices assessed for services to shippers.
Trucking Insurance
Another notable trend is the cost of commercial auto insurance. As we have discussed previously, the PPI for premiums has been rising since April 2023, but pricing has accelerated recently.
Revised PPI data for April shows a much stronger gain than the preliminary figures at a 0.8% increase – the strongest m/m gain since one of the same degree in January 2021. The preliminary May increase was 0.4%, which also is stronger than typical.
Perhaps even more significant, the PPI for commercial auto insurance premiums was up 3.0% y/y in May, matching the comparison in December 2019 and the highest since 3.3% in June 2019.
Business formation
New applications for businesses continued to fall in May, declining 1.5% m/m, seasonally adjusted. Business applications were down 5.4% y/y but still up more than 40% compared to the pre-pandemic month of February 2020, although that comparison is the lowest since October 2022.
The transportation and warehousing sector is one of the big weaknesses for U.S. business formation. Total new applications for transportation and warehousing businesses fell 3.2% m/m in May and was down more than 13% y/y. Applications were still 31% higher than during February 2020, but that comparison is the weakest since June of that year.
The Census Bureau also tracks applications for businesses that it deems to have a “high propensity” to be employer firms as opposed to those that are operated by sole proprietors, for example.
New applications for high propensity transportation and warehousing businesses have been falling consistently and in May were just 1.1% higher than they were in February 2020. For all businesses, high propensity applications in May were nearly 24% higher.
Although the Census Bureau does not publish more granular data on new applications than the entire transportation and warehousing sector, trucking firms logically would be one of the largest variables in the m/m changes in applications.
Trucking
Total broker-posted spot rates in the Truckstop system barely changed for a second straight week during the week ended May 31 (week 23). Flatbed spot rates increased for the fourth straight week – the first such streak since January – but dry van and refrigerated spot rates were down week over week.
Load postings rose sharply after a drop during Memorial Day week. The week-over-week moves in rates and volume were roughly in line with seasonal expectations for each equipment type.
The total broker-posted rate ticked up two-tenths of a cent, reversing a decline of the same scope during the previous week. Rates were about 4.5% below the same 2023 week and nearly 8% below the five-year average for the week.
For more on week 23 spot metrics for truck freight, visit https://freight.ftrintel.com/spotmarketinsights.
Rail/Intermodal
Total North American rail traffic was up 2.8% y/y for the week ending June 8, according to the Association of American Railroads (AAR).
Carloads were down 2.6% y/y this week, unchanged from last week. The primary reason for the decline continues to be coal, however, the effect of coal is smaller now than it has been in recent weeks. For week 23, coal carloads were down 15.3%, up from their trough of -27.6% back in April and has now been growing w/w for 6 consecutive weeks.
Among the other commodities, results were mixed, with 10 posting y/y gains, and the other 10 showing y/y declines.
Intermodal had another strong week and, contrary to previous expectations, intermodal traffic has been exceeding 2023 levels at increasing levels of magnitude over the past month. Over the past four weeks, total intermodal traffic has grown 4.5%, 5.7%, 8.2% and for the most recent week, 8.3% y/y. Some of the recent strength stems from the holiday comparisons and we will get more consistent results in the coming weeks.
YTD, total rail traffic is up 2.0%, with carloads down 3.8% and intermodal up 8.1%. Of the 10 commodity carload groups reported by the AAR, four show positive YTD y/y growth, down from five last week. These commodities include chemicals, petroleum products, motor vehicles & parts, and grain, with the “other” category reverting to YTD y/y declines.
