Truckometer - Strong start
Posted: 10-Feb-2020 |

According to the latest Truckometer report, there's been a lift in both the light and heavy traffic indexes bucking recent trends. The Light Traffic Index rose 2.0% month on month in January, unwinding its December drop, while the Heavy Traffic jumped 4.8% month on month, after two weaker months. The report says that annual growth in the two indexes is bouncing back, consistent with its pre-coronavirus forecast that annual growth had bottomed out.

It goes on to say that 'The human toll associated with the coronavirus outbreak is very worrying and the economic impacts could be significant too. The recent turnaround in domestic momentum provides a degree of resilience as we head into uncertain times.'

The Light Traffic Index gives an indication of where GDP growth is headed in six months' time, while the Heavy Traffic Index is real-time. They both seem to agree that the slowdown in economic momentum has found a floor, consistent with the January economic forecasts of a bounce in growth from here. The annual GDP revisions have brought the GDP data over 2019 more into line with both traffic indexes.

However, the novel coronavirus has now made any forecasts highly uncertain, but the data does show that momentum in the economy has lifted, which is helpful when facing this kind of economic uncertainty.

The Light Traffic Index is suggesting that the economic baseline over the next six months is about 0.5% per quarter, but coronavirus disruptions are looking likely to throw these numbers around.

As discussed last month, a model using the Heavy Traffic Index both contemporaneous and lagged one quarter, and the Light Traffic Index lagged two quarters, suggests growth of 0.5% quarter on quarter. Growth in Q1 is now looking likely to be weaker than this, but it depends hugely on how long disruptions persist, which at this stage is impossible to know.

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