REPORT: Freight Volumes Still Growing “Slightly” But “Mixed Signals” Cloud Outlook
Columbus, OH – The U.S. economy performed well in the second quarter of 2019, but a new report by trucking analysts, FTR Transportation Intelligence, indicates the picture is not so pretty for the transportation sector.
Although initial Gross Domestic Product (GDP) figures for the second quarter of 2019 show economic growth at 2.1%, the components of GDP linked to demand for and transportation of goods was far weaker, according to an analysis by FTR.
FTR estimates that the GDP Goods Transport Sector rose at a seasonally adjusted annual rate (SAAR) of just 0.5% in 2019Q2 from the first quarter of the year.
By comparison, the GDP Goods Transport Sector grew 3.2% in 2018 and 5.7% in 2017.
“It’s a slow growth environment now, but it feels worse than that because the freight markets were so extraordinarily hot in 2018,” said Eric Starks, FTR’s chairman and CEO.
“However, while freight volumes are holding up as of now, most of the risks seem to be on the downside, especially with tariffs and the overall trade climate.”
Starks described “mixed signals” in the economy that are further clouding the future outlook.
“Consumer spending remains strong, although we’re finally starting to see a slight deceleration in job growth,” he said.
Last week the U.S. Labor Department (DOL) released its job growth figures for July and reported the economy created 164,000 new jobs.
The national unemployment rate is still historically low at 3.7 percent
The trucking industry added 2,000 jobs in July as overall transportation and warehousing employment increased by 9,000 jobs last month.
However, Stark says stakeholders best be engaged and aware of what is happening.
“After a couple of years of constant pressure on the transportation system we’re just in a more volatile and dynamic environment that requires shippers, carriers and intermediaries to be especially vigilant,” he said.
Another troubling sign is U.S. factory activity is slowing.
Newly released data from the Institute of Supply Management (ISM) showed that U.S. factory activity expanded at a slower pace in July, as the manufacturing Purchasing Manager’s Index (PMI) fell 0.5 points to 51.2 on a seasonally adjusted basis.
Thankfully, FTR analysts say some data for the second quarter actually brought encouraging news for the freight demand outlook.
GDP for the Goods Transport Sector in 2019Q2 rose at an SAAR of 2.0% over the first quarter.
This is a positive development since growth of 2% in GDP for the Goods Transport Sector is typically seen as the minimum level needed to keep the freight markets stable.
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(Photo courtesy of Utility Trailer)
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