Jobless Claims Fall, But Economic Slowdown Persists
The number of Americans filing for jobless benefits dropped last week, undoing nearly half of the previous week's spike. This suggests the labor market remains tight despite slowing job growth.
Early second-quarter data shows the economy slowing due to the Federal Reserve's interest rate hikes. Single-family homebuilding declined in April, and future construction permits hit an eight-month low. Factory output also fell unexpectedly. April's economic indicators, including payrolls and retail sales, have missed expectations.
The labor market is rebalancing after significant Fed rate hikes since March 2022 to curb demand. This and easing inflation trends raise the possibility of a rate cut in September. Import prices surged 0.9% in April, the largest since March 2022, driven by higher petroleum costs. Economists expect this spike to be temporary.
Housing and manufacturing are struggling due to higher borrowing costs. Single-family home starts dropped 0.4% in April, with permits at their lowest since August. Manufacturing output fell 0.3%, impacted by high interest rates.
Why This Matters To Us:
In transportation and logistics, a tight labor market and economic slowdown can directly affect your operations. Higher interest rates might slow down infrastructure projects and manufacturing, impacting demand for shipping and logistics services. Plus, rising import prices can lead to higher costs for goods you transport.
Our Take:
Jobless claims are down, but the economy's still feeling the squeeze from those Fed rate hikes. This could mean slower projects and higher costs in logistics. Time to tighten up those supply chains and be ready for anything.
The Department of Labor just ordered three cross-border logistics companies in San Diego to shell out $840,000 in back wages and fines to warehouse and transportation workers.