Overview
The labor picture is a bit fuzzy based on the data released this week. Payroll employment in May was considerably stronger than it was in April, but employment as measured by the household survey fell rather sharply.
The unemployment rate also ticked up even though the labor participation rate fell. Meanwhile, the number of job openings is moving closer to the pre-pandemic norm.
One key indicator of the manufacturing sector weakened slightly in May.
Employment situation
The U.S. added 272,000 payroll jobs m/m, seasonally adjusted, in May, according to preliminary data from the Bureau of Labor Statistics. BLS revised earlier estimates of March and April employment downward by a net of 15,000 jobs. May’s increase was the second highest of 2024 so far.
Not all the employment data showed growth, however, Employment as measured by the BLS household survey fell by 408,000. While payroll employment was up 1.8% y/y, employment as measured by the household survey was up just 0.2%. Also, payroll employment is up 3.9% versus the pre-pandemic month of February 2020 while household employment is up just 1.5%.
The unemployment rate ticked up to 4.0% for the highest since the same rate in January 2022. The rate is still low relative to history; the average during the period of 2015 through 2019 was 4.4%. The labor participation rate declined to 62.5%.
As often is the case, the sectors hit hardest by the pandemic – private education and health services, government, and leisure and hospitality – saw the strongest m/m gains, led as usual by health care. Those three broad sectors together accounted for 171,000 of the 272,000 job gains.
The only sector to see a decline was mining and logging, down 4,000 jobs, seasonally adjusted. The information sector saw no change in employment. Retail was the largest contributor to a 33,000-job gain in trade, transportation, and utilities, led mainly by building materials and garden equipment and supplies dealers. Transportation and warehousing also contributed with gains in most areas that were offset by a drop in trucking jobs.
Job openings
Unfilled job positions at the end of April were at their lowest level since February 21, according to preliminary data from the Bureau of Labor Statistics. Job openings fell 3.5%, seasonally adjusted, m/m and were down 18.6% y/y to 8.1 million. Openings now are only about 500,000 above the pre-pandemic peak in November 2018.
ISM manufacturing index
The Institute for Supply Management's manufacturing index slipped a bit deeper into contraction territory in May. The index, which had just barely crossed into expansion territory in March, declined to 48.7% from 49.2% in April.
The components of the ISM index most closely associated with freight demand saw even larger decreases m/m. The production index declined 1.1 points to 50.2%, which is technically in expansion territory but just barely so. The new orders component fell 3.7 points to 45.4%.
Spot metrics
Total broker-posted spot rates in the Truckstop system were essentially unchanged from the prior week during the week ended May 31 (week 22), but rates for the three principal equipment types performed differently.
As with the overall market rate, dry van spot rates were basically flat versus the previous week. However, refrigerated spot rates suffered their largest drop since the fifth week of the year. Flatbed rates were up for a third straight week.
The total broker-posted rate edged down two-tenths of a cent. Rates were about 5% below the same 2023 week and more than 7% below the five-year average for the week.
For more on week 22 spot metrics for truck freight, visit https://freight.ftrintel.com/spotmarketinsights.
Rail/Intermodal
Rail traffic in week 22 was generally positive, with most commodity groups showing y/y gains. According to the Association of American Railroads, total traffic was up 2.7% y/y for the week ended June 1.
Carloads were down 2.6% y/y this week. Up from -4.2% 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 22, coal carloads were down 17.5%, up from its trough of -27.6% back in April and has now been growing for five consecutive weeks.
Besides coal, most carload commodities had a favorable week. This week, 12 out of the 20 commodities reported by the AAR posted y/y growth.
