Before acting on statistics, best to read them like tea leaves
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For-hire enjoys best-hiring month since April

Dec. 6, 2013
Less cheering: New GDP rise is pinned to swollen inventories

Of the 203,000 jobs added to the economy last month, as reported today by the Dept. of Labor’s Bureau of Labor Statistics (BLS), some 8,400 were for positions in for-hire trucking— notching the best employment month for the segment since April.

What’s more, per the BLS Current Employment Statistics Highlights report, in November the unemployment rate fell from 7.3% to 7.0%. BLS said employment increased in transportation and warehousing as well as in health care and manufacturing.

“Truck transportation added 8,000 jobs in November,” stated BLS. However, that number may actually surpass 8,400, the number pegged by Bob Costello, chief economist & vice president of the American Trucking Assns. Costello pointed out to FleetOwner that “ATA goes on our figures, which come from BLS.”

BLS further observed about the November performance by for-hire trucking that “since the most recent employment trough in March 2010, the industry has added 161,000 jobs.”

Costello said the drop in the unemployment rate— now at its lowest level in five years— was “due to solid job growth, not people leaving work force” and a “very positive sign” for the economy.

BLS also reported that the change in total nonfarm employment for September was revised up by 12,000 (from +163,000 to +175,000) and that the employment change for October was revised down by 4,000 (from +204,000 to +200,000).

“Employment in transportation and warehousing rose by 31,000 in November,” the agency noted, “with gains in couriers and messengers (+9,000), truck transportation (+8,000), warehousing and storage (+5,000), and air transportation (+3,000).”

The other big economic news this week came yesterday, when the Commerce Dept. reported that GDP increased at an annual rate of 3.6% in the third quarter, according to what it termed the "second” estimate released by its Bureau of Economic Analysis (BEA).

“The acceleration in real GDP growth in the third quarter primarily reflected an acceleration in private inventory investment, a deceleration in imports, and an acceleration in state and local government spending that were partly offset by decelerations in exports, in personal consumption expenditures, and in nonresidential fixed investment,” noted BEA in a news release.

However, ATA’s Costello cautioned against viewing this news too positively—pointing out the revision was due to higher inventories built up by businesses.

“These higher inventories aren’t good because shippers will work off any excess inventories before ordering more products,” he told FleetOwner. And that hurts truck-freight volumes.  It is likely one of the reasons why October freight was off, once adjusted for typical seasonality.”

Costello said inventories did not pile up “on purpose,” but said the situation was “most likely caused by weaker sales than expected.  I suspect the drawdown has already started as October truck freight was weaker than anticipated (seasonally adjusted).”

Indeed, Lindsey Piegza, managing director & chief economist of brokerage firm Sterne Agee, observed in an email that while third-quarter GDP was revised up from the preliminary estimate of 2.8% to 3.6%, “the underlying story does not change. 

“Headline [a basic rate before distorting factors have been removed] growth was led by [a] surge in inventories-- larger than previously reported-- while consumption continued to wane and business remained sidelined,” she continued. “The surge in inventories accounted for 1.68%, or nearly half of headline growth in the third quarter.”

On the other hand, Peizga pointed out that personal consumption was revised down from 1.5% to 1.4% in Q3. She said that contributed less than 1% to the headline number-- reinforcing the declining trend in consumption since the start of the year.

“As we saw with the initial GDP release,” Piezga pointed out, “headline growth was impressive thanks to an inventory stockpile. However, overzealous production last quarter is likely to severely contract from the current quarter's growth.

“Given the fragile consumer sector and tepid business investment,” she advised, “end of the year growth is unlikely to push above 2%.”

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