September 2011 rail traffic, while weakening since May, had enough marginal improvement to lift rail transport from the edge of contraction. The existing “less good” trend line was broken.
The graphic below shows the total traffic on the USA rails – with one month of improving data. One month is not a trend – but the existing trend of less good data has been broken. Trend lines are important to understanding the future.
The major reason rail traffic seems sluggish is because of reduced shipments of coal and grains – which are not necessarily economic indicators.
Coal, because the majority of use is in power production in plants which can use alternative fuels, is not an economic indicator. Neither is grains as movements are more of an indication of crop yields and/or export demand. Food staples are not good economic indicators.
Most finished consumer goods which travel on rail move in intermodal units, containers and trailers, on rail cars. If there was only one pulse point to watch – it is this one. And here, it is obvious that the downward trend line was broken.
Definitely the “less good” consumer related rail movements raises alarm bells. Rail is the first reporter of September 2011 data. Here is how August 2011 transport indicators compare:
- Diesel Usage: Up 2.5% year-over-year
- Truck Transport: Up 4.5% year-over-year
- Container Counts: Year-over-year imports were down 9.4%, while exports were up 4.4%
- Rail Counts: Down 0.3% year-over-year
In August, there was a less good trend line in play – and import container counts sent us a recession warning flag. September is a new month, and the first out of the box report is rail and is hinting the down trend may be over.