Just Keep Swimming Swimming Swimming
November Railcar Report
Just keep swimming swimming, swimming… The railroad industry had another overall positive month in November. In November, the U.S. averaged 225,049 railcars loaded per week. Total average car loads excluding coal, our primary data point, were 164,497 railcars loaded per week. That’s just -.9% below November 2019. Following October’s -1.2% YOY decline. That makes two consecutive months U.S. non coal railcar loadings were near pre pandemic levels.
That is not to say there are not economic indicators that give a person pause. November net new jobs were only 245,000. While that is a solid number in any normal month. This is a big drop from September and October’s 600K + numbers. No doubt, the closer we get to normalization, the more we expect the numbers to temper. We still have just over 10 million net jobs to be recovered. Cases have been rising and some states re-imposing lock down measures. It is hard not to see a correlation between the two and the employment report.
The unemployment rate dropped from 6.9% to 6.7% this is mostly due to a drop in labor force participation, back to 61.5%. down .2% from October. You can see in the chart below (blue bar) how the monthly job gains have dropped as the months have gone on. That said, the numbers are still positive and as the first vaccines are receiving approvals right now. Optimists hope for a reacceleration as we enter 2021.
With 10 million jobs left to be recovered from pre pandemic levels. How are some other economic indicators looking?
Economy Looking Ahead
U.S. GDP increased 33.1% in the 3rd quarter of 2020. A historic number if it hadn’t preceded a -31.4% decline in Q2. So what are we doing now?
Our favorite tool the New York Fed Weekly Economic indicator keeps inching closer and closer toward the positive mark. For the week of 12/4/2020. The WEI measured an average -2.13% annual GDP growth. That’s the best reading since the start of the pandemic. Its hard to believe as recently as September, those numbers were closer to -6%. A fantastic improvement over 90 days.
The purchasing managers index. A regarded indicator of near term future economic expectations. Was 57.5 in November. Anything above 50 indicates economic expansion. Below 50 indicates economic contraction. 57.5 is off slightly from October’s 59.3. It remains positive and well above 55 though. Manufacturer’s inventories have fallen to 10 year lows. This should provide some boost to output as companies begin returning inventories to normal levels.
Indicators important to the rail sector. Industrial Output and capacity utilization both improved in October. The Industrial output index measured 103.2 in October. The highest reading since the pandemic. By comparison, May’s reading was 92.1. Capacity utilization was similar. It rose to 72.8% for October. A lot better than April’s historically low 64.1%. Still a long way from 2018 high’s near 80%. November numbers will be released in the middle of December. If vaccine approvals and the following roll outs move successfully. This should be a fun component to watch over the next several months.
Rail Category Highlights
We touched on what a standout grain continues to be. Chemicals were the new entrant this month. up 3.4% of November 2019. This is the first monthly year over year increase since the start of the pandemic. What’s better. November’s 31,479 cars per week are the second best ever November performance for the sector.
Iron and Scrap steel also continue to be strong. After October’s headline 29.1% increase. November followed by being up 12.5% over November 2019.
Crushed stone, sand, and Gravel. Petroleum products. These two can’t seem to catch a break. They were down again significantly in November.
Overall, 9 of the 20 rail commodity categories saw increases in November. From April through August, the most category increases in any one month was 3.
With one more month to go in this crazy year. We will update you how we closed in our January report.
Merry Christmas & Happy New Year