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US hiring slowed to 155K jobs, trucking gains on seasonally adjusted data

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WASHINGTON  β€” U.S. employers added 155,000 jobs in November, a slowdown from recent months but enough to suggest that the economy is expanding at a solid pace despite sharp gyrations in the stock market.

The Labor Department said Friday that the unemployment rate remained 3.7 percent, nearly a five-decade low, for the third straight month. Average hourly pay rose 3.1 percent from a year ago, matching the previous month’s figure, which was the best since 2009.

CAPTION FOR PHOTO

Laurence Marzo, left, and Ty Ford, right, move a conveyor belt into place to help unload a truck carrying merchandise at a Walmart Supercenter in Houston.  (Associated Press: DAVID J. PHILLIP)

The economy is expanding at a healthy pace, but rising trade tensions between the U.S. and China, ongoing interest rate increases by the Federal Reserve and weakening global growth have roiled financial markets. Analysts expect growth to slow but remain solid in 2019 as the impact of last year’s tax cuts fade.

On a seasonally adjusted basis, for hire trucking gained 4,500 jobs; on a not seasonally adjusted basis, the industry lost 1,200 jobs.

The jobs figure was less than many economists forecast, but few saw the report as a sign of a broader slowdown.

“The economy continues to churn out new jobs and reflects the strong underlying business conditions that point to steady, albeit slower job growth and economic activity in 2019,” said Joe Brusuelas, chief economist at consulting firm RSM. “This report strongly implies that a recession is not looming just over the horizon.”

The report is unlikely to dissuade the Federal Reserve from raising short-term interest rates at its meeting later this month, as expected, Brusuelas said. But it suggests the Fed may not hike rates next year as rapidly as many investors have feared.

The ongoing job gains are pushing down unemployment rates to historically low levels for a variety of groups. The unemployment rate for men aged 20 and above fell last month to 3.3 percent, the lowest in 18 years. And the rate for Americans with just high school diplomas dropped to 3.5 percent, the lowest since December 2000. The African-American jobless rate declined to 5.9 percent, matching May’s figure as the lowest on record.

November’s job gains are down from October’s robust 237,000, which was revised lower from last month’s estimate. Hiring has averaged 195,000 a month for the past six months, modestly below an average of 212,000 in the previous six.

Hiring in November was led by health care firms, which added 40,100 jobs, and professional services such as accounting and engineering, which gained 32,000. Manufacturing companies hired 27,000 new workers, the most in seven months and a sign that trade tensions have yet to weaken factory hiring.

Construction firms cut back, however, adding just 5,000 jobs, the fewest in five months. Hiring also slowed in restaurants, bars and hotels.

Most recent data have pointed to solid economic growth. Americans increased their spending in October by the most in seven months, and their incomes grew by the most in nine months, according to a government report last week. Consumer confidence remains near 18-year highs, surveys show. And both manufacturing and services companies expanded at a healthy pace in November, according to a pair of business surveys.

The housing market, though, has stumbled this year as the Fed’s rate hikes have contributed to sharply higher mortgage rates. Sales of existing homes have fallen 5.4 percent from a year earlier, the biggest annual decline in more than four years.

Investors, however, are mostly focused on where the economy is headed. They are worried that the U.S.-China trade war could still intensify, despite an agreement over the weekend between Presidents Donald Trump and Xi Jinping that included postponing a planned U.S. tariff hike for 90 days. Higher tariffs would compound the risks for a global economy that is already grappling with dismal growth figures from Europe and Japan.

The interest rate paid by longer-term bonds has also fallen sharply in the past month, panicking investors, while short-term rates have declined by much less. That typically signals a weaker economy ahead.

And the Federal Reserve has raised short-term interest rates three times this year and is likely to do so a fourth time later this month, thereby raising borrowing costs for consumers and businesses. The Fed has signaled that it could increase rates again next year.

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ATA For-Hire Truck Tonnage index increases 0.2% in September

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Compared with September 2018, the SA index increased 3.5%. The index is up 4.1% year-to-date compared with the same period last year. (The Trucker file photo)

ARLINGTON, Va. β€” American Trucking Associations’ advanced seasonally adjusted (SA) For-Hire Truck Tonnage Index increased 0.2% in September after falling 4% in August.

In September, the index equaled 117.6 (2015=100) compared with 117.3 in August.

β€œThis was the first month in 2019 that we did not see a significant increase or decrease in tonnage,” said ATA Chief Economist Bob Costello. β€œFor the entire third quarter, the index was up 1.2% over the previous quarter and 4.5% from a year earlier, both are nice gains.”

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.

August’s reading was revised down compared with our September press release.

Compared with September 2018, the SA index increased 3.5%. The index is up 4.1% year-to-date compared with the same period last year.

The not seasonally adjusted index, which represents the change in tonnage actually hauled by the fleets before any seasonal adjustment, equaled 114.8 in August, 7.5% below the August level (124). 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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CMV market trifecta: Sales of used trucks decline m/m, y/y ytd

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September marks the first time since the fall of 2012 that the used truck industry has seen average prices fall month-over-month for three straight months. (The Trucker file photo)

COLUMBUS, Ind. β€” Preliminary used Class 8 volumes (same dealer sales) fell 5% month-over-month in September, according to the latest preliminary release of the β€œState of the Industry: U.S. Classes 3-8 Used Trucks” published by ACT Research.

Additionally, the report indicated that longer-term comparisons yielded a 17% decline compared to September 2018, as well as a year-to-date drop of 19%, the 11th consecutive contraction for both time period comparisons.

Other data released in ACT’s preliminary report included sequential comparisons for September 2019, which showed that average prices and average age fell 3% each, while average miles climbed 5%.

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). This report is utilized by those throughout the industry, including commercial vehicle dealers to gain a better understanding of the used truck market, especially as it relates to changes in near-term performance.

β€œSeptember marks the first time since the fall of 2012 that the used truck industry has seen average prices fall month-over-month for three straight months,” said Steve Tam, vice president at ACT Research. β€œSeptember also has the distinction of being the first time since mid-2017 that prices have fallen year-over-year for two consecutive months. From our perspective, there are two factors at work. Demand is falling, as evidenced by lower sales volumes, and supply is on the rise.”

ACT Research is a publisher of commercial vehicle truck, trailer, and bus industry data, market analysis and forecasts for the North America and China markets. ACT’s analytical services are used by all major North American truck and trailer manufacturers and their suppliers, as well as banking and investment companies.

ACT has scheduled its 62nd seminar for February 11-13, 2020. It will feature trucker, electrification and economic panels, as well as discussions on near-term demand of North American commercial vehicle markets and the pending impact of electrification on the market in the near future.

A commercial vehicle database workshop is also being planned in conjunction with this semi-annual event. Click here for seminar information.

For information about other ACT Research products and services, visit www.actresearch.net.

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At 0.3% dip, September retail sales drop by largest amount in seven months

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The overall economy grew at a 2% annual rate in the April-June quarter with much of that strength coming from a 4.6% surge in consumer spending, which accounts for about 70% of economic activity. (Β© 2019 FOTOSEARCH)

WASHINGTON β€” Retail sales dropped in September by the largest amount in seven months, possibly signaling that rising trade tensions and turbulent markets are having an impact on consumer spending.

Retail sales fell 0.3% last month following a 0.6% gain in August, the Commerce Department reported Wednesday. It was the first decline since a 0.5% drop in February.

Retail sales are important to the trucking industry because trucks carry an estimated 75-80% of the merchandise sold at retail outlets.

Consumer spending was strong in the spring and economists had been counting on continued strength to protect the U.S. economy as it is buffeted by the fallout from President Donald Trump’s trade war with China.

The spending decline in October, which was unexpected, was influenced by special factors including a big 0.7% decline in sales at gasoline stations, a decline that likely reflected falling gas prices during the month.

The overall economy grew at a 2% annual rate in the April-June quarter with much of that strength coming from a 4.6% surge in consumer spending, which accounts for about 70% of economic activity.

That spending pace had been expected to slow in the July-September quarter but still remain strong enough to support economic growth near the 2% rate seen in the spring.

But some economists are worried that a slowing global economy and the adverse impact of the U.S.-China trade war could slow overall growth so much that the country could see an increasing risk of a recession ending the current record-long U.S. expansion, which began in June 2009.

“It looks like the trade war has claimed yet another victim, in addition to diminished business confidence and reduced investment spending, … consumers are starting to chicken out,” said Chris Rupkey,Β  chief financial economist at MUFG in New York.

Many economists said the disappointing retail sales performance would make it more likely that the Federal Reserve will cut interest rates in October for a third time this year to buy more insurance against a recession when they meet later this month.

Michael Pearce, senior U.S. economist at Capital Economics, said while there were special factors affecting the weak September sales performance, the report contained clear signs that consumption growth is slowing.

He said the report was consistent with his view that the overall economy will continue to slow to a rate of just 1% by the final three months of this year. He said that will prompt the Fed to cut rates again but not until the December meeting.

In addition to the drop in gasoline sales, sales of autos fell 0.9% in September after a solid 1.9% increase in August.

Sales at department stores were down 1.4% while sales at general merchandise stores, which include chain retailers such as Walmart and Target, fell 0.3%.

Sales also dropped at hardware stores, grocery stores and sporting goods stores. Clothing stores, restaurants and health care stores all saw increases.

Sales in a retail control group which focuses on key components that go into computations of GDP were unchanged in September after a 0.3% gain in August.

 

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