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U.S. employers add robust 304K jobs; for-hire trucking adds 3,600

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In this file photo, an employment sign hangs from a wooden fence on the property of a McDonald's restaurant in Atlantic Highlands, N.J. On Friday, Feb. 1, the U.S. government issues the January jobs report, which will reveal the latest unemployment rate and number of jobs U.S. employers added. (Associated Press: JULIO CORTEZ)

WASHINGTON — U.S. employers shrugged off last month’s partial government shutdown and engaged in a burst of hiring in January, adding 304,000 jobs, the most in nearly a year.

The healthy gain the government reported Friday illustrated the job market’s durability nearly a decade into the economic expansion. The U.S. has now added jobs for 100 straight months, the longest such period on record.

The unemployment rate did rise in January to 4 percent from 3.9 percent, but mostly for a technical reason: Roughly 175,000 federal workers were counted as temporarily unemployed last month because of the shutdown.

For-hire trucking added 3,600 jobs, according to Department of Labor data.

The government on Friday also sharply revised down its estimate of job growth in December, to 222,000 from a previously estimated 312,000. Still, hiring has accelerated since last summer, a development that has surprised economists because hiring typically slows when unemployment is so low.

The ongoing demand for workers is leading some businesses to offer higher pay to attract and keep staff. Average hourly wages rose 3.2 percent in January from a year earlier. That’s just below the annual gain of 3.3 percent in December, which matched October and November for the fastest increase since April 2009.

The strong job market is also encouraging more people who weren’t working to begin looking. The proportion of Americans who either have a job or are seeking one — which had been unusually low since the recession ended a decade ago — reached 63.2 percent in January, the highest level in more than five years.

The 35-day government shutdown caused 800,000 workers to miss two paychecks. But because these workers will eventually receive back pay, they were counted as employed in the survey of businesses that produces the monthly job gain.

But in a separate survey of households that’s used to calculate the unemployment rate, many of these people were counted as temporarily jobless. That’s a key reason why the unemployment rate rose despite the healthy job gain.

Most economists have forecast that the shutdown will likely slow economic growth for the first three months of this year. But some say that even businesses that lost income from the shutdown likely held onto their staffs, knowing that the shutdown would only be temporary.

Friday’s solid jobs report provided a dose of reassurance that the economy remains mostly healthy and likely to shake off any effects of the shutdown. The nonpartisan Congressional Budget Office estimates that the shutdown slowed annual growth for the January-March quarter by about 0.4 percentage point, to a rate of 2.1 percent, though that loss should lead to a bounce-back later this year.

The main reason for the temporary economic loss this quarter is that the thousands of government workers who missed two paychecks slowed their spending. The government itself also spent less. In addition, many businesses across the country lost income. Tourists cut back on visits to national parks, for example, thereby hurting nearby restaurants and hotels.

Yet with unemployment so low and many companies struggling to fill jobs, layoffs might not have been widespread.

The partial government shutdown has delayed the release of a range of government data about the economy, including statistics on housing, factory orders, and fourth-quarter growth.

The reports that have been released have been mixed. The Federal Reserve’s industrial production report showed that manufacturing output rose in December by the most in nearly a year, boosted by auto production.

But consumer confidence fell in January for a third straight month as Americans’ optimism dimmed amid the shutdown and sharp drops in the stock market. Falling confidence can cause consumers to restrain their spending, though economists note that confidence typically returns quickly after shutdowns end.

The housing market has slumped as mortgage rates have increased. Sales of existing homes plunged in December and fell 3.1 percent in 2018 from the previous year. Mortgage rates have fallen back after nearly touching 5 percent last year, but the number of Americans who signed contracts to buy homes still declined in December.

China’s economy is decelerating sharply, the United Kingdom is struggling to negotiate its exit from the European Union, and Italy’s economy has entered recession, exacerbating fears that slower global growth will cut into U.S. exports.

Fed Chairman Jerome Powell this week cited the weaker global economy as a key reason why the central bank will be “patient” before it raises its benchmark interest rate again. That was a sharp turnaround from January, when Fed policymakers forecast two additional hikes for this year.

 

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ATA Truck Tonnage Index surges 6.6% in July, 7.3% higher than July 2018

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Compared with July 2018, the SA index surged 7.3%, the largest year-over-year gain since April. (Courtesy: AMERICAN TRUCKING ASSOCIATIONS

ARLINGTON, Va. — American Trucking Associations’ advanced seasonally adjusted (SA) For-Hire Truck Tonnage Index increased 6.6% in July after falling 1.2% in June. In July, the index equaled 122.7 (2015=100) compared with 115.1 in June.

“Tonnage in 2019 has been on a rollercoaster ride, plagued with large monthly swings, which continued in July as tonnage surged after falling significantly in May and June,” said ATA Chief Economist Bob Costello. “However, take out the month-to-month noise, and you see that truck tonnage is still on a nice upward path. It is important to note that ATA’s tonnage data is dominated by contract freight, which is performing significantly better than the plunge in spot market freight this year.”

June’s reading was revised down compared with our July press release.

Compared with July 2018, the SA index surged 7.3%, the largest year-over-year gain since April.

The not seasonally adjusted index, which represents the change in tonnage actually hauled by the fleets before any seasonal adjustment, equaled 122.8 in July, 4.5% above June level (117.5). In calculating the index, 100 represents 2015.

Trucking serves as a barometer of the U.S. economy, representing 70.2% of tonnage carried by all modes of domestic freight transportation, including manufactured and retail goods. Trucks hauled 10.77 billion tons of freight in 2017. Motor carriers collected $700.1 billion, or 79.3% of total revenue earned by all transport modes.

ATA calculates the tonnage index based on surveys from its membership and has been doing so since the 1970s. This is a preliminary figure and subject to change in the final report issued around the 5th day of each month. The report includes month-to-month and year-over-year results, relevant economic comparisons, and key financial indicators.

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Average price of gallon of diesel drops below $3 for first time since February

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WASHINGTON — The average on-highway price of a gallon of diesel declined 1.7 cents a gallon to $2.994 for the week ending August 19, according to the Energy Information Administration of the Department of Energy.

It marked the first time since the week ending February 11, 2019, that the price has been below $3, and it marked the sixth consecutive week of a decline.

All regions of the country showed a drop led by a 2.5 cent a gallon decline in the New England states (Maine, Vermont, New Hampshire, Massachusetts, Connecticut and Rhode Island) and a 2.4 cent a gallon drop in the Midwest states (North Dakota, South Dakota, Nebraska, Kansas, Oklahoma, Missouri, Iowa, Minnesota, Wisconsin, Illinois, Tennessee, Kentucky, Indiana, Ohio and Michigan). California declined 2.2 cents a gallon.

The price for the week ending August 19 was 21.3 cents a gallon for the comparable week in 2018.

For a complete list of prices by region for the past three weeks, click here.

For a list of the states by region, click here.

https://www.eia.gov/petroleum/gasdiesel/diesel_map.php

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July trailer sales up slightly, but below last year; used Class 8 sales fall again

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Both ACT Research and FTR reported trailer sales in July as being up slightly over June, but still far below the same month one year ago. (Courtesy: GREAT DANE)

The nation’s two organizations that track and analyze data about the commercial motor vehicle market both note that trailer orders were up in July as compared to June but were still far below when compared with the same month last year.

One of the two organizations reported used Class 8 sales fell for the fourth consecutive month.

ACT Research said preliminary estimate for July 2019 net trailer orders is 9,900 units. Final volume will be available later this month. This preliminary market estimate should be within +/- 3% of the final order tally.

FTR reported preliminary trailer orders for July at 9,000 units, up 61% from dismal June numbers but 68% below July 2018. FTR said trailer orders continue to show weakness during the summer months after experiencing a record run in the second half of last year, noting that van fleets already have their orders in for 2019 and have not started ordering yet for 2020. Although currently, production remains robust at near-record levels, some easing of build rates is expected as backlogs fall significantly to where they were at the start of 2018, FTR said. Trailer orders for the past 12 months now total 324,000 units.

“While net trailer order volume improved significantly from June’s dramatically disappointing results, the industry’s year-over-year performance continued to be extremely weak. While net orders jumped 65% versus an amazingly weak June, they were 66%  below this point last year, a tough comparison to the first month of the record-setting order run-up of last summer and fall,” said Frank Maly, ACT’s director of CV transportation analysis and research. “While some fleets made investment commitments in response to the opening of some 2020 order boards, their overall response was lackluster. A few months ago, there was strong interest to push commitments into next year, but uncertainty over the economy, freight volumes, and capacity has now caused many fleets to move to the sidelines as they re-assess their true needs for either replacement of older equipment or additions to fleet capacity next year.”

On a positive note, Maly said the cancellation pressures of recent months appeared to ease a bit in July. However, any cancels are likely impacting fourth quarter production slots, so there is still some churn in order board occurring before year-end.

“That results in a fairly soft foundation for early next year. Also worth noting is that production continued at a solid pace in July, although OEMs definitely slid back from June’s frantic pace,” he said.

Don Ake, FTR vice president of commercial vehicles, said trailer orders should stay subdued in August but start to revive in September, as fleets determine their needs for next year. The environment remains uncertain, with freight growth slowing and the tariff situation in flux.

“The July order volumes continue to demonstrate a possible return to normalcy in the equipment markets. The low total is representative of a typical slow summer order month, and is very close to the July 2016 number,” he said.

As for the used truck market, Steve Tam, ACT’s vice president of research, said preliminary used truck sales fell 2% month-over-month, the fourth consecutive sequential drop.

Other data released in ACT’s preliminary report included sequential comparisons for July 2019, which showed that average prices fell 4%, while average miles climbed 2%, and average age was up 4%.

“Used truck prices are the hottest topic in the industry right now,” Tam said. “Many dealers are experiencing significant softening in prices, but the erosion is not uniform. Depending on a host of factors, experiences vary and a few factors that impact prices include customer, equipment specifications, location, and vehicle condition.”

ACT’s Classes 3-8 Used Truck Report provides data on the average selling price, miles, and age based on a sample of industry data. In addition, the report provides the average selling price for top-selling Class 8 models for each of the major truck OEMs – Freightliner (Daimler); Kenworth and Peterbilt (Paccar); International (Navistar); and Volvo and Mack (Volvo).

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