Fleet Management

Economic Watch: Unemployment Falls; Manufacturing, Construction Slows

October 06, 2014

By Evan Lockridge

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Both the trucking industry and the overall economy added jobs in September, pushing the unemployment rate down below 6% for the first time since July 2008 and hitting its lowest level in six years.

The U.S. Commerce Department reports 248,000 jobs were added during the month, of which 3,800 came from the for-hire trucking industry. This pushed the unemployment rate down to 5.9% from 6.1% in August.

This also marked the 48th consecutive month of job growth, tying the longest stretch since 1939 and beating a more recent run in the late 1980s.

“Another month of impressive headline job creation suggests the economy is gaining momentum and the U.S. labor market is continuing to improve,” said Lindsey Piegza, chief economist at the investment firm Sterne Agee. “On the other hand, stagnant average hourly earnings suggest businesses continue to rely on flexible, low-cost labor, keeping wage pressures at bay, On net, this ... report offers little new insight to settle the debate between policy officials torn between the discrepancies in top-line improvement verses weakness in the details.”

Manufacturing & Non-Manufacturing Activity

Meantime, two separate reports from the nation’s purchasing managers show continued growth in the non-manufacturing and manufacturing sectors.

Economic activity in the non-manufacturing sector grew in September for the 56th consecutive month, according to the Non-Manufacturing Institute for Supply Management Report on Business.

The Non-Manufacturing Index registered 58.6% in September, one-percentage point lower than the August reading of 59.6%.

Also, economic activity in the manufacturing sector expanded in September for the 16th consecutive month, and the overall economy grew for the 64th consecutive month, according to the Manufacturing ISM Report On Business.

The September Purchasing Managers Index registered 56.6%, a decrease of 2.4 percentage points from the August reading of 59%, which was a record high.

A reading above 50 in either index indicates growth while one below 50 indicates contraction.

The decline in the latter ISM report suggests an imminent decline in manufacturing activity, according to Piegza. “Whether this is a lasting trend, however, remains to be seen, as one month’s data point does not constitute a trend… yet. Against the backdrop of a modest spending pace both domestically and internationally, consumers have been unable or unwilling to absorb the elevated levels of production since the start of the year which have instead translated into rising inventory levels and stockpiles of goods.”

Piegza said producers have clearly been betting on a stronger consumer for the second half on the year, but cautions "with retail sales stagnant at best, and minimal wage pressures, it is likely producers will face a more lackluster reality in the final quarter of the year with spending still positive but far from robust.”

Construction Spending

Another report showed U.S. construction spending in August fell 0.8% compared to July’s revised level of a 1.2% gain, down from an earlier report of a 1.8% hike, according to the U.S. Commerce Department.

The August level is 5% higher than the same time a year ago, while construction spending in the first eight months of the year is 6.8% higher than during the same time in 2013.

Factory Shipments and Orders

Factory orders and shipments both fell in August, according to a final U.S. Commerce Department report.

Shipments declined 1.6% from the month before following two consecutive monthly increases. Transportation equipment led the decline in shipments falling 5.1%.

New factory orders decreased 10.1% during the same time, the largest monthly drop on record, following two straight monthly gains. Excluding new transportation orders from the total the drop was just 0.1%. The drop was due to a surge in orders for the volatile aircraft segment during July.

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