The economy received some good news and some bad news in May, as several key economic indicators show the United States may not be in a recession. The results for the trucking industry, though, are somewhat mixed.
Analyst Chris Brady, president of Commercial Motor Vehicle Consulting, said the news is really a continuation of the pattern the industry has been in for a while. “You do have some freight markets in good shape, but you have some detriments, including consumer spending. The freight environment is really just sluggish,'' he said.
The industry is seeing positive signs in exports, up 5.5% in the first quarter, and agricultural commodities, as more U.S. farm products are shipped overseas. Even imports showed an increase in the first quarter, up 2.5% vs. a decrease of 1.4% in the fourth quarter. Weakness in the housing industry though, along with the struggling auto industry continues to plague trucking, Brady said. Residential construction is down a seasonably adjusted 20% for the third straight quarter, adding to the woes.
With continued weakness in housing and consumer spending, Brady doesn't foresee growth in the trucking industry for the next two quarters. “A sluggish environment plus high fuel costs just puts a squeeze on profits,” Brady said.
Overall, the government reported the GDP showed a 0.6% increase, the second consecutive quarter it has grown at that pace.
The Labor Dept. reported the economy lost just 20,000 jobs in April. It is the fourth consecutive month of decline. The unemployment rate dropped to 5% from 5.1% in March, leading some experts to believe the economy is improving.
Analyst Satish Jindel, president of SJ Consulting, doesn't see that making a significant impact. “I would say people are reading too much into it,'' he said. “The real way to judge is consumer confidence.''
Consumer confidence took a hit in April as well, reaching 62.3%, down from 65.9 in March.