The U.S. labor market shows signs of cooling
The U.S. labor market cooled in June, with nonfarm payroll growth slowing sharply and the unemployment rate edging down due to fewer people participating in the labor force.
Why it matters: For our markets, this indicates a more selective hiring landscape. Broad labor availability may be improving in some areas, but skilled trades, project labor, field service and transportation-related roles can remain tight by region and specialty.
By the numbers:
- Nonfarm payrolls increased by 57,000, down from a revised 129,000 in May, well below expectations.
- The unemployment rate fell to 4.2% from 4.3%; the improvement was tied partly to a lower participation rate.
- The labor force participation rate dropped to 61.5%, down 0.3% from May, the lowest since 2021.
- The Consumer Price Index fell 0.4% month over month and 3.5% year over year in June, the first decline in five months.
- The Producer Price Index fell 0.3% month over month and increased 5.5% year over year in June, the lowest reading in three months.
The big picture: Wage growth remains steady at 0.3% month over month and 3.5% year over year, keeping labor costs elevated despite slower hiring.
Yes, but while broad layoffs aren’t expected, hiring is likely to remain cautious and role-specific.
Container rates nearly doubled amid tight capacity
June saw a significant spike in ocean freight rates, driven by a combination of tariff-related frontloading, tight carrier capacity and ongoing geopolitical risk, with carriers doubling down on their pricing strategies.
Why it matters: U.S. importers faced severe cost increases as transpacific rates nearly doubled.
The big picture: Carriers maintained tight supply through blank sailings and layered surcharges, while importers rushed to move cargo ahead of potential July tariff activity and the July 1 bunker fuel adjustment.
By the numbers:
- Drewry’s World Container Index, the global benchmark to ship a 40-foot container, rose nearly 54% at the end of May to late June, reaching its highest level since September 2024.
- Carriers announced additional general rate increases of $2,000 to $3,000 per FEU (40-foot equivalent unit) on the transpacific trade route effective July 15; upward pressure on rates is expected to continue into Q3.
- Only four blank sailings were announced for the transpacific trade route in the week ending in late June; capacity remains tight.
Raw materials market faces selective pressures in July
In July, the raw materials picture remains challenging, but it’s not moving in one direction across the board. Commodities, such as copper, aluminum and steel, continue to be costly due to tariffs and premiums.
Why it matters: Customers should focus on the full delivery cost of materials, including tariffs, premiums, lead times, freight and supplier availability, rather than just headline commodity prices.
The big picture: While energy prices eased off earlier highs after the United States and Iran signed a memorandum of understanding, crude oil remains volatile, following renewed tensions in the Middle East, which are impacting fuel and freight prices. Resins have become more favorable for buyers, but lumber prices are uneven as weaker construction demand offsets tighter domestic production.
What we’re watching:
- West Texas Intermediate and Brent Crude Oil Index, the domestic and global benchmark prices for crude oil. Diesel and bunker fuel for freight and maritime vessels.
- COMEX and London Metal Exchange for copper and aluminum futures.
- Polyethylene, polypropylene, PVC and naphtha feedstocks.
- Tariff policy actions, customs enforcement and regional supply which can significantly affect final costs.
Trucking market’s supply-driven tightness carries into June
The surface transportation market accelerated its tightening cycle in June, with spot rates rising across all major equipment types due to supply constraints.
Zoom in: Compounding the supply squeeze are persistent driver shortages, ongoing non-domicile CDL enforcement and a Supreme Court ruling on May 14 that elevated broker liability and pulled additional capacity out of the market.
Why it matters: Carriers firmly hold the pricing pen. Shippers face sustained cost pressures and capacity challenges, making well-developed carrier and supplier partnerships, along with proactive planning, essential for navigating the volatile market.
By the numbers:
- Van spot rates climbed 9.7% month over month and 29.4% year over year.
- Flatbed rates rose 11% month over month and 35.8% year over year.
- Reefer rates surged 28.8% month over month and 21% year over year, driven by peak produce demand.
- Intermodal volumes reached a new monthly record of 10.1% year over year in the week ending June 27, according to the Association of American Railroads.