Overview
Signs of a cooler labor market continued in August as job gains remained tepid following a downward revision of prior data. Job openings, meanwhile, have basically normalized, although they are still slightly higher than the pre-pandemic peak.
Other economic data released this week was lackluster at best. A key indicator of manufacturing activity improved slightly but remains in contraction territory and solidly so. Construction spending slowed, and vehicle sales dropped. International trade in goods was mixed as imports rose but exports fell.
One upside for freight transportation is lower fuel costs. Diesel prices have continued to decline, and crude prices have fallen below $70 a barrel for the first time since December.
Employment situation
The U.S. added just 142,000 payroll jobs m/m on a seasonally adjusted basis in August, according to preliminary data from the Bureau of Labor Statistics. Payroll employment was up 1.5% y/y.
The unemployment rate edged down to 4.2%. The labor participation rate held at 62.7%.
Job openings and quits
In releasing its preliminary estimate, BLS characterized job openings as "little changed" at 7.7 million at the end of July. Some might quibble with that description, however. Job openings fell by 237,000 (3.0%) following a downward revision of June's initial estimate by 274,000. Therefore, the preliminary July estimate is 511,000 fewer job openings than the initial June estimate released a month ago.
Unfilled positions have been falling since a peak of more than 12 million in March 2022 and are now just 79,000 higher than they were at the pre-pandemic peak in November 2018.
Meanwhile, job quits ticked up a bit after a June that saw the fewest quits since August 2020.
Trucking
For-hire trucking shed 1,400 payroll jobs, seasonally adjusted, in August. Employment is down 12,900 jobs over the past five months but is essentially flat y/y now that the prior-year comparisons exclude Yellow Corporation.
Total trucking employment was up by a mere 400 jobs y/y in August. In July, employment had been down 29,800 jobs y/y.
Although trucking’s payroll employment has declined in every month since April, the m/m decreases generally have been modest. The only decrease out of the ordinary was the loss of 6,800 jobs in May, which had been the largest drop since February 2023 aside from the 31,600-job plunge last August when Yellow shut down.
More granular data on trucking is available only through July. None of the trucking sectors saw major changes in payroll employment m/m. General freight truckload jobs were up slightly m/m while LTL jobs declined slightly.
Coupled with the data on changes in the carrier population discussed last week, it is clear that the exit of active trucking capacity remains incremental.
Spot metrics
Broker-posted refrigerated and dry van spot rates in the Truckstop system have underperformed seasonal expectations recently, but they rose sharply during the week ended August 30 (week 35) as they usually do during the week before Labor Day.
Refrigerated van rates surged by the most in a week 35 since at least 2008. Dry van rates were not as strong historically but rose by the most since International Roadcheck week in May. Flatbed rates, however, were down for an 11th straight week to their lowest level since July 2020.
For more on week 35 spot metrics for truck freight, visit https://www.ftrintel.com/spotmarketinsights.
East/Gulf Coast ports labor situation
There have been a few gloomy updates relating to the potential East and Gulf Coast port strike.
The U.S. Maritime Alliance (USMX), the association representing the trade partners at the East and Gulf Coast ports, this week stated that the International Longshoremen’s Association (ILA) “continues to strongly signal it has already made the decision to call a strike”.
ILA itself did not really contradict the USMX claim, although it still conditions a strike on failure to obtain agreement on a new contract. The union released a video in which International President Harold Daggett stated, “The ILA most definitely will hit the streets on October 1st if we don’t get the kind of contract we deserve.”
According to data from the U.S. Census Bureau, the U.S. East Coast ports have accounted for 51% of total containerized imports by tonnage so far in 2024. Gulf Coast ports have accounted for another 13% of containerized imports.
As we just learned from the Canadian work stoppage, the impact of a labor disruptions can have significant impacts on intermodal, not only during and after a work stoppage but before one as well as shippers reroute shipments to avoid disruptions. A shutdown at the U.S. East and Gulf Coast ports – even if it’s short-lived or avoided altogether – could have significant consequences for the North American supply chain.
