The Light Traffic Index (LTI) continues to bounce around a flat trend, while the more volatile Heavy Traffic Index (HTI) jumped 4.0% in January after a modest rise in December. Heavy traffic is up 4.1% y/y, while light traffic is up just 0.2% y/y.

Light traffic (motorbikes, cars and vans) is generally a good indicator of the state of demand, as opposed to production. It typically provides a six-month lead on momentum in the economy – variation reflects discretionary spending on outings, movement of couriers and tradespeople etc. The trend in light traffic is flat, matching lacklustre GDP, and in per capita terms is flattening out after a sharp drop (ANZ population forecasts). Neither light nor heavy traffic particularly corroborate the very sharp Q2/Q3 drop in GDP reported in the latest release, though some other indicators do.

Heavy traffic data (mostly trucks) tends to provide a good steer on production GDP in real time, as it captures both goods production and freight associated with both wholesale and retail trade. The Heavy Traffic Index rose 4.0% in January and is up 4.1% compared to a year ago (three-month average). Heavy traffic can be volatile, so we’ll see if the January lift persists into next month before drawing strong conclusions, but it’s good to see a broad-based bump higher (10 of 11 roads rose).

Note that all data is seasonally adjusted. The historical road weights have also been recalibrated this month in light of the very large GDP revisions.