The first glance at the BLS employment numbers in trucking looks strong, but some other numbers are lagging.
Monthly employment figures show a transportation industry that is adding a significant amount of jobs by one measure but also raises questions why a red-hot freight market isn’t putting up numbers even higher.
The most looked-to number in the monthly data for the health of the industry is employment in the truck transportation sector on a seasonally adjusted basis. The preliminary number for December rose to 1,484,300 jobs, an increase of 7,300 jobs from the revised November number of 1,477,000 jobs. With the October numbers in the books — the last two months would have reflected preliminary estimates of October — it means that the truck transportation sector has added 19,100 jobs over the last two months on a seasonally adjusted basis.
But there are two things to note: The December figure is still less than the 1,526,400 truck transportation jobs reported in December 2019. And on a non-seasonally adjusted basis, the number of truck transportation jobs in December actually declined slightly, to 1,482,400 from 1,484,900. (All December numbers are preliminary.)
While analysts always tend to look at seasonally adjusted numbers, Jason Miller, an associate professor at Michigan State University who specializes in trucking and supply chain research, said he likes to look at both figures.
“The seasonal adjustment factors are based on historical patterns,” he wrote in an email to FreightWaves. But the problem is that those patterns can become “outdated” by big shocks to the system, like what the global economy is going through now, Miller said.
“The not seasonally adjusted data provides the raw figures and, hence, isn’t sensitive to past patterns potentially becoming outdated,” Miller said.
Miller’s theory on the divergent paths of seasonally adjusted and not seasonally adjusted figures in December is that it was created by the impact from what he described as the “specialized local sector.”
“We see pronounced seasonality tends to be present, with substantial employment declines in December usually occurring,” he wrote. “We didn’t see the usual decline occur in November, though. This would suggest that if employment stayed steady, we would see the seasonally adjusted employment inflated upwards.”
Miller also dove into the more specific sector data that goes through November. That breaks down the truck transportation jobs numbers into LTL and truckload.
One area that has caught his eye is the difference in the not seasonally adjusted numbers for truckload and LTL carriers.
“One different dynamic to me with LTL is that we can see that employment began declining after July 2019, but this didn’t happen in (the category of truckload),,” Miller wrote in an email. “My thought is that this occurred because of LTL carriers’ greater exposure to the industrial economy, and we saw manufacturing activity slow in the second half of 2019.”
And while the not seasonally adjusted number for truck transportation as a whole dropped in December, the more specific truckload data through November showed what Miller said was “a major upward movement” for the first time since “the ending of lockdowns.”
“Employment in that sector finally moved above 2017 levels,” he added.
Among some of the other highlights in the monthly report:
— The producer price index (PPI) in the NAICS truck transportation sector, which starts with the numbers 484, shows the pressure that cost inflation is bringing to moving freight by truck. The PPI for that number rose in November to 149.4. (December data is not available yet.) That is the highest level ever and has now jumped from 140.6 in May to its November level. Even in the hot freight market of 2018, it never rose above 146.9.
— Surprisingly, that increase in PPI didn’t come with a significant boost in wages between October and November. Average hourly earnings for production and nonsupervisory employees, according to the BLS, rose to $25.15 in November, up just 3 cents from the month before. However, it is up significantly from the $24.60 posted in August.
— The strong transportation and warehousing sector, which includes all NAICS categories that begin with 48 or 49, saw its total employment rise to 5,588,800, up from 5,542,200. But just like the numbers in the truck transportation sector, it hasn’t reached year-ago numbers, which are 67,100 less than December 2019. But that has narrowed by an enormous amount. The year-to-year gap in May was 518,300 jobs. The unemployment rate in the sector ticked up to 9.3% from 9%. It’s the second consecutive month of an increase, as it stood at 8.9% in October.
— The more specific warehousing and storage sector continues to climb higher. It posted seasonally adjusted job totals of 1,295,500 in December, up from 1,287,300 jobs. A year ago, it was 1,192,000. Unlike truck transport, which saw a decline in the not seasonally adjusted numbers, warehousing and storage rose on that basis, to 1,326,300 jobs from 1,319,000 jobs.