By Richie Lin.    Photo：Fred

A couple weeks ago we used PPI, CPI, PMI to predict the economic situations of USA in the near future. This week we use another two indicators to explore where will the economy go in the following weeks. These indicators are the yearly increased rate of durable goods orders and Unemployment Insurance Continued Claims (UI Continued Claims). Yearly increased rate of durable goods in April continued the trend of dropping from the highest point 18 to only 4.6. And if we exclude the large purchases such as airplanes or defensive contracts, the number of ordinary consumer durable goods like cars and home appliances was only 2.01. This indicates clearly that manufacturers didn’t get many new orders in March, then they don’t have buy and transport the materials and products in the following months. And the number of UI Continued Claims also maintained around 240000 from November, 2022 till April of 2023. Based on these two economic indicators, we can conclude that economy will not turn to positive in a short time. Companies don’t get many orders from their customers, so they will be forced to cut the expenditures, so the unemployment rate will be higher and higher because some people will be layoff to reduce the spending on human resources. Therefore, consumers will stop or restrict to buy the durable goods such furniture, electronic devices, home appliance because they have to save the money to endure the hard times. Then the vicious cycle will keep going on and on until consumers have the appetite and money to buy new things in their living rooms, garages, kitchens, etc. However, consumers will likely to be as frugal as possible in the coming months under the pressures of high gasoline and high inflation. The mood in the market has been reversed from being aggressive to being cautious since the end of second quarter in 2022. Top priority of USA and European countries is to suppress the inflations by all means including but not limited to increasing the interest rate. Since companies’ orders and consumptions are decreasing, the demands of ocean freight and airfreight services will definitely go downward. Even though shipping lines keep using blank sailings to keep up the ocean freight rates, rates will still stay in the low level because there are not many orders in the market until the end of third quarter.

FCL market rate reference in week 18:

• Asia main ports to USAWC USD 1700~2000 per 40GP; 
• Asia main ports to USAEC USD 2500~3000 per 40GP; 
• Asia main ports for IPI points of USA is USD 4000~4500 per 40GP. 
• Asia main ports to Europe base ports and West Mediterranean: USD 2000~3500 per 40GP.

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