Monthly job creation in the U.S. rose for the month of May by 339,000. That’s 15% above April’s figures and its highest release since January. The strong release more than 78% higher than what the Dow had originally anticipated for the month. The rise in openings is seen as an encouraging indicator for a number of economists as strong employment figures typically represents a healthy economy because an employed consumer is one who is capable of spending. The labor market resiliency, however, has been a key decision-making influencer for the Feds’ rate hikes since they began raising the federal funds rate last spring from near zero to now above 5% points. Since the most recent and 10th consecutive hike in May of a quarter percent, the echoing sentiment from many has the Feds pausing hikes for the time being. However, with the most recent jobs release and the fact that inflation is still well below the Feds’ target of 2%… that sentiment may be fading.

Some things to consider outside of just the creation of new jobs are the types of jobs currently available, what type of jobs are being added, what those jobs are paying, and the liquidity of the average consumer. As Quit Rates continue their slow downward trajectory from last August, those holding multiple jobs have continually increased. At the same time, both consumer credit card debt and delinquency rates have skyrocketed, with debt surpassing pre-pandemic levels back in April of last year and delinquency on a trajectory to surpass the pre-COVID precipice before the year’s end. Of the 339k jobs added last month… healthcare, government, professional services, and hospitality represented the overwhelming majority. While positions that have the greatest direct impact on freight flows such as manufacturing and retail saw little to no movement.

This all relevant as it relates to freight as demand measured by SONAR’s Outbound Tender Volume Index has remained above both 2019 and 2020 levels for the vast majority of the year. This index tracks tendered freight volumes daily of which most of the tenders are directly related to consumer goods spending. The other 2 large inputs for freight flows include manufacturing and housing. Both of which play a much smaller role in freight flows especially in today’s current market where manufacturing has remained in contraction territory as measured by the ISMPMI for the past 7 consecutive months and housing has begun receiving “recession” branding from a handful of news outlets across several US markets as 30-year fixed rates remain more than 3% higher than pre-pandemic levels which have a direct correlation on affordability ultimately contributing to a significant deterioration in housing starts since the mortgage rate hike began back at the beginning of 2022.

This has been your Bridge Logistics Market Update for the week of June 5th 2023.