U.S. weekly rail traffic inched higher sequentially last week as nationwide retail figures and housing starts showed glimmers of increased economic activity.
U.S. rail volumes for the week ending June 13 totaled 449,291 carloads and intermodal units, which is 14.9% lower than the same period in 2019 but 3.7% higher than the week ending June 6, according to the Association of American Railroads.
Of that, U.S. railroad operations originated 198,437 carloads, a 22.8% decrease year-over-year but a 3.1% increase sequentially, and 250,854 intermodal containers and trailers, a 7.3% drop year-over-year but a 4.2% increase sequentially.
Year-to-date U.S. rail volumes totaled 10.8 million carloads and intermodal units, which is 13.2% lower than the same period in 2019.
The weekly sequential increases come as several U.S. economic indicators showed potential signs of recovery occurring in May as states began to lift sheltering-in-place mandates brought about by the COVID-19 pandemic.
For instance, builder confidence for newly built single-family homes rose 21 points to 58 in June, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index. NAHB says any reading above 50 indicates a positive market.
The seasonally adjusted index consists of a survey that considers builder perceptions of single-family home sales as well as sales expectations for the next six months.
“Housing clearly shows signs of momentum as challenges and opportunities exist in the single-family market,” said NAHB Chief Economist Robert Dietz.
Meanwhile, the U.S. Census Bureau this week said retail sales in May rose 17.7% on a seasonally adjusted basis from April, although they were down 6.1% year-over-year.
Nonetheless, the National Retail Federation (NRF) urged caution in interpreting Census data, noting that the data may be incomplete because some retailers’ offices were closed and unable to respond to the Census survey.
NRF estimates that May retail sales were up 11% from April on a seasonally adjusted basis and 1.7% higher from May 2019 on an unadjusted basis.
“The economy kicked off in May as retailers and other businesses reopened and both stimulus money and supplemental unemployment checks fueled spending driven by pent-up demand from two months of shutdowns,” NRF Chief Economist Jack Kleinhenz said. “But full recovery is still a long way off. Comparisons against April have to be taken in context because April was a full month when almost everything that wasn’t deemed ‘essential’ was shut down. Spending has improved considerably but it’s still far below where it was a year ago, and while the freefall in consumer confidence is over, unemployment remains high and confidence is still at recession levels.”
Furthermore, despite the positive signals seen in May and June, there is still opportunity for volatility, as seen by the stock market’s recent jitters as the market responded to questions over a second wave of the COVID-19 pandemic.
“Going forward, wallets are primed, increased foot traffic shows that consumers are returning to stores, and retailers are ready to meet their demand, but we are likely to remain on a roller coaster for a while,” Kleinhenz said. “What we need to look at is the trajectory of employment and the direction of the virus. There’s hope for a turnaround in the economy in the third quarter but if the virus has a reawakening, we’re going to see some serious situations for consumers.”
Dietz agreed, “Builders report increasing demand for families seeking single-family homes in inner and outer suburbs that feature lower density neighborhoods. [But] at the same time, elevated unemployment and the risk of new, local virus outbreaks remain a risk to the housing market.”
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