In last month’s report, we said to be ready for the numbers to get a little wacky as year-over-year comparisons caught up with pandemic months, well here we go… Total average weekly railcar loads in April were 237,960, up 23.7% over April 2020. That sounds great, but April 2021 was still down 10.1% from April 2019. Ex-coal, shipments were up 21.9% over April 2020, but still down 3.6% from April 2019.
Railcar Loadings Analysis:
While the pandemic recovery is still in progress for domestic railcar loadings, that is not the case for intermodal. In April, intermodal loadings notched an all-time monthly record for weekly average loadings, the second time this year. The weekly average for intermodal loadings was 293,488 containers and trailers. That is 33.8% over April 2020 and up 10.4% over April 2019. For the first four months of 2021 U.S. intermodal loadings have totaled 4.79 million containers loaded, the most ever through the first 4 months of the year. There are positive signs for the domestic market as well.
In April, seventeen of twenty AAR categories were higher than they were in April 2020 and nine categories topped April 2019. In April 2019 average weekly ex-coal loadings were approximately 180,000 cars/wk. That compares with April 2021’s 175,221 average weekly railcar loadings.
Through the first four months of the year, total domestic railcars loaded are 3.863 million; up 2.8% for the first four months last year. Ex-coal car loadings are 2.836 million, up 3.4% from 2020 and down from 2.914 million or -2.7% through April 2019. All things considered, to be 2.7% off 2019 year-to-date levels just one year after the pandemic and government lockdowns set in is an exciting statistic. Go look at reports from just a year ago. There were not a lot of people saying we would be back to pre-pandemic levels a year later.
We mentioned 17 of 20 carload categories were higher in April 2021 over April 2020. Grain continues to be strong with loadings up 19.5% over April 2020 and up 11.1% from April 2019. Through April 2021 total grain carloads are 433,284. That is the most grain carloadings to this point in the year since 1989.
Another strong April performer, metallic ores and metals were 96,008 carloads. April 2020 metallic ore loads were 69,250 loads or 38.6% lower than April 2021. Year to date metallic ores and metals have moved 367,081 railcars. Up 9.5% through April 2020.
Chemicals were strong in April, up 26.9% over April 2020. More importantly, chemicals are tracking right in line with the levels of 2019. Excluding the freeze of the February storm, chemicals have returned to pre-lockdown levels.
Forest products including lumber and pulp and paper products have totaled 3.9% more carloads than they had through April 2020. Lumber despite its meteoric rise in price has only increased loads 5.4% so far this year. As the housing boom and supply constraints continue, we expect to see this number rise in the coming months.
Industrial products are an aggregate category consisting of seven of the major commodity categories. It represents a wide swath of the U.S. industrial economy. It serves as a good gauge for overall economic strength in the underlying economy. While it still remains well below 2019 levels. Progress is clear from the chart below. The blip you see in the first two months of the year is the winter storm that hit the Midwest back in February. It is hard to underestimate the effect that had on overall numbers so far this year.
The headline for CNBC’s April jobs report article. “April’s expected hiring boom goes bust…” In April 2021, total nonfarm payroll employment rose by 266,000. While in non-pandemic times that would be considered a successful month. It is considered an enormous miss for the U.S. economy. By some estimates, it is the biggest jobs miss in 20+ years. Estimates were in the range of one million new jobs added as the economy and states continue reopening from forced lockdowns. Adding to the pain, March’s 916,000 job report was revised down to 770,000 jobs. Reasons for the miss are widely scattered and depend on who you talk to. The takeaway is that this is a very disappointing number. We want to stress though, one month does not make a trend.
Despite reopening in almost all states, the jobs scenario has stalled in recent months, despite what looked like an acceleration just a month ago. The unemployment rate ticked up .1% to 6.1%. The number of net jobs still missing from before the pandemic is just over 8.2 million or 5.4% fewer jobs than in February 2020.
Despite the jobs report. Economic indicators remain largely positive. The initial report for U.S. GDP in Q1 2021 was 6.4%.
The purchasing managers' index was 60.7% in April. Down from 64.7% in March, but one of the highest readings on record. Anything above 50% indicates expansion.
Industrial output in March was up 1.4% over February. It was up another .7% in April over March. While April’s reading was considered a slight miss over a .9% expectation, it is moving in the right direction. Capacity utilization has remained fairly steady over the last couple of months at: 75.3% in January, 72.7% in February, 74.4% in March, and 74.9% in April.
If you have looked at a car lot lately, you may have noticed they are looking a little sparse. We spoke on the strength of autos in our March report. April continued the trend. New light-vehicle sales were a seasonally adjusted 18.5 million new vehicles sold, which is the highest reading since July 2005. These numbers will be interesting to watch in the coming months as the continued semiconductor and plastics shortage plagues vehicle developments. Opinions are mixed but the overall consensus seems to be these shortages will last the majority of 2021.
Housing and autos seem to be walking in lockstep. Housing starts in March were 1.74 million. That is up 19.4% over February 2021. However, housing starts slipped in April falling 9.5% to a seasonally adjusted rate of 1.569 million new homes. We’ve talked extensively about lumber and other commodity prices in previous articles. It may be the increasing cost of homes is finally catching up with buyers. Lumber prices have dropped slightly in recent weeks despite remaining at extremely elevated levels. We will see what comes of the housing market in the coming months.
Federal Reserve Weekly Economic Index:
We always close with our economic index. We celebrated the WEI going positive last month and it remains steady. While the numbers are almost certainly skewed by last year's declines, it is nice to see the ledger on the positive side for a change. We’ll continue monitoring this in the coming months.
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