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Weekly Transportation Update: The Fed cuts the target federal funds rate by half a point

 

In recent economic news, the Federal Reserve has cut interest rates by half a point, aiming to stimulate growth. Manufacturing output showed signs of recovery in August, while retail sales remained stable. The inventory situation saw little change in July. Housing starts experienced a significant increase in August, although sales of existing homes are at a near 14-year low. Mortgage rates have dropped to their lowest levels in two years, contributing to a decrease in weekly initial jobless claims. Diesel prices are the lowest since October 2021, and truck spot rates have reached their lowest since July 2020. The Surface Transportation Board (STB) is holding a two-day hearing focused on rail growth, while East and Gulf Coast ports face the threat of a strike. Additionally, intermodal transport has driven a year-over-year increase in rail traffic.


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Weekly Transportation Update: U.S. adds 142,000 payroll jobs in August; the unemployment rate edges lower.

 

In August, the U.S. added 142,000 payroll jobs, and the unemployment rate eased to 4.2%. Despite this, job openings hit their lowest level since January 2021, and the ISM manufacturing index remained in contraction. Auto and light truck sales declined, while mortgage rates held steady. Diesel prices fell for the eighth consecutive week, although trucking employment continued to decline slightly. Conversely, van spot rates increased heading into Labor Day. Rail carloads rose year-over-year for the first time since June, and East/Gulf Coast ports moved closer to a strike.


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Weekly Transportation Update: Vehicle purchases spur consumer spending; personal saving rate sinks.

 

Retail inventories-to-sales ratios remained steady at 1.32 overall and 1.13 excluding automotive, reflecting historically lean levels. New durable goods orders surged 9.9% in July, driven by a significant rebound in aircraft orders, although core capital goods orders showed only a modest decline.

Unemployment benefits and mortgage rates remained stable, while diesel prices fell to their lowest since January 2022, and the trucking industry saw a net increase in carriers despite historically low spot rates.

For the week ending August 24, North American rail traffic increased 1.3% year-over-year, driven by a 7.1% rise in intermodal traffic despite a 4.5% drop in carloads, largely due to a short Canadian rail work stoppage, while YTD totals show a 2.3% increase with intermodal up 8.1% and carloads down 3.2%.


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Weekly Transportation Update: Home sales rise in July, especially sales of new homes


In July, the U.S. housing market showed mixed signals with new home sales rising sharply, while existing home sales saw a slight increase. Mortgage rates dipped to their lowest level since April 2023, providing some relief to buyers. Despite these gains, U.S. business applications declined, although the transportation sector saw an uptick. Initial jobless claims rose slightly, while diesel prices fell for the sixth consecutive week. Truck spot rates declined across all equipment types, yet both trucking and parcel revenues showed year-over-year growth in Q2. CDL hiring activity rebounded, and Canadian railroads were ordered to end a lockout. Meanwhile, a court rejected the STB's final offer rate review rule, and rail traffic experienced one of its strongest weeks of the year.


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Weekly Transportation Update: Automotive output, Hurricane Beryl hit industrial activity in July


In recent economic developments, manufacturing output has been weighed down by the automotive sector, despite a rebound in vehicle sales boosting the retail sector. June saw minimal changes in inventories relative to sales, while housing starts dropped to their lowest rate since May 2020, coinciding with a slight uptick in mortgage rates. Consumer prices and producer pricing gains remained soft in July, particularly in services. Meanwhile, initial jobless claims reached their lowest level in five weeks, diesel prices declined for the fifth consecutive week, and truck spot rates generally decreased. However, rail traffic showed year-over-year improvement, though Canada remains on the brink of a rail work stoppage.


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Weekly Transportation Update: First-time claims for unemployment benefits fall sharply


In recent economic developments, initial jobless claims saw a sharp decline, while wholesale inventories were skewed by fluctuations in petroleum products. June witnessed real U.S. goods exports surpassing imports, indicating a positive trade balance. Mortgage rates dropped to their lowest since May 2023, and diesel prices continued their downward trend for the fourth consecutive week. Van spot rates experienced an uptick, although they remain below 2023 levels. Carriers reduced CDL hiring activity in June, and rail carload traffic recovered after a challenging July. Additionally, the CIRB has permitted a potential rail strike in Canada, signaling possible disruptions ahead.


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Weekly Transportation Update: The U.S. economy adds just 114,000 payroll jobs in July


In July, the U.S. added 114,000 payroll jobs, though the unemployment rate reached its highest level since late 2021. Job openings remained steady while the number of quits continued to fall. The ISM manufacturing index also saw a decline this month. Construction spending saw little change in June, and mortgage rates barely moved in the latest week. Diesel prices decreased for the third consecutive week. In the trucking industry, payroll jobs declined, and the for-hire carrier base saw a modest decrease. Despite a decline in van equipment rates, they remained higher year-over-year. Rail traffic had a positive week compared to the same period last year, although there is a potential for a Canadian rail strike this month.


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Weekly Transportation Update: The freight transportation economy posts strong gain in Q2

 

In Q2, GDP grew by 2.8% annualized, with the freight economy rising 5.3%. Real consumer spending increased by 0.2% in June. Retail inventories remained lean relative to sales.

The aircraft sector significantly impacted durable goods orders. Existing home sales fell sharply in June, while new home sales slightly declined. Mortgage rates remained stable.

Diesel prices declined for the second consecutive week, easing transportation costs. Spot rates for flatbed and van increased year-over-year. Rail traffic showed mixed results: carload traffic was down, but intermodal traffic was up. A new rail safety bill was introduced in the U.S. House.


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Weekly Transportation Update: Manufacturing output strengthens as automotive nearly matches its record

 

In June, manufacturing output surged to a 20-month high, with automotive production nearly tying its record peak. Real retail trade sales also saw an increase. Although inventories remained relatively stable compared to sales in May, housing starts rose in June but were still down year-over-year, while homes under construction continued to decline. Mortgage rates decreased again in the latest week, and diesel prices fell after four consecutive increases. Van spot rates continued to run higher year-over-year, and rail traffic showed some recovery from the holiday lull. Additionally, the Surface Transportation Board (STB) has scheduled a hearing to discuss rail growth strategies.


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Weekly Transportation Update: Consumer inflation falls m/m for the first time in just over four years

 

In June, inflation was mild at both the consumer and producer levels, with consumer prices declining month-over-month for the first time since May 2020. This was mainly due to falling gasoline and diesel prices. Truck insurance premiums also decreased after more than a year of gains. Additionally, new applications for transportation and warehousing businesses saw their largest increase since August 2022, alongside recent gains in new trucking authorities. This suggests the truck freight market has bottomed out.


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