The unemployment rate has increased to 3.9%, with a slight easing in mortgage rates and a continued fall in diesel prices. Additionally, rail carload volume is still below 2023 levels.
The latest data shows a still-robust labor market, although the unemployment rate hinted at some loosening. Also, employment as measured by the household survey has been sluggish recently. Job openings are still high, however.
Within freight transportation, the m/m job changes in February do not tell the full story as downward revisions to prior months indicate greater weakness.
Otherwise, this week was light on key economic data. Next week brings several key data releases concerning the industrial and consumer sectors as well as inflation in February.
Employment situation
The U.S. economy added 275,000 payroll jobs, seasonally adjusted, in February, according to preliminary figures from the Bureau of Labor Statistics. Payroll job growth is still robust, although BLS did revise its earlier estimates for December and January downward by a total of 167,000 jobs. Payroll employment in February was up 1.8% y/y.
Another indicator that suggested some weakening was the unemployment rate, which rose to 3.9% – the highest since January 2022 – from 3.7% in January. Even so, the rate is low by historical standards. The average during 2015 through 2019 – a reasonably strong labor market – was 4.4%.
Job growth remains centered in three sectors especially hit by the pandemic – private education and health services, labor and hospitality, and government. Together, those sectors accounted for 195,000 added jobs, seasonally adjusted. Another area of strength m/m was trade, transportation, and utilities, which saw an increase of 40,000 jobs, led by transportation and warehousing and retail trade.
Couriers and messengers – less formally, parcel and local delivery – accounted for the lion’s share of the m/m gains in transportation and warehousing with a 17,300-job jump. However, that increase followed a downward revision of December and January estimates by 43,200 jobs.
Most other transportation and warehousing sectors either shed jobs or saw only minor gains. Warehousing and storage lost 6,800 payroll jobs following a downward revision of December and January of 13,500. (For a discussion of trucking jobs, see the Trucking section below.)
Manufacturing was the only major sector to lose jobs m/m, shedding 4,000. The declines were broad-based, but one notable area of strength was fabricated metal product manufacturing, which saw an increase of 4,400 jobs.
Job openings
Unfilled job positions are still running more than 27% higher than during the pre-pandemic month of February 2020. Job openings at the end of January were only 0.3% lower than they were a month earlier and totaled nearly 8.9 million, seasonally adjusted. The decrease followed a downward revision of preliminary December estimates by 137,000.
Spot metrics
Total broker-posted spot rates in the Truckstop system eased less than a penny during the week ended March 1 (week 9), but refrigerated spot rates fell for the sixth straight week.
Refrigerated rates were at their lowest level since April of last year and only a few cents higher than they were in May 2020 as the fright markets were just beginning to climb out of the lockdown period.
After declining for five straight weeks, dry van spot rates increased slightly. Aside from the prior week, dry van rates were the lowest since the week before Thanksgiving. Otherwise, dry van spot rates are in a similar position as refrigerated as they are only about 7 cents higher than they were in June 2020.
Flatbed rates declined slightly for only the third week-over-week decrease this year.
Total volume growth, which was led by flatbed, was the strongest since early January when load activity was recovering from the holidays.
For more on week 9 spot metrics for truck freight, visit https://freight.ftrintel.com/spotmarketinsights.
Activist investors
In a late addition to the program, Surface Transportation Board Chairman Martin Oberman used his February 29 speech at the Southeast Association of Rail Shippers spring meeting to lash out at activist investor meddling in management decisions at Norfolk Southern as well as at the activist investor-led management changes at Union Pacific last year.
Oberman declared that the proxy fight for control of NS “does not bode well for the railroad industry, the U.S. economy, or the public.” He termed Ancora Holdings’ plans as “a broadside attack on NS and its corporate philosophy of maintaining its workforce at resilient levels and investing for long-term growth.”
The speech focused principally on the problems Oberman sees as being created by investors’ focus on operating ratio at the exclusion of other priorities he deemed to be essential for monopoly railroads. Oberman only briefly touched on possible countermeasures, one being the proposed reciprocal switching rule under STB review as a final rule.
“And the board has also stated it is interested in considering additional ways to grant sole-served shippers competitive access to a second railroad,” Oberman said. “In my view, for example, it may well be time for the STB to re-examine the restrictions contained in the decades-old bottleneck rule.”
Oberman’s tenure as a board member technically expired at the end of 2023, but he continues to serve as STB chairman under a holdover arrangement that could last as long as one year.
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