Trans4Cast: Employment is Strong, Why isn’t Freight?

The employment numbers for February came out last Friday, and the numbers looked good. U.S. businesses added another 242,000 jobs in February, an improvement over the 172,000 added in January. The monthly numbers are volatile but if you average the recent months you get monthly gains of 228,000 over the last 3 months, 235,000 over the last 6 months, and 223,000 over the last year. Those are very stable, solid employment gains. GDP should be growing solidly during that time. And it has grown, but certainly not as strong as we all would like.

Where’s the disconnect?
The trouble is that the goods-producing industries, the sector that is key to freight demand, has seen a significant slowing in employment. There is talk of a ‘manufacturing recession’ and we can certainly say at a minimum that manufacturing activity has been weak for at least a year. You can see in the graph below that employment growth in goods-producing industries has become disconnected from the overall employment growth since April of last year. The scales aren’t the same but the picture is clear – we are losing growth in areas that actually produce goods that need transported.

Goods-producing employment was DOWN 15,000 in February compared to the robust addition of 242,000 overall. In fact, over the whole last twelve months goods-producing has added only 124,000 jobs – half of what was added in February alone for the U.S. as a whole. Services continue to matter more and more in the U.S. economy. That creates additional reasons to expect slower growth going forward.

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T4C 2016-03-04 employment

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