The US economy hit a soft patch during Q-1 of this year with manufacturing output up only slightly compared with the same frame a year earlier and freight movements mostly down.
US manufacturing production was up by just 1.8% from January to March compared with Q-1 of Y 2018, down from 3.5% growth in the July-September%.
Road freight volumes were up 4.6% Y-Y in December-February, down from 8.3% growth in Q-2 last year, according to figures compiled by the American Trucking Associations.
Containerized rail freight was up by just 1.2% in December-February, down from more than 6% growth in July-September, according to the Association of American Railroads.
More recent data suggests rail freight shrank by almost 2% in Q-1 of Y 2019 compared with the same frame in Y 2018 with declines in both bulk and containerized movements.
The number of containers handled by the Port of Los Angeles, the busiest cargo facility on the West coast, which handles trans-Pacific trade, was down by 1% in Q-1 of this year.
Containers handled at the Port of Long Beach, the other main Pacific gateway, and subject to less M-M volatility, were down by more than 7% in January-March compared with Y 2018.
Manufacturing employment was 1.9% higher Y-Y in January-March, but job creation is no longer accelerating and shows signs of turning over.
On every real-time metric, manufacturing activity lost momentum in q-1 of Y 2018 and extending throughout Q-1 of Y 2019, after expanding very rapidly earlier in Y 2018.
This slowdown resembles the Summer of 1998, when a similar loss of momentum prompted the Fed to cut interest rates by 75 bpts between September and November.
Fed policymakers have given no indication they will respond the same way this time, but if there is no sign of re-acceleration by the end of June, the central bank is likely to cut rates at least once in 2-H of this year, stay tuned…
Have a Happy Easter Holiday weekend.