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Overall: What a complex environment. Freight volumes and pricing are being heavily affected by a few near-term trends.
- Inventory stockpiling was still being reported across global PMI reports in May. Some measures of inventory showed modest growth in May, but none of the macro data showed disproportionate overstocks (such as the scenario that developed in 2023). That will be important in forecasting the peak season. Many firms wanted to build larger inventory stockpiles in May, but tight global material conditions and a disrupted global supply chain were limiting their ability to do so.
- Real Economic Expansion Activity was also contributing to growth. The Atlanta Fed’s Q2 GDPNow estimate was still growing at 3% through early June (Blue Chip estimates are looking for 2%). Either are reasonably good outlooks for Q2. Retail spending grew 4.9% in April, manufacturing PMIs (mentioned below) were robust, and pockets of construction remained strong. Tax refund benefits were creating some of the tailwind, and those will disappear in May. Many analysts are on the lookout for the next catalyst, and that could come from a peace agreement in the Middle East. Reportedly more than $2 trillion in private construction spending is awaiting lower material costs and bond yields, and the trajectory of both of those are tied directly to the conflict in the Middle East.
Link to Full Edition: LTL Monthly Executive Briefing PDF
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