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Transportation Update | U.S. Economy

Posted by The FTR Experts on 11/30/21 2:45 PM

Highlights

• Retail and foodservice sales set a record in October.

• Hurricane recovery, higher auto output boost industrial production.

Residential construction posts back-to-back decreases.

Overview

Although sharply rising gasoline prices certainly were a factor in the record month, sales were stronger in nearly all retail sectors in October as retail and foodservice sales rose 1.7% to a record level. Seasonally adjusted, sales were more than 21% higher in October than during the pre-pandemic month of February 2020. Retail sales have remained fairly stable since hitting their prior record in April in the wake of the third round of stimulus.

Gasoline station sales were among the strongest gainers at 3.9%, although nonstore retail was slightly stronger at an increase of 4.0%. Another strong gainer was electronics and appliance stores, which saw a 3.8% increase in sales. Only two sectors – clothing stores and health and personal care stores – saw month-over-month declines, and both were under 1%.

After four months of declining sales, motor vehicle and parts dealers saw back-to-back gains in September and October as sales rose 1.2% and 1.8%, respectively.

Industrial production

Industrial production rose 1.6% in October, which is the strongest increase since March. However, both of those increases stemmed in large part from essentially the same dynamic: Recovery from a weather event. In March, IP rebounded from extreme winter weather in February. In October, production jumped after it took a hit in September due to the lingering effects of Hurricane Ida. The Federal Reserve said that about half of October’s gain reflected recovery from the hurricane. Mining output rose 4.1%, which is the largest gain since March and largely reflects a recovery from the hurricane.
Another boost for IP and for manufacturing was motor vehicles and parts output, which jumped 11% and represented half of the gain in manufacturing output. Overall, manufacturing rose 1.2%; excluding automotive, it increased 0.6%. Motor vehicles and parts output has been volatile since February due to the semiconductor shortage, so the sharp increase in October – the largest since July 2020 – means little for the outlook.

October was a milestone for IP as it exceeded pre-pandemic levels for the first time, albeit not by much. IP was 0.3% above February 2020, seasonally adjusted. Manufacturing output was 1.2% higher. That sector had fully recovered previously but then fallen back. The October level is the strongest of the pandemic.

Residential Construction

Housing starts posted back-to-back decreases in September and October for the first time since February, but the 0.7% decline in October was the smallest in more than three years. Although starts have been volatile for basically all of 2021, the average this year is still quite strong at only about 1%, seasonally adjusted, below the robust level in February 2020. However, housing starts in October were 4.3% below that month’s rate and have been on a general decline since June.

Permits authorized for future residential construction rose 4% in October. Permits also have been volatile, but they are still stronger than they were before the pandemic at 11.6% above February 2020.

 


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Tags: Economy, State of Freight TODAY

 


 

 


 

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