Diesel prices drop for fourth consecutive week
-Diesel prices drop for fourth consecutive week
Weekly retail on-highway U.S. diesel prices decreased by 2.4 cents to $2.465 per gallon on June 26. This was the fourth consecutive weekly decrease in fuel prices. Diesel dropped below $2.50 on 6/19 , after fluctuating in a very narrow range between 2.52 and 2.60 per gallon since 12/19, never rising by more than 4.6 cents nor falling by more than 4.0 cents in any week during that period.
In February 2016, diesel prices reached their lowest level ($1.980) since January 2005, dropping below the recessionary trough, before rebounding throughout the rest of the year, finally crossing the $2.50/gallon mark on 12/19. The last year that diesel did not hit $2.50 per gallon all year was 2004. We had been above that level all year up until last week.
Diesel prices are 3.9 cents per gallon higher than one year ago, but are 37.8 cents per gallon lower than two years ago. On June 6, the Energy Information Administration (EIA) increased its pricing forecast by one cent to 2.66 per gallon for all of 2017, so still anticipates further increases this year, ending the year at $2.74.
A view of weekly prices over the last 6+ years (second chart) indicates fairly stable prices between Q2 2011 and the start of the 2015 slide (min of $3.65 and max of $4.16). Diesel prices then stabilized between August 24 and November 16 of 2015, with a high of $2.561 and a low of $2.476 during those 13 weeks, but were in steady decline between then and February 2016 before beginning a slow but steady climb.Diesel remains below the June price level in each of the five years prior to 2016, and is virtually equal to 2016 price levels.
The recessionary low price point for diesel was $2.023 in March 2009. Diesel prices peaked at $4.771 per gallon in July 2008.
U.S. auto and light truck assemblies remain weak
-U.S. auto and light truck assemblies remain weak
Annualized U.S. assemblies of autos and light trucks fell 1.7% to 11.29 million units in May (seasonally adjusted), and were down 0.4% from prior year. Assemblies have recovered somewhat since March when they were at the lowest level since February 2015. Seasonally adjusted assemblies have been at or above an 11-million unit pace since March 2015, but have only been above a 12-million unit pace once in the last 22 months (June 2016). Our graph is a three-month moving average of seasonally adjusted annualized assemblies. Using this moving average, year-over-year assemblies were down 3.2% and have hovered around or under 0 since May 2016. Each of the last 3 months are lower than any month since May 2016. With sales flat and inventories high, it is not surprising that assemblies are weak.
The auto industry has come a long way since assemblies bottomed out at a 3.6 million-unit annual pace (seasonally adjusted) in January 2009. Average monthly seasonally adjusted assemblies were 11.4 million from January of 2001 through December of 2007, and have been averaged 11.7 and 11.8 million units in 2015 and 2016 respectively.
Auto sales decline in May
-Auto sales decline in May
Annualized seasonally adjusted U.S. sales (SAAR) of domestic and foreign autos and light trucks fell to 16.58 million in May, coming in below the consensus forecast (16.9 million). Sales were 3.1% below prior year sales and were down 1.4% from prior month. Year-over-year sales for our three month moving average (graphed) was down 2.2%. Imported and domestic light truck sales performed much more strongly than car sales. Total year-to-date sales are down 2.0% over 2016, with light trucks up 4.8% and cars down 11.7%. Light trucks accounted for 63% of all unit sales year-to-date, up from 59% for the same period last year. After several years of rising sales, it appears that sales will decline slightly this year (red line on graph).
Sales set an all time record in 2016 at 17.46 million following 2015’s then-record level of 17.40 million. To put those numbers in perspective though, they narrowly eclipsed 2000 (17.35 million) and 2001 (17.12 million). In 2017, sales are expected to be down slightly, but with inventories high, production is likely to be down more significantly from 2016 levels.
Full-year sales total for 2014 were 16.5 million up 6% from 15.6 million in 2013 and right in line with the prerecession 2001-2007 average (16.7 million). The recessionary low point for auto sales occurred during the first six months of 2009, when annualized sales averaged only 9.6 million units. Auto purchases represent a large portion of the typical household budget, and improving auto sales is directly correlated to rising confidence among American consumers. Our graph shows a 3-month moving average of seasonally adjusted annual rates to smooth out some of the month-to-month volatility.
Disappointing retail sales in May
-Disappointing retail sales in May
The U.S. Bureau of the Census reported that seasonally adjusted real retail and food service sales were down slightly (-0.1%) at $194.3 billion in May. (Note that actual sales are deflated using CPI 1982 – 1984 = 100). May sales were 1.9% higher than the prior-year period.
Nominal (unadjusted for inflation) seasonally-adjusted retail sales totaled $473.8 billion in May (second graph), also down slightly (-0.3%) from prior month, but up 3.8% from prior year results. This was the smallest year-over-year percentage increase since last November. Total nominal sales were up 3.3% for the full year 2016.
The results were below consensus expectations. Nominal retail and food services sales excluding gasoline were up 3.7% year-over-year. Nonstore retailer sales (e-commerce and mail order) were up 10.2%. Gasoline station sales were up 6.2% year-over-year, a reversal from most of 2016 when full-year sales were down 6.3%. Department stores sales fell by 3.7% year-over-year, while sporting goods, hobby and book store sales fell by 4.7%. We focus primarily on real retail sales because they are a better indicator of freight volumes than the inflated figures.
New home inventories rise and sales fall in April
-New home inventories rise and sales fall in April
According to the U.S. Census Bureau and the Department of Housing and Urban Development, single-family new home inventories increased to 268k in April (seasonally adjusted). Inventories are at the highest level since July 2009. April’s new home inventories were 27k (11.2%) above the prior-year level of 241k. New home inventories still remain somewhat low by historical standards, but are closing in on longer run average inventory levels (~340k).
The growth in inventories in the last year (seasonally adjusted) has been driven by homes not yet started (+16k), more so than by homes under construction (+10K) or homes completed (+1k).
New home inventories increased slowly during the first 9 months of 2016, from 237k in January to 242k in September, but then jumped to 256k by December, an increase of 19k from January. In 2015, inventories rose 27k; from 207k in January to 234k in December. Inventory levels increased 23k throughout 2014, peaking at 212k in December, and rose 38k in 2013, to 187k by December. The last year of flat inventories was 2012, when the absolute inventory of new homes remained within a consistent range of 142k – 150k.
Seasonally adjusted new home inventories increased to 5.7 months of supply in April, up from from 5.1 months a year ago. Sales of new single-family houses decreased to 569k (seasonally adjusted annual rate), down 11.4% from revised prior month sales and up 0.5% from prior year. Full-year 2016 sales of 561k were up 12.0% from 501k in 2015. Year-to-date 2017 sales are up 11.3%
Full year 2015 new home sales were up 14.6% over 2014. For the full year 2014, new home sales only grew by 1.9% to 437k units. The months of supply figure remained below 5 months between February 2012 and June 2013, but was 5.0 or more from that point through the end of 2014 with only one exception. In 2015, eight months were at 5.0 or greater months of supply, including each of the last 7 months of the year. In 2016, only one month (July) was less than 5.0. The average months of supply over the last 50 years is 6.1, so current new home inventory remain below “normal” levels. For the 9-year period of 1997 through 2005, the inventory level averaged 4.1 months with relatively little volatility, despite the dot-com boom and subsequent recession, and we are above that level today. The vertical bars in the graphs represent recessions.
Manufacturing index increased in May after declining in prior two months
-Manufacturing index increased in May after declining in prior two months
The Institute of Supply Management (ISM) reported that the Purchasing Managers’ Index (PMI) increased slightly to 54.9 in May from 54.8 in April. So far every month of 2017 has had a higher index than any month of 2016. After contracting in August 2016, the manufacturing sector has expanded at a strong pace. PMI came in above expectations (54.6). The New Order Index increase by 2 points to 59.5. The Production Index fell by 1.5 points to 57.1. Of 18 manufacturing industries, 15 reported monthly growth in May.
After a slow start in January of 2014, PMI recovered, with a range of 54.3 to 58.1 for the balance of 2014. We did not see a reading above 53.9 in 2015, and that high mark was reached in January. In 2016, the index ranged from 48.2 (Jan) to 54.5 (Dec) but it was not a steady rise, with manufacturing contracting in February and August.
An index over 50 indicates growth while a PMI under 50 represents contraction in the manufacturing sector of the economy. The index reached a low of 32.5 in December 2008 but then recovered more quickly than most other areas of the economy.
Diesel prices remain steady
-Diesel prices remain steady
Weekly retail on-highway U.S. diesel prices decreased by 0.7 cents to $2.564 per gallon on June 5, continuing a trend of very modest fluctuations up and down in every week this year. Diesel has ranged between 2.53 and 2.60 per gallon since 12/19, never rising by more than 4.6 cents or falling by more than 2.5 cents in any week during that period.
In February 2016, diesel prices reached their lowest level ($1.980) since January 2005, dropping below the recessionary trough, before rebounding throughout the rest of the year, finally crossing the $2.50/gallon mark on 12/19. The last year that diesel did not hit $2.50 per gallon all year was 2004. We have been above that level all year to this point.
Diesel prices are 15.7 cents per gallon higher than one year ago, but are 32.0 cents per gallon lower than two years ago. On June 6, the Energy Information Administration (EIA) increased its pricing forecast by one cent to 2.66 per gallon for all of 2017, so still anticipates further increases this year, ending the year at $2.74.
A view of weekly prices over the last 6+ years (second chart) indicates fairly stable prices between Q2 2011 and the start of the 2015 slide (min of $3.65 and max of $4.16). Diesel prices then stabilized between August 24 and November 16 of 2015, with a high of $2.561 and a low of $2.476 during those 13 weeks, but were in steady decline between then and February 2016 before beginning a slow but steady climb.Diesel remains below the June price level in each of the five years prior to 2016.
The recessionary low price point for diesel was $2.023 in March 2009. Diesel prices peaked at $4.771 per gallon in July 2008.
Housing starts down in April due to multi-family drop
-Housing starts down in April due to multi-family drop
Housing starts totaled 1.172 million in April (seasonally adjusted annual rate – SAAR) down 2.6% from prior month’s revised figures, but up 0.7% from April 2016 results, and were below expected levels. Single family starts totaled 835k (SAAR), down 0.4% from March and up 8.9% year-over-year. Starts of multi-unit (5+)structures were 328k (SAAR) down 9.6% from March and down 14.6% over prior year. Total starts exceeded a 1.0 million unit annual pace for the 25rd straight month. Year-to-date starts are up 5.3%
For the full year 2016, total starts were 1.174 million, up 5.6% over 2015. Single unit starts led the way with 9.4% growth, while multi-unit starts declined by 1.3%. In the prior couple of years single-unit starts grew more slowly than multi-unit starts. For the full year 2015, total starts were 1.112 million, up 10.8% over 2014. Single unit starts were up 10.3% in 2015, while 5+ unit starts were up 12.9%. For the full year 2014, there were 1.003 million total housing starts, up 8.8% from the 925 thousand starts during 2013. Single family starts were up 4.9% and multifamily starts were up 16.4%. Total 2013 housing starts were up a robust 18.5% from the 781k housing starts recorded in 2012 and in 2012 starts were up 28.2%.
Despite several years of strong growth, there remains a lot of ground to cover for the housing sector to fully recover from the recession. Housing starts are still well below the average of just over 1.5 million per year over the last 40+ years, and even farther below the 2.2 million peak of the most recent housing boom. Since 1968, the U.S. population has grown from 200 million to more than 320 million. Some economists believe that slower population growth and household formation in the U.S. means that housing starts will not recover to 1.5 million units for a long time.
Total starts reached a low point of 478k (SAAR) in April of 2009, while single unit starts bottomed out at 353k in March of 2009. A low housing starts figure not only impacts transportation demand for building products but also for appliances, furniture, and other related items, so continued improvement in the housing sector should lead to rising freight volumes. The ATA estimates that each housing start generates 8 truckloads of freight.
Retail sales increase in April
-Retail sales increase in April
The U.S. Bureau of the Census reported that seasonally adjusted real retail and food service sales were up slightly (+0.2%) at $194.5 billion in April. (Note that actual sales are deflated using CPI 1982 – 1984 = 100). April sales were 2.2% higher than the prior-year period.
Nominal (unadjusted for inflation) seasonally-adjusted retail sales totaled $474.9 billion in April (second graph), also up slightly (+0.4%) from prior month, and up 4.5% from prior year results. Total nominal sales were up 3.3% for the full year 2016.
The results were below consensus expectations but March was revised upward. Nominal retail and food services sales excluding gasoline were up 0.4% year-over-year. Nonstore retailer sales (e-commerce and mail order) were up 11.9%. Gasoline station sales were up 12.3% year-over-year, a reversal from most of 2016 when full-year sales were down 6.3%. Department stores sales fell by 3.7% year-over-year, while sporting goods, hobby and book store sales fell by 2.4%. We focus primarily on real retail sales because they are a better indicator of freight volumes than the inflated figures.
Diesel prices continue to fluctuate within a narrow band
-Diesel prices continue to fluctuate within a narrow band
Weekly retail on-highway U.S. diesel prices decreased by 0.5 cents to $2.539 per gallon on May 22, continuing a trend of very modest fluctuations up and down in every week this year. Diesel has ranged between 2.53 and 2.60 per gallon since 12/19, never rising by more than 4.6 cents or falling by more than 2.5 cents in any week during that period.
In February 2016, diesel prices reached their lowest level ($1.980) since January 2005, dropping below the recessionary trough, before rebounding throughout the rest of the year, finally crossing the $2.50/gallon mark on 12.19. The last year that diesel did not hit $2.50 per gallon all year was 2004. We have been above that level all year to this point.
Diesel prices are 18.2 cents per gallon higher than one year ago, but are 37.5 cents per gallon lower than two years ago. On May 9, the Energy Information Administration (EIA) decreased its pricing forecast to 2.65 per gallon for 2017, so still anticipates further increases this year.
A view of weekly prices over the last 6+ years (second chart) indicates fairly stable prices between Q2 2011 and the start of the 2015 slide (min of $3.65 and max of $4.16). Diesel prices then stabilized between August 24 and November 16 of 2015, with a high of $2.561 and a low of $2.476 during those 13 weeks, but were in steady decline between then and February 2016 before beginning a slow but steady climb.Diesel remains below the May price level in each of the five years prior to 2016.
The recessionary low price point for diesel was $2.023 in March 2009. Diesel prices peaked at $4.771 per gallon in July 2008.
Diesel prices drop for fourth consecutive week
-Diesel prices drop for fourth consecutive week
Weekly retail on-highway U.S. diesel prices decreased by 2.4 cents to $2.465 per gallon on June 26. This was the fourth consecutive weekly decrease in fuel prices. Diesel dropped below $2.50 on 6/19 , after fluctuating in a very narrow range between 2.52 and 2.60 per gallon since 12/19, never rising by more than 4.6 cents nor falling by more than 4.0 cents in any week during that period.
In February 2016, diesel prices reached their lowest level ($1.980) since January 2005, dropping below the recessionary trough, before rebounding throughout the rest of the year, finally crossing the $2.50/gallon mark on 12/19. The last year that diesel did not hit $2.50 per gallon all year was 2004. We had been above that level all year up until last week.
Diesel prices are 3.9 cents per gallon higher than one year ago, but are 37.8 cents per gallon lower than two years ago. On June 6, the Energy Information Administration (EIA) increased its pricing forecast by one cent to 2.66 per gallon for all of 2017, so still anticipates further increases this year, ending the year at $2.74.
A view of weekly prices over the last 6+ years (second chart) indicates fairly stable prices between Q2 2011 and the start of the 2015 slide (min of $3.65 and max of $4.16). Diesel prices then stabilized between August 24 and November 16 of 2015, with a high of $2.561 and a low of $2.476 during those 13 weeks, but were in steady decline between then and February 2016 before beginning a slow but steady climb.Diesel remains below the June price level in each of the five years prior to 2016, and is virtually equal to 2016 price levels.
The recessionary low price point for diesel was $2.023 in March 2009. Diesel prices peaked at $4.771 per gallon in July 2008.
U.S. auto and light truck assemblies remain weak
-U.S. auto and light truck assemblies remain weak
Annualized U.S. assemblies of autos and light trucks fell 1.7% to 11.29 million units in May (seasonally adjusted), and were down 0.4% from prior year. Assemblies have recovered somewhat since March when they were at the lowest level since February 2015. Seasonally adjusted assemblies have been at or above an 11-million unit pace since March 2015, but have only been above a 12-million unit pace once in the last 22 months (June 2016). Our graph is a three-month moving average of seasonally adjusted annualized assemblies. Using this moving average, year-over-year assemblies were down 3.2% and have hovered around or under 0 since May 2016. Each of the last 3 months are lower than any month since May 2016. With sales flat and inventories high, it is not surprising that assemblies are weak.
The auto industry has come a long way since assemblies bottomed out at a 3.6 million-unit annual pace (seasonally adjusted) in January 2009. Average monthly seasonally adjusted assemblies were 11.4 million from January of 2001 through December of 2007, and have been averaged 11.7 and 11.8 million units in 2015 and 2016 respectively.
Auto sales decline in May
-Auto sales decline in May
Annualized seasonally adjusted U.S. sales (SAAR) of domestic and foreign autos and light trucks fell to 16.58 million in May, coming in below the consensus forecast (16.9 million). Sales were 3.1% below prior year sales and were down 1.4% from prior month. Year-over-year sales for our three month moving average (graphed) was down 2.2%. Imported and domestic light truck sales performed much more strongly than car sales. Total year-to-date sales are down 2.0% over 2016, with light trucks up 4.8% and cars down 11.7%. Light trucks accounted for 63% of all unit sales year-to-date, up from 59% for the same period last year. After several years of rising sales, it appears that sales will decline slightly this year (red line on graph).
Sales set an all time record in 2016 at 17.46 million following 2015’s then-record level of 17.40 million. To put those numbers in perspective though, they narrowly eclipsed 2000 (17.35 million) and 2001 (17.12 million). In 2017, sales are expected to be down slightly, but with inventories high, production is likely to be down more significantly from 2016 levels.
Full-year sales total for 2014 were 16.5 million up 6% from 15.6 million in 2013 and right in line with the prerecession 2001-2007 average (16.7 million). The recessionary low point for auto sales occurred during the first six months of 2009, when annualized sales averaged only 9.6 million units. Auto purchases represent a large portion of the typical household budget, and improving auto sales is directly correlated to rising confidence among American consumers. Our graph shows a 3-month moving average of seasonally adjusted annual rates to smooth out some of the month-to-month volatility.
Disappointing retail sales in May
-Disappointing retail sales in May
The U.S. Bureau of the Census reported that seasonally adjusted real retail and food service sales were down slightly (-0.1%) at $194.3 billion in May. (Note that actual sales are deflated using CPI 1982 – 1984 = 100). May sales were 1.9% higher than the prior-year period.
Nominal (unadjusted for inflation) seasonally-adjusted retail sales totaled $473.8 billion in May (second graph), also down slightly (-0.3%) from prior month, but up 3.8% from prior year results. This was the smallest year-over-year percentage increase since last November. Total nominal sales were up 3.3% for the full year 2016.
The results were below consensus expectations. Nominal retail and food services sales excluding gasoline were up 3.7% year-over-year. Nonstore retailer sales (e-commerce and mail order) were up 10.2%. Gasoline station sales were up 6.2% year-over-year, a reversal from most of 2016 when full-year sales were down 6.3%. Department stores sales fell by 3.7% year-over-year, while sporting goods, hobby and book store sales fell by 4.7%. We focus primarily on real retail sales because they are a better indicator of freight volumes than the inflated figures.
New home inventories rise and sales fall in April
-New home inventories rise and sales fall in April
According to the U.S. Census Bureau and the Department of Housing and Urban Development, single-family new home inventories increased to 268k in April (seasonally adjusted). Inventories are at the highest level since July 2009. April’s new home inventories were 27k (11.2%) above the prior-year level of 241k. New home inventories still remain somewhat low by historical standards, but are closing in on longer run average inventory levels (~340k).
The growth in inventories in the last year (seasonally adjusted) has been driven by homes not yet started (+16k), more so than by homes under construction (+10K) or homes completed (+1k).
New home inventories increased slowly during the first 9 months of 2016, from 237k in January to 242k in September, but then jumped to 256k by December, an increase of 19k from January. In 2015, inventories rose 27k; from 207k in January to 234k in December. Inventory levels increased 23k throughout 2014, peaking at 212k in December, and rose 38k in 2013, to 187k by December. The last year of flat inventories was 2012, when the absolute inventory of new homes remained within a consistent range of 142k – 150k.
Seasonally adjusted new home inventories increased to 5.7 months of supply in April, up from from 5.1 months a year ago. Sales of new single-family houses decreased to 569k (seasonally adjusted annual rate), down 11.4% from revised prior month sales and up 0.5% from prior year. Full-year 2016 sales of 561k were up 12.0% from 501k in 2015. Year-to-date 2017 sales are up 11.3%
Full year 2015 new home sales were up 14.6% over 2014. For the full year 2014, new home sales only grew by 1.9% to 437k units. The months of supply figure remained below 5 months between February 2012 and June 2013, but was 5.0 or more from that point through the end of 2014 with only one exception. In 2015, eight months were at 5.0 or greater months of supply, including each of the last 7 months of the year. In 2016, only one month (July) was less than 5.0. The average months of supply over the last 50 years is 6.1, so current new home inventory remain below “normal” levels. For the 9-year period of 1997 through 2005, the inventory level averaged 4.1 months with relatively little volatility, despite the dot-com boom and subsequent recession, and we are above that level today. The vertical bars in the graphs represent recessions.
Manufacturing index increased in May after declining in prior two months
-Manufacturing index increased in May after declining in prior two months
The Institute of Supply Management (ISM) reported that the Purchasing Managers’ Index (PMI) increased slightly to 54.9 in May from 54.8 in April. So far every month of 2017 has had a higher index than any month of 2016. After contracting in August 2016, the manufacturing sector has expanded at a strong pace. PMI came in above expectations (54.6). The New Order Index increase by 2 points to 59.5. The Production Index fell by 1.5 points to 57.1. Of 18 manufacturing industries, 15 reported monthly growth in May.
After a slow start in January of 2014, PMI recovered, with a range of 54.3 to 58.1 for the balance of 2014. We did not see a reading above 53.9 in 2015, and that high mark was reached in January. In 2016, the index ranged from 48.2 (Jan) to 54.5 (Dec) but it was not a steady rise, with manufacturing contracting in February and August.
An index over 50 indicates growth while a PMI under 50 represents contraction in the manufacturing sector of the economy. The index reached a low of 32.5 in December 2008 but then recovered more quickly than most other areas of the economy.
Diesel prices remain steady
-Diesel prices remain steady
Weekly retail on-highway U.S. diesel prices decreased by 0.7 cents to $2.564 per gallon on June 5, continuing a trend of very modest fluctuations up and down in every week this year. Diesel has ranged between 2.53 and 2.60 per gallon since 12/19, never rising by more than 4.6 cents or falling by more than 2.5 cents in any week during that period.
In February 2016, diesel prices reached their lowest level ($1.980) since January 2005, dropping below the recessionary trough, before rebounding throughout the rest of the year, finally crossing the $2.50/gallon mark on 12/19. The last year that diesel did not hit $2.50 per gallon all year was 2004. We have been above that level all year to this point.
Diesel prices are 15.7 cents per gallon higher than one year ago, but are 32.0 cents per gallon lower than two years ago. On June 6, the Energy Information Administration (EIA) increased its pricing forecast by one cent to 2.66 per gallon for all of 2017, so still anticipates further increases this year, ending the year at $2.74.
A view of weekly prices over the last 6+ years (second chart) indicates fairly stable prices between Q2 2011 and the start of the 2015 slide (min of $3.65 and max of $4.16). Diesel prices then stabilized between August 24 and November 16 of 2015, with a high of $2.561 and a low of $2.476 during those 13 weeks, but were in steady decline between then and February 2016 before beginning a slow but steady climb.Diesel remains below the June price level in each of the five years prior to 2016.
The recessionary low price point for diesel was $2.023 in March 2009. Diesel prices peaked at $4.771 per gallon in July 2008.
Housing starts down in April due to multi-family drop
-Housing starts down in April due to multi-family drop
Housing starts totaled 1.172 million in April (seasonally adjusted annual rate – SAAR) down 2.6% from prior month’s revised figures, but up 0.7% from April 2016 results, and were below expected levels. Single family starts totaled 835k (SAAR), down 0.4% from March and up 8.9% year-over-year. Starts of multi-unit (5+)structures were 328k (SAAR) down 9.6% from March and down 14.6% over prior year. Total starts exceeded a 1.0 million unit annual pace for the 25rd straight month. Year-to-date starts are up 5.3%
For the full year 2016, total starts were 1.174 million, up 5.6% over 2015. Single unit starts led the way with 9.4% growth, while multi-unit starts declined by 1.3%. In the prior couple of years single-unit starts grew more slowly than multi-unit starts. For the full year 2015, total starts were 1.112 million, up 10.8% over 2014. Single unit starts were up 10.3% in 2015, while 5+ unit starts were up 12.9%. For the full year 2014, there were 1.003 million total housing starts, up 8.8% from the 925 thousand starts during 2013. Single family starts were up 4.9% and multifamily starts were up 16.4%. Total 2013 housing starts were up a robust 18.5% from the 781k housing starts recorded in 2012 and in 2012 starts were up 28.2%.
Despite several years of strong growth, there remains a lot of ground to cover for the housing sector to fully recover from the recession. Housing starts are still well below the average of just over 1.5 million per year over the last 40+ years, and even farther below the 2.2 million peak of the most recent housing boom. Since 1968, the U.S. population has grown from 200 million to more than 320 million. Some economists believe that slower population growth and household formation in the U.S. means that housing starts will not recover to 1.5 million units for a long time.
Total starts reached a low point of 478k (SAAR) in April of 2009, while single unit starts bottomed out at 353k in March of 2009. A low housing starts figure not only impacts transportation demand for building products but also for appliances, furniture, and other related items, so continued improvement in the housing sector should lead to rising freight volumes. The ATA estimates that each housing start generates 8 truckloads of freight.
Retail sales increase in April
-Retail sales increase in April
The U.S. Bureau of the Census reported that seasonally adjusted real retail and food service sales were up slightly (+0.2%) at $194.5 billion in April. (Note that actual sales are deflated using CPI 1982 – 1984 = 100). April sales were 2.2% higher than the prior-year period.
Nominal (unadjusted for inflation) seasonally-adjusted retail sales totaled $474.9 billion in April (second graph), also up slightly (+0.4%) from prior month, and up 4.5% from prior year results. Total nominal sales were up 3.3% for the full year 2016.
The results were below consensus expectations but March was revised upward. Nominal retail and food services sales excluding gasoline were up 0.4% year-over-year. Nonstore retailer sales (e-commerce and mail order) were up 11.9%. Gasoline station sales were up 12.3% year-over-year, a reversal from most of 2016 when full-year sales were down 6.3%. Department stores sales fell by 3.7% year-over-year, while sporting goods, hobby and book store sales fell by 2.4%. We focus primarily on real retail sales because they are a better indicator of freight volumes than the inflated figures.
Diesel prices continue to fluctuate within a narrow band
-Diesel prices continue to fluctuate within a narrow band
Weekly retail on-highway U.S. diesel prices decreased by 0.5 cents to $2.539 per gallon on May 22, continuing a trend of very modest fluctuations up and down in every week this year. Diesel has ranged between 2.53 and 2.60 per gallon since 12/19, never rising by more than 4.6 cents or falling by more than 2.5 cents in any week during that period.
In February 2016, diesel prices reached their lowest level ($1.980) since January 2005, dropping below the recessionary trough, before rebounding throughout the rest of the year, finally crossing the $2.50/gallon mark on 12.19. The last year that diesel did not hit $2.50 per gallon all year was 2004. We have been above that level all year to this point.
Diesel prices are 18.2 cents per gallon higher than one year ago, but are 37.5 cents per gallon lower than two years ago. On May 9, the Energy Information Administration (EIA) decreased its pricing forecast to 2.65 per gallon for 2017, so still anticipates further increases this year.
A view of weekly prices over the last 6+ years (second chart) indicates fairly stable prices between Q2 2011 and the start of the 2015 slide (min of $3.65 and max of $4.16). Diesel prices then stabilized between August 24 and November 16 of 2015, with a high of $2.561 and a low of $2.476 during those 13 weeks, but were in steady decline between then and February 2016 before beginning a slow but steady climb.Diesel remains below the May price level in each of the five years prior to 2016.
The recessionary low price point for diesel was $2.023 in March 2009. Diesel prices peaked at $4.771 per gallon in July 2008.
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