Freight Volumes Down: What the July Jobs Report Means

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6}#fwtv_0L36ju3FniI. fwtv-panel p{margin:0 0 12px}#fwtv_0L36ju3FniI. fwtv-transcript p{margin:0 0 12px}SummaryView TranscriptThe July jobs report delivered a surprise: a decline of 23,000 non-farm payrolls, directly impacting the freight market. While unemployment dipped, it was largely due to people leaving the workforce, not finding new jobs.

We break down how this, alongside declining Sonar Truckload Rejection and Volume Indexes, signals soft demand. However, contract rates are still rising, and manufacturing is accelerating. Dive into the complex interplay of these economic indicators and what they mean for capacity, pricing power, and the future of freight. The U. S.

economy shed 23,000 nonfarm payrolls in July, far below consensus expectations of 83,000 to 95,000 job gains, according to the Bureau of Labor Statistics report released Friday, Aug. 7. The miss was compounded by downward revisions to May and June that together showed 103,000 fewer jobs than originally reported. While the unemployment rate ticked down to 4.

1%, the decline was driven by labor force participation falling to 61. 4% — a five-year low — meaning workers left the workforce rather than found jobs. For the freight market, the most relevant losses were in retail trade, down 19,000 jobs, and warehousing clubs and general merchandise, down 21,000.

“Those are shippers generating truckload freight,” said the FreightWaves analyst presenting the SONAR update. Transportation and warehousing employment was flat — neither declining nor adding workers — mirroring what real-time SONAR data are showing on volumes and capacity. The SONAR Truckload Rejection Index stood at 13.

6% as of the update, down from a peak of 17. 9% in early June. The SONAR Truckload Volume Index also retreated from its mid-July peak to roughly 11,258. The analyst cautioned against reading the rejection slide as a fundamental shift in market power, noting that the current cycle is driven by a lack of capacity, not weakening demand.

“I wouldn’t overread the rejection slide as a market flip to shippers by any means. The PPI still clearly says that carriers have the leverage. It’s just softened a bit off of that really high recent number from early June.”

The SONAR Freight Pricing Power Index, ticker FWPI, came in at 72 for the week, down from a mid-July peak of 79 but still firmly in carrier-favorable territory. Contract rates continued to rise near their recent highs even as spot rates dipped slightly versus the 30-day average, narrowing the spot-to-contract spread.

Rail volumes remained near the top of their five-year range, providing additional support for the carrier-favorable reading. Manufacturing data offer a counterweight to the soft freight and labor numbers. The ISM Purchasing Managers Index hit 55. 6 in July, its highest reading since May 2022 and the seventh consecutive month of expansion.

New orders and backlogs both accelerated, and manufacturing added jobs for the first time in 33 months. The analyst said industrial activity should eventually pull freight demand higher, unless shippers are still burning through existing inventory rather than placing fresh orders. Geopolitical risk adds further uncertainty. DOE diesel prices rose 16.

8% month over month amid renewed conflict in the Middle East, raising questions about whether carriers can continue passing higher fuel costs through to all-in spot rates given the capacity environment.

Regionally, capacity loosened most quickly in Atlanta and El Paso, while tender rejections remained elevated and actually increased over the prior few days across parts of the Midwest, with Green Bay standing out.

The analyst summarized the setup as three economic forces — a weakening labor market, accelerating manufacturing, and stubborn inflation — pulling in different directions, with the Pricing Power Index sitting at their intersection. U. S.

payrolls fell 23,000 in July, missing consensus forecasts of 83,000–95,000 gains, with prior months revised 103,000 jobs lower combined. SONAR’s Truckload Rejection Index slipped to 13. 6% from a June peak of 17. 9%, but the Freight Pricing Power Index remains at 72, firmly in carrier-favorable territor