Truckometer - Stop-start
Posted: 14-Oct-2020 |
The latest ANZ Truckometer report is in and it’s a bit of a mixed bag. The Light Traffic Index bounced back 12.3% in September, while the Heavy Traffic lifted 4.1% as the Alert Level restrictions eased. Both indexes are higher versus a year ago, reflecting catch-up activity rather than an economy running hot. But still, it’s encouraging.
Traffic volumes lifted again over September as alert levels eased and catch-up activity was evident. The data is very volatile at present, understandably. We’d view the overshoot from the previous trend as more a story of catch-up than sustainably higher activity, but it’s a story of resilience nonetheless.
In the broadest terms, heavy traffic primarily reflects the movement of goods; light traffic captures the movement of people. As a general rule, light traffic provides a lead on momentum in the economy (and population growth), whereas heavy traffic is a real-time indicator of production.
It is clear that the first lockdown represented a much more significant disruption than the second, which was regionalised, peaked at a much lower level, and was significantly briefer. Less lockdown implies less bounceback, logically, but nonetheless both the Heavy Traffic Index and the Light Traffic Index are higher than a year ago (by 9.1% and 5.7% respectively). It would be unsurprising to see this overshoot dissipate over coming months as the economy settles into its new sustainable path. We estimate the closed border knocks out about 5% of GDP, though the impact on traffic is even more difficult to estimate.
The next few months will provide a stiff test for the economy: the winding down of wage subsidies, the narrowing of the mortgage deferment scheme, the lost summer of tourism, and the lagged impacts of net migration abruptly falling to zero. But the ANZ Truckometer is consistent with the preliminary ANZ Business Outlook for October released yesterday, indicating that the economy for now at least has regained momentum, albeit in a slightly stop-start way due to COVID briefly re-emerging. There’s a large hill looming but at least we’ve got some speed up.