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Weekly Transportation Update: Unemployment Plummets to Levels Not Seen in 50 Years

Posted by The FTR Experts on 2/7/23 9:00 AM

U.S. job growth soars in January on a seasonally adjusted basis.

  • The unemployment rate declines, matching levels not seen since the 1960s.
  • The ISM manufacturing index falls deeper into contraction territory.
  • Dry van and refrigerated spot rates continued their seasonal declines.
  • Intermodal volumes show no sign of improvement or conversion.

Tags: Economy, WTU

Key Takeaways

  • U.S. adds 517,000 payroll jobs in January.
  • Unemployment rate falls to 3.4%.
  • Labor participation rate ticks up to 62.4%.
  • Job openings rise sharply in December.
  • ISM’s manufacturing index sinks further.
  • Mortgage rates barely change in the latest week.
  • Initial jobless claims are the lowest since April.
  • Diesel prices rise for the second straight week.
  • Trucking adds 4,100 payroll jobs in January.
  • Truck spot rates continue seasonal decline.
  • Intermodal volumes show no sign of improvement.
  • Rail rates could prove stronger than expected.
  • CP-KCS merger is on the verge of approval.


Payroll employment looked far stronger in January than it did previously. The economy added 517,000 jobs, seasonally adjusted – the strongest m/m gain since July. Also, the unemployment rate edged down to 3.4%. The rate has not been so low since May 1969, and it has not been lower since October 1953. The labor participation ticked up to 62.4%.

The sharp gain in January payroll jobs was on top of an upward revision of initial December estimates by 813,000 jobs due to a Bureau of Labor Statistics annual data revision that incorporates more comprehensive data than the monthly establishment survey does. The updated data generally shows stronger employment levels for the economy than previously indicated starting in June 2021.

On a seasonally adjusted basis, payroll employment is now 2.7 million jobs, or 1.8%, above February 2020 – roughly double the recovery seen in the initial December estimates.

It is worth noting that payroll employment fell by 2.5 million on a not seasonally adjusted basis. The sharp increase in the seasonally adjusted level simply means that the economy shed far fewer jobs than expected for a January. The unadjusted drop in payroll jobs was the smallest for a January since 1995 when total employment was about 38 million lower than it is today.

Almost all major sectors of the economy saw seasonally adjusted job growth in January, but sectors hit hardest by the pandemic continued to see the largest gains. Leisure and hospitality added 128,000 jobs, and private education and health services added 105,000. The only major sector to lose any jobs was information, which includes some of the large tech firms that have announced layoffs recently.

Manufacturing added 19,000 jobs despite an 8,400-job drop in transportation equipment. The largest offsetting gain was in food manufacturing, followed by nonmetallic minerals and fabricated metals.

The January employment situation report incorporated other notable changes aside from the annual benchmark revision. BLS also updated seasonal adjustment factors and population estimates, the latter of which affects data in the household survey such as the unemployment rate and labor participation rate.

BLS also changed the format of the reported data itself. Many changes replace outdated descriptions for industries. For example, “broadcasting, except Internet” is now “broadcasting and content providers.” However, some changes reflect fundamental changes in the economy over time.

Perhaps most notable in this regard were changes in retail trade. Previously, BLS tracked data separately for various categories of “stores,” and lumped all non-store retail into a single category.

The new format eliminates the categories of non-store retailers and miscellaneous store retailers and reassigns those workers to other categories based on the type of goods sold. In so doing, the term “retailers” has replaced “stores” in all cases.

Job openings

Payroll job data was not the only labor market indicator that surprised to the upside. Unfilled job positions at the end of December totaled just over 11 million, seasonally adjusted – a 5.5% increase over November and the highest level of job openings since July. December’s m/m gain was the largest since July 2021.

The largest gains in job openings were in accommodation and food services, retail trade, and construction. Job openings in December were about 57% higher than in February 2020. Job quits eased 0.4% and are nearly 19% above February 2020.

ISM Manufacturing Index

The Institute for Supply Management’s manufacturing index in January fell a point to 47.4, which is well below the 50 threshold between expansion and contraction and the lowest reading since May 2020. The new orders component fell 2.6 points to 42.5. Production eased to 48.0. The only ISM index components in expansion territory in January were employment and inventories, and both were just marginally above 50.

Mortgage rates

Mortgage rates seems to be stabilizing. The average rate on a 30-year fixed-rate mortgage eased to 6.09% in the latest week from 6.13% previously. Rates are down nearly a full point since November.
Freddie Mac said that its research indicates that a percentage point reduction in rates can allow as many as 3 million more mortgage-ready consumers to qualify for and afford a $400,000 loan, which is the median home price.

Unemployment benefits

The unemployment benefits situation changed little in the latest week. First-time claims for benefits declined by 3,000, seasonally adjusted, to 183,000. Initial claims have fallen in four of the past five weeks and the other week saw no change. Continued claims for benefits fell by 11,000 to 1.66 million, which was the level two weeks earlier.

Diesel and petroleum prices

The national average price of diesel rose 1.8 cents to $4.622 a gallon during the week ended January 30. After the prior week’s jump of 8 cents, it was uncertain where prices might go last week. Diesel prices had not risen in consecutive weeks since October when they rose more than 50 cents in two weeks.

The near-term outlook is unclear as crude prices have eased slightly but distillate production remains very low. West Texas Intermediate has closed below $80 a barrel for five straight sessions. On the other hand, production of ultra-low distillate – the base stock for on-highway diesel – barely changed in the latest week and sits at the lowest level since April aside for the December holiday period.





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