September Rail Traffic Best Month since Pre Pandemic
July total U.S. Rail car loadings saw a decline of -17.6% over July 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 only -12.7%, and Intermodal loadings have almost returned to pre Covid-19 levels.
U.S. Railtraffic down 10% YTD Excluding Coal.
Through September, U.S. year to date total rail car loads are down -15.3% from 2019. Excluding coal, car loads are down -10%, and total intermodal car loads are down -5.9%. The question on everyone’s mind though, is what will be the pace of the recovery?
Employment & Economic Indicators
So how will the pandemic recovery continue? In short, who knows? Weekly and monthly economic indicators continue improving. However increasing case counts and a tumultuous upcoming presidential election have market participants on all sides scratching their heads. We’ll stick to the data and leave the speculating to the experts.
The Purchasing Managers index in September posted a 55.4. It’s 4th straight month above 50. Anything above 50 indicates expansion, below 50 indicates contraction. The September jobs report showed a net of 661,000 new jobs created. While this is a drop off from the previous 1.4 and 1.7 million jobs respectively in July and August. September includes a little over 200,000 government positions coming off of payroll, meaning over 800,000 net private sector jobs were created in September. With some drop off in the labor force participation rate, which we covered extensively in our August article. September brought the unemployment rate to 7.9% and approximately 11,272,000 net jobs have been regained from the Covid lock down in March and April. That leaves approximately 10.8 million jobs left to regain all of the pandemic lost jobs. The below chart details the labor force participation rate and population employment ratio against the official unemployment rate.
The slowing pace of job growth has some speculating the easy gains are in. However, consumer confidence spike significantly back to 101.8 in September after dropping to 91.7 and 86.3 in July and August.
Housing starts continue to be a strong point with August total housing starts at an annual pace of 1.416 million. The strength in housing can been seen in the price of lumber, which is near record highs, and builder confidence surveys remain strong as consumers continuing moving to suburbs.
We will get the first reading of 3rd quarter GDP on October 29th. We look forward to seeing that report.
Rail Sector Highlights
Motor vehicles & parts also eclipsed Sep 2019. A sign the auto recovery is showing strength. In September motor vehicles & parts were up 2.5% over September 2019. While not a huge gain, anything green in this time, is a positive. This can be seen in the new vehicle numbers as well. Which have returned to near pandemic levels. Other positive categories this month Farm products excluding grain, grain mill products, food products, lumber and wood products, iron and steel scrap, and waste & non ferrous scrap.
The biggest laggard continues to be crushed stone, sand, and gravel. A beleaguered U.S. shale industry in on display with September CSG car loads down 20.9% in September. Year to date CSG car loads are down -18.4% from this time last year. Only coal is worse.
Rail car loads of course remain down for the year and month, but we have come a long way from the depths of the spring.
As we continue to move forward in Pandemic recovery there are some positive notes looking ahead. We mentioned the bounce back in consumer confidence above. forward leading indicators for GDP indicate a strong 3rd quarter, however estimates vary widely. Which is why we are anxious to see the first release at the end of the month.
On the topic of GDP, the Federal Reserve Weekly economic indicator continues to trend up. notching a reading -4.18% during the week of 10/3/2020. The highest reading since the depths of the pandemic. Where we go from here, is anyone’s guess.
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