Overview
The housing market took center stage in economic indicators this week, and the picture is fuzzy. Sales of existing homes sank to practically their lowest level in 14 years while sales of new homes rose to their highest level in well over a year. Meanwhile, mortgage rates continued to rise, which is contrary to widespread expectations in the wake of last month’s Federal Reserve interest rate cut.
Data related to the labor market also was weak, but a strike at Boeing is one factor in the highest level of ongoing claims for unemployment benefits since November 2021.
Manufacturing orders
As often happens, the performance of the aircraft industry skewed the total number of new orders for durable manufactured goods. Total new orders decreased 0.8% m/m, seasonally adjusted, and were down 2.1% y/y.
However, new orders for both civilian and defense aircraft fell sharply. A gain in the much larger motor vehicle and parts sector softened the blow to the broader transportation equipment category, but new orders were still down 3.1% m/m. New orders for durable goods excluding transportation equipment increased 0.4% and were up 1.1% y/y.
Fabricated metal products saw the strongest m/m growth at 2.1% followed by computers and related products at 0.9%. The weakest major category was machinery, but it was down only 0.2%.
New orders for core capital goods – nondefense capital goods excluding aircraft – increased 0.5% m/m and were barely above flat y/y at +0.1%.
Because the Census Bureau reports its data on new orders without adjusting for pricing, FTR calculates a “real” core capital goods orders figure using the Producer Price Index for private capital equipment. The differences between nominal and real new orders are fairly small recently but are more significant over time.
Adjusted for inflation, new orders for core capital goods increased 0.3% m/m but were down 2.4% y/y.
Unemployment benefits
First-time claims for unemployment benefits have basically normalized over the past couple of weeks after a spike in early October that appears to be related to layoffs in auto manufacturing and disruptions due to Hurricane Helene. In the latest week, initial claims fell by 15,000, seasonally adjusted, to 227,000. First-time claims fell by 18,000 in the prior week after jumping by 35,000 during the week ended October 5.
Ongoing claims, however, continue to rise. In the latest week for which data is available (the data lags new claims by a week), continued claims for benefits rose by 28,000, seasonally adjusted, to nearly 1.9 million – the highest level since November 2021 – and are up by 78,000 over the past three weeks. However, one factor is the ongoing strike at Boeing.
Trucking
After The aftermath of Hurricane Milton likely was a factor, but regional data suggests broader market strength as broker-posted spot rates in the Truckstop system rose for all equipment types during the week ended October 18 (week 42).
Dry van spot rates increased for a fourth straight week for the first time since May 2021, and refrigerated spot rates saw their second-largest gain since May. Flatbed spot rates were positive y/y – barely – for only the third time this year.
The total broker-posted rate increased 2.7 cents after declining more than 1 cent in the prior week. The increase was the first in a week 42 since 2016.
Rates were 1.7% above the same 2023 week for the second-strongest y/y comparison this year but were more than 5% below the five-year average. Spot rates excluding a calculated fuel surcharge were more than 10% higher than the same 2023 week and were positive y/y for all equipment types.
The current week (week 43) usually sees lower overall rates week over week, but history varies by equipment type.
For more on week 42 spot metrics for truck freight, visit https://freight.ftrintel.com/spotmarketinsights.
Rail/Intermodal
For the week ended October 19, North American rail traffic was down 0.6% y/y, according to data from the Association of American Railroads (AAR). Rail carloads were down 4.4% while intermodal volume was up 3.1%.
After improving last week to -1.2% y/y from -4.5% during the previous week, carload traffic weakened in the latest week, and the usual suspects to blame. The greatest y/y declines in carload traffic came from metallic ores & metals, down 15.2%; coal, down 11.0%; and nonmetallic minerals, down 9.7%.
The automotive group also continues to struggle but has been improving. Last week, automotive traffic was down 4.4% y/y, an improvement from -8.0% in the prior week and -10.0% in the week before.
The latest week’s results had a few bright spots. Grain carloads were up 3.8% y/y, and farm products (excl. grain) were up 11.1%. Also growing this week were petroleum products (up 4.4%) and chemicals (up 0.5%) following y/y declines for both commodity groups in the previous week.
Intermodal rail traffic came in lower than the prior week’s y/y growth of 5.1%. This comes as the result of moderating growth for the western carriers, BNSF and Union Pacific, and y/y declines at the Canadian carriers, Canadian National and CPKC.
The eastern U.S. carriers, however, have returned to 2023 levels following several weeks of weakness both leading up to and following the East and Gulf Coast port strikes.
Within carloads, four of the 10 AAR commodity groups show positive y/y growth for the year to date (YTD), unchanged from last week. These commodities include petroleum products, up 7.3%; grain, up 4.6%; chemicals, up 3.5%; and farm products excluding grain, up 2.5%. Intermodal continues to outperform carloads and is currently up 7.7% YTD.
