The general trend of stagnation in economic indicators continued in the latest week as key measures of the industrial and consumer sectors barely moved, at least if we ignore some special situations distorting the data.
Consumer inflation also held steady as falling fuel prices offset rising costs elsewhere. Moreover, further declines in crude prices this week could mean a continued trend toward lower fuel prices for consumers, transportation providers, and shippers.
Retail and food service sales
Retail and food service sales held nearly flat in October, easing just 0.1% m/m, seasonally adjusted. As noted below, inflation was not a major issue during the month, so sales adjusted for inflation did not look much different, declining just 0.2%, according to data from the St. Louis Federal Reserve.
While sales overall were nearly flat, individual retail sectors saw considerable differences. In essence, a drop in vehicle and parts sales offset small gains in food services and drinking places and nonstore retail and a modestly larger increase for food and beverage stores.
Some other major categories were closer to the overall change. For example, sales at general merchandise stores declined 0.2%.
Although the unadjusted decrease in sales was miniscule, it was the first m/m decline since March. Current-dollar sales were up 2.5% y/y in October. Real retail and food service sales were down 0.7%.
Continued gains in sales of new homes apparently are preserving some demand for construction despite high mortgage rates. Starts of new homes increased 1.9% m/m, seasonally adjusted, in October, although the increase followed a small downward revision of the earlier estimate for September. The preliminary October figure is about 1% higher than the initial September estimate. Housing starts were down 4.2% y/y.
Starts of single-family homes barely budged, ticking up just 0.2% m/m. Single-family starts were up 13.1% y/y. Starts in multi-family buildings of five or more units rose for the second straight month after falling sharply in both August and June. Multi-family starts were down 31.8% y/y.
Permits authorized for future residential construction increased 1.1% m/m but were down 4.4% y/y. Single-family permits ticked up 0.5% and were up 13.9% y/y. Multi-family permits fell 14% m/m and were down 31.6% y/y.
Although starts and permits generally have been stronger for single-family homes than for multi-family homes in recent months, the number of housing units under construction tells a different story. Overall, the number of housing units under construction barely changed, easing just 0.1% m/m. However, the number of single-family homes under construction declined 0.6% for the 17th straight m/m decrease. Multi-family homes under construction also barely changed, rising just 0.1%, but they are still near an all-time high.
After rising for the first time in five weeks, total broker-posted spot rates in the Truckstop system returned to their slight downward trend during the week ended November 10 (week 45).
Spot rates for refrigerated equipment rose for a second straight week for the first time since early September. Dry van spot rates were unchanged while flatbed rates declined by the most in five weeks. Spot rates are down y/y in all segments but are mostly tracking seasonal expectations.
For more on week 45 spot metrics for truck freight, visit https://freight.ftrintel.com/spotmarketinsights.
Surface Transportation Board chairman Martin Oberman will not seek renomination to the agency when his term expires at the end of next month. Oberman made the surprise announcement on November 16, and it raised immediate speculation about who the next chairman will be and what the priorities and direction at the agency will be. Oberman said he will depart the agency in January, shortly into his holdover year after his term expires on December31. Oberman spearheaded the board’s review of the CPKC merger and its record seven-year oversight period. STB under his leadership also issued a bold final offer arbitration that is under appeal and focused on improving rail service through additional data reporting and use of emergency service orders.
Another milestone of Oberman’s tenure is advancement of the long-dormant EP 711 proceeding on reciprocal switching. The board is awaiting reply comments on its proposal that reciprocal switching be available to shippers near a terminal area that can show evidence of inadequate service. Oberman said earlier this year that the board would act quickly to finalize the rules once reply comments were received, and that could in part be because of his imminent departure.
The likely successor to Oberman is unclear, although it almost certainly will be one of the two remaining Democratic members at the agency, Robert Primus or Karen Hedlund. The term of board member Patrick Fuchs, a Republican, expires in mid-January, and his renomination status is unclear. If he were renominated, he would not be a candidate for the chairman’s gavel unless a Republican president wins the 2024 election.