One rail category has now returned to pre-pandemic levels. August saw a 3.0% rise in average weekly intermodal railcar loadings compared to August 2019. Overall, August total U.S. Rail car loadings saw a decline of -14.9% over August 2019. Still well off 2019 levels, railcar loadings have continued to make month over month recovery gains from the lows of April and May. Excluding coal, U.S. loadings were down -9.9%.
The grind continues as rail car loadings continue their COVID recovery. With new case counts trending downward and most economies in at least some stage of reopening; rail traffic has seen steady month over month increases. The obvious highlight for this month is intermodal loadings. Intermodal cars make up over 50% of total railcars moved in this country on a monthly basis. The average weekly cars loaded in August was 280,739, or 3.0% higher than August 2019. This highlight demonstrates the U.S. consumer is holding up their end of the bargain and has remained surprisingly resilient. Another factor may be an unseasonably weak U.S. dollar as Federal reserve programs and government spending have ballooned in recent months and increased the money supply. We’ll touch more on this below. Despite an outsized recovery, total YTD intermodal loadings are still -7.7% from 2019. The hole created in the pandemic depths is going to be difficult to eclipse this year.
Moving to domestic railcar loadings, the recovery continues, but still has a long way to go. Average weekly U.S. railcar loadings, excluding coal, in August were 163,152. A huge improvement over a May low of 138,723, but still -9.9% off last year’s August level. Coal continues to see record declines as the U.S. moves further and further from it as a power generation source. Because of the outsized relation coal has on total U.S. railcar loadings, we will focus more on ex-coal going forward. We will touch on coal loadings from time to time though. The macroeconomic trends seem to parallel the rail loading data, as numbers while still below 2019 levels, continue improving.
We’ll quickly highlight two carload categories this month; Grain and crushed stone, sand, and gravel. One good, one bad. Of the 20 commodity categories tracked by the American Association of Railroads, only two had carload gains in August. August grain shipments averaged 22,214 carloads per week. This is a 5.6% increase over August 2019. While still down -5.9% YTD. The improvement in grain shipments is likely due to an increase in exports of grain products from the U.S. This could bode well for U.S. farmers and food producers in the coming months. We’ll continue to monitor progress. On the other end, crushed stone, sand, and gravel carloads were 25% lower than August 2019. This is a direct attribute to the struggling U.S. Shale market. Just last week Saudi Arabia lowered its average oil selling price to Asia. Subsequently, Oil dropped below $40 per barrel for the first time in months. With lagging jet fuel demand and slow to return travel, oil prospects do not yet see a light at the end of the tunnel.
Economic data is supporting the data seen in rail car loadings. With another upside surprise in the August BLS Job support. The U.S. created 1.371 million net new jobs in the month of August. Lowering the reported unemployment rate to 8.4%. Expectations were for around 1 million new jobs created. In February prior to COVID shutdowns, unemployment was at or near all times lows. Going into May, we had eclipsed an unemployment rate that topped the highest levels seen during the 08 “Great recession” and is only topped by the great depression of the 1930s where unemployment reached close to 25%. so far at least, this recovery does not appear drug out like then. Since April, the U.S. Economy has made back over 10 million of the jobs lost or a little over half the total lost jobs. Leaving us with another 10 million to go.
Another positive sign the labor market is improving is the labor force participation rate. The LFPR is the percentage of working-age individuals in the U.S. actively working or seeking employment. After largely trending down with more baby boomers reaching retirement age in the 2000s and 2010’s the LFPR had begun trending up to a 5 year high of 63.4% in January and February 2020. It proceeded to fall precipitously into COVID shutdowns. In April, the labor force participation rate reached a low of 60.2%. it has since recovered to 61.7% as of August. Currently, a 1% participation rate increase equates to approximately 2.6 million people returning to the workforce. An improvement from 60.2 to 61.7 equates to approximately 3.9 million Americans returning to the workforce.
If rail industry recovery is going to continue, continued job gains and the consumer will be a lynchpin in that recovery.
Other economic indicators continue to support the overall economic recovery. In August, capacity utilization eclipsed 70% for the first time since March. Manufacturing utilization continues to improve as well. Consumer spending increased 1.9% month over month in July from June. This is the 3rd straight month of month over month increase. July was -2.8% below July 2019.
New auto sales have also continued to improve. Notching a COVID high of 15.2 million in August on a seasonally adjusted rate. April was the low at just 8.7 million new autos sold (SAAR).
Finally, housing continues to be a standout. Market supply levels are at multi-year lows. Interest rates remain at historic lows driving up housing demand. New housing starts in July reached an annualized level of 1.496 million. This is no more evident than in lumber prices which are currently at historic highs.
Finally we update the NY Fed’s Weekly economic index. The WEI continues to be a metric for tracking the recovery. The data has become more choppy in August, but the overall data remains in the positive direction. In August, the NY fed tracked U.S. GDP in the range of -6.15% to -4.41% over 2019 GDP levels. While a terrible number in normal years, this year is anything but normal.
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