U.S. weekly rail volumes rose 16.1% year-over-year as last year’s pandemic-induced volume downturn reflects uneven comparisons, according to the Association of American Railroads (AAR). However, macroeconomic indicators still point to continued strength in the consumer economy, which could support rail volumes into the second quarter.
Weekly U.S. rail traffic for the week ending Saturday was 521,731 carloads and intermodal units. Of that, carloads rose 6% compared with the same period last year to 232,561 carloads, while intermodal units were up 25.8% to 289,170 containers and trailers.
“Comparisons of the current week with the same week in 2020 are inflated because of the widespread economywide shutdowns — and subsequent large reduction in rail volumes — last year at this time,” AAR said.
On a sequential basis, carload volume was up 0.8% over the prior week ending March 20, while intermodal traffic rose 2.3%.
For the first 12 weeks of 2021, U.S. rail volumes were up 4.5% to 6 million carloads and intermodal units.
US unemployment rate down, more jobs added
Although the year-over-year comparisons might result in inflated volume gains, economic indicators released Friday point to the potential for continued strength in the consumer economy.
March’s U.S. unemployment rate moved down to 6%, compared with 6.2% in February, according to the U.S. Bureau of Labor Statistics (BLS). Although the rate is 2.5% higher than pre-pandemic February 2020, it is “down considerably from its recent high in April 2020,” BLS said. That translates to about 9.7 million people unemployed in March.
Meanwhile, total nonfarm payroll employment rose by 916,000 in March, which is the highest level in months, according to some media reports.
These figures come amid expectations that the consumer economy could strengthen even further as vaccinations roll out and social distancing requirements loosen. However, other factors, such as the inflation rate, need to be kept in mind when determining trends, according to FreightWaves market expert Anthony Smith.
“Movement in the data becomes more compelling when multiple and independent reports paint a similar picture. We’ve seen some subtle decline in the unemployment rate, growth in the ADP employment report, a slight decrease in continuing jobless claims and a surge in nonfarm payrolls,” Smith said. “When all this is mixed in with successful vaccine efforts throughout the country, it makes for a valid argument that the jobs market is gaining traction with recovery as more COVID-19 regulations get lifted.
“All of this has a downstream impact on freight, the movement of goods and services rendered. We see the spike in e-commerce and retail sales when stimulus packages are put in place. As more Americans return to the workforce with confidence, they will spend more confidently. The velocity of money will pick up, as will the output for the overall country,” Smith continued. “Other issues need to be accounted for, so we’re not out of the woods yet. Inflation will be a difficult task to take on, but I’ll save that commentary for another time.”
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