by Calculated Risk on 7/03/2025 03:47:00 PM
Thursday, July 03, 2025
AAR: Rail Traffic in June: Intermodal "Stumbles", Carload Growth Continues
From the Association of American Railroads (AAR) AAR Data Center. Graph and excerpts reprinted with permission.
In recent months the U.S. economy has defied easy characterization, caught between signals of underlying strength and uncertainty regarding the road ahead. Rail freight volumes have followed that lead, reflecting a mix of cautious optimism and lingering hesitation across key sectors. The uncertainty characterizing both the economy and freight markets is likely to continue because key drivers of economic momentum— including the labor market, consumer spending, inflation levels, interest rates, and economic policies across the globe—remain fluid.
emphasis added
U.S. rail intermodal originations fell 2.9% (31,000 containers and trailers) in June 2025 from June 2024, their first year-over-year decline in 22 months. June’s decline comes amid broader uncertainties impacting global supply chains that have tempered international shipments. In June 2025, U.S. rail intermodal volume averaged 260,834 units per week, below the 2016-2005 average for June of 263,991.
Meanwhile, total U.S. rail carloads (excluding intermodal) rose 2.1% (nearly 19,000 carloads) in June 2025 over June 2024, their fourth straight year-over-year increase— the first time that’s happened since late 2021. In June, 10 of the 20 carload categories tracked by the AAR had year over-year gains. Total U.S. rail carloads averaged 226,259 per week in June 2025, the most for June since 2021. In the 66 months since January 2020, only 14 months had a higher weekly average than June 2025 did.
ISM® Services Index Increased to 50.8% in June; Price Paid Highest Since 2022
by Calculated Risk on 7/03/2025 02:07:00 PM
(Posted with permission). The ISM® Services index was at 50.8%, up from 49.9% last month. The employment index decreased to 47.2%, from 50.7%. Note: Above 50 indicates expansion, below 50 in contraction.
From the Institute for Supply Management: Services PMI® at 50.8% June 2025 Services ISM® Report On Business®
Economic activity in the services sector grew in June after just one month of contraction, say the nation's purchasing and supply executives in the latest Services ISM® Report On Business®. The Services PMI® indicated expansion at 50.8 percent, above the 50-percent breakeven point for 11th time in the last 12 months.This was at consensus expectations, but employment was weak and prices paid very high.
The report was issued today by Steve Miller, CPSM, CSCP, Chair of the Institute for Supply Management® (ISM®) Services Business Survey Committee: “In June, the Services PMI® registered 50.8 percent, 0.9 percentage point higher than the May figure of 49.9 percent. The Business Activity Index returned to expansion territory in June, registering 54.2 percent, 4.2 percentage points higher than the ‘unchanged’ reading of 50 percent recorded in May. This index has not been in contraction territory since May 2020. The New Orders Index returned to expansion territory in June, recording a reading of 51.3 percent, an increase of 4.9 percentage points from the May figure of 46.4 percent. The Employment Index returned to contraction territory for the third time in the last four months; the reading of 47.2 percent is 3.5 percentage points lower than the 50.7 percent recorded in May.
“The Supplier Deliveries Index registered 50.3 percent, 2.2 percentage points lower than the 52.5 percent recorded in May. This is the seventh consecutive month that the index has been in expansion territory, indicating slower supplier delivery performance. (Supplier Deliveries is the only ISM® Report On Business® index that is inversed; a reading of above 50 percent indicates slower deliveries, which is typical as the economy improves and customer demand increases.)
“The Prices Index registered 67.5 percent in June, a 1.2-percentage point decrease from May’s reading of 68.7 percent. The index has exceeded 60 percent for seven straight months, with the May and June readings the highest since November 2022 (69.4 percent).
emphasis added
Trade Deficit increased to $71.5 Billion in May
by Calculated Risk on 7/03/2025 11:39:00 AM
The Census Bureau and the Bureau of Economic Analysis reported:
The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced today that the goods and services deficit was $71.5 billion in May, up $11.3 billion from $60.3 billion in April, revised.
May exports were $279.0 billion, $11.6 billion less than April exports. May imports were $350.5 billion, $0.3 billion less than April imports.
emphasis added
Exports and imports decreased in May.
Exports were up 5.3% year-over-year; imports were up 3.3% year-over-year.
Imports increased sharply earlier this year as importers rushed to beat tariffs.
The second graph shows the U.S. trade deficit, with and without petroleum.
Note that net, exports of petroleum products are positive and have been increasing.
The trade deficit with China decreased to $13.9 billion from $23.7 billion a year ago.
Weekly Initial Unemployment Claims Decrease to 233,000
by Calculated Risk on 7/03/2025 11:30:00 AM
The DOL reported:
In the week ending June 28, the advance figure for seasonally adjusted initial claims was 233,000, a decrease of 4,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 236,000 to 237,000. The 4-week moving average was 241,500, a decrease of 3,750 from the previous week's revised average. The previous week's average was revised up by 250 from 245,000 to 245,250.The following graph shows the 4-week moving average of weekly claims since 1971.
emphasis added
The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims decreased to 241,500.
The previous week was revised up.
Weekly claims were lower than the consensus forecast.
Comments on June Employment Report
by Calculated Risk on 7/03/2025 09:13:00 AM
The headline jobs number in the June employment report was above expectations and April and May payrolls were revised up by 16,000 combined. The participation rate decreased, the employment population ratio was unchanged, and the unemployment rate was decreased to 4.1%.
Prime (25 to 54 Years Old) Participation
The 25 to 54 years old participation rate increased in June to 83.5% from 83.4% in May.
Average Hourly Wages
Wage growth has trended down after peaking at 5.9% YoY in March 2022 and was at 3.7% YoY in June.
Part Time for Economic Reasons
"The number of people employed part time for economic reasons, at 4.5 million, changed little in June. These individuals would have preferred full-time employment but were working part time because their hours had been reduced or they were unable to find full-time jobs."The number of persons working part time for economic reasons decreased in June to 4.47 million from 4.62 million in May. This is above the pre-pandemic levels.
These workers are included in the alternate measure of labor underutilization (U-6) that decreased to 7.7% from 7.8% in the previous month. This is down from the record high in April 2020 of 22.9% and up from the lowest level on record (seasonally adjusted) in December 2022 (6.6%). (This series started in 1994). This measure is above the 7.0% level in February 2020 (pre-pandemic).
Unemployed over 26 Weeks
According to the BLS, there are 1.65 million workers who have been unemployed for more than 26 weeks and still want a job, up from 1.46 million the previous month.
This is above pre-pandemic levels.
Job Streak
Headline Jobs, Top 10 Streaks | ||
---|---|---|
Year Ended | Streak, Months | |
1 | 2020 | 113 |
2 | Current, N/A | 541 |
3 | 1990 | 48 |
4 | 2007 | 46 |
5 | 1979 | 45 |
6 tie | 1943 | 33 |
6 tie | 1986 | 33 |
6 tie | 2000 | 33 |
9 | 1967 | 29 |
10 | 1995 | 25 |
1Currrent Streak |
Summary:
The headline jobs number in the May employment report was above expectations and April and May payrolls were revised up by 16,000 combined. The participation rate decreased, the employment population ratio was unchanged, and the unemployment rate was decreased to 4.1%.
June Employment Report: 147 thousand Jobs, 4.1% Unemployment Rate
by Calculated Risk on 7/03/2025 08:30:00 AM
From the BLS: Employment Situation
Total nonfarm payroll employment increased by 147,000 in June, and the unemployment rate changed little at 4.1 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in state government and health care. Federal government continued to lose jobs.
...
The change in total nonfarm payroll employment for April was revised up by 11,000, from +147,000 to +158,000, and the change for May was revised up by 5,000, from +139,000 to +144,000. With these revisions, employment in April and May combined is 16,000 higher than previously reported.
emphasis added
The first graph shows the jobs added per month since January 2021.
Payrolls for April and May were revised up by 16 thousand, combined.
In June, the year-over-year change was 1.81 million jobs. Employment was up solidly year-over-year.
The third graph shows the employment population ratio and the participation rate.
The Employment-Population ratio was unchanged at 59.7% from 59.7% in May (blue line).
I'll post the 25 to 54 age group employment-population ratio graph later.
The unemployment rate was decreased to 4.1% in June from 4.2% in May.
This was above consensus expectations and April and May payrolls were revised up by 16,000 combined.
Wednesday, July 02, 2025
Thursday: Employment Report, Trade Deficit, Unemployment Claims, ISM Services
by Calculated Risk on 7/02/2025 08:11:00 PM
Note: Mortgage rates are from MortgageNewsDaily.com and are for top tier scenarios.
Thursday:
• At 8:30 AM ET, Employment Report for June. The consensus is for 129,000 jobs added, and for the unemployment rate to be unchanged at 4.2%.
• Also at 8:30 AM, The initial weekly unemployment claims report will be released. The consensus is for initial claims to increase to 239 thousand from 236 thousand last week.
• Also at 8:30 AM, Trade Balance report for May from the Census Bureau. The consensus is the trade deficit to be $69.8 billion. The U.S. trade deficit was at $61.6 billion the previous month.
• At 10:00 AM, the ISM Services Index for June. The consensus is for a reading of 50.8, up from 49.9.
• All US markets will close early at 1:00 PM ET in observance of Independence Day
June Employment Preview
by Calculated Risk on 7/02/2025 03:45:00 PM
On Thursday at 8:30 AM ET, the BLS will release the employment report for June. The consensus is for 129,000 jobs added, and for the unemployment rate to be unchanged at 4.2%. There were 139,000 jobs added in May, and the unemployment rate was at 4.2%.
From Goldman Sachs:
We do not place much weight on the ADP miss because of ADP’s limited correlation with BLS private payrolls over the last few years. We left our forecast for June nonfarm payroll growth unchanged at +85k ahead of tomorrow’s release. ... We expect payroll growth to slow from its 135k 3-month average because big data indicators were soft ... We forecast that the unemployment rate edged up to 4.3%—a low bar from an unrounded 4.24%—reflecting sequential increases in other measures of labor market slack.From BofA:
emphasis added
June NFP are likely to rise by 95k. Although the initial claims increase in recent weeks can be attributed to seasonal volatility, continuing claims were also high during the survey week. We also see headwinds from weak college graduates hiring and summer job cuts for education & health workers. Additionally, leisure & hospitality job growth tends to slow in June when Memorial Day falls relatively earlier in the month in May (like this year). We expect the u-rate to rise a tenth to 4.3%.• ADP Report: The ADP employment report showed 33,000 private sector jobs were lost in June. This was well below consensus forecasts and suggests job gains below consensus expectations, however, in general, ADP hasn't been very useful in forecasting the BLS report.
• ISM Surveys: Note that the ISM indexes are diffusion indexes based on the number of firms hiring (not the number of hires). The ISM® manufacturing employment index was at 45.0%, down from 46.8% the previous month. This would suggest jobs lost in manufacturing. The ADP report indicated 15,000 manufacturing jobs added in June.
The ISM® services employment index for June will be released tomorrow.
• Unemployment Claims: The weekly claims report showed more initial unemployment claims during the reference week at 246,000 in June compared to 226,000 in May. This suggests layoffs in June were higher than in May.
Asking Rents Mostly Unchanged Year-over-year
by Calculated Risk on 7/02/2025 12:32:00 PM
Today, in the Real Estate Newsletter: Asking Rents Mostly Unchanged Year-over-year
Brief excerpt:
Another monthly update on rents.This is much more in the article.
Tracking rents is important for understanding the dynamics of the housing market. Slower household formation and increased supply (more multi-family completions) has kept asking rents under pressure.
More recently, immigration policy has become a negative for rentals.
Apartment List: Asking Rent Growth -0.7% Year-over-year ...
The national multifamily vacancy rate currently stands at 7%, the highest reading we've recorded in our index. We're past the peak of a multifamily construction surge, but the market is still absorbing all of the new units, and vacancies are still trending up.Realtor.com: 22nd Consecutive Month with Year-over-year Decline in RentsIn May 2025, U.S. median rent posted its 22nd consecutive year-over-year decline, dropping 1.7% for 0-2 bedroom properties across the 50 largest metropolitan areas.
Heavy Truck Sales Decreased in June
by Calculated Risk on 7/02/2025 09:44:00 AM
This graph shows heavy truck sales since 1967 using data from the BEA. The dashed line is the June 2025 seasonally adjusted annual sales rate (SAAR) of 435 thousand.
Note: "Heavy trucks - trucks more than 14,000 pounds gross vehicle weight."
Click on graph for larger image.