Truckometer - Business as Usual?
Posted: 11-Mar-2020 |
I guess this is the Truckometer many of us have been waiting for, if the banks are happy, then there's no need to panic right?
The Light Traffic Index fell 0.7% month on month in February, while the Heavy Traffic fell 3.0% month on month, after a sharp lift the previous month, the report begins. Annual growth in the two indexes remains decent. There are pockets of weakness in truck movements in logging-intensive regions but no change in economy-wide trends evident.
The moves in both the Light Traffic Index (-0.7%) and Heavy Traffic Index (-3.0%) were not unusually large in February, indicating that activity remained largely business as usual around the country.
However, the latest reports says, the alarming spread of COVID-19 globally, and the impending policy response, have now made any economic forecasts highly uncertain. Given the suddenness of the COVID-19 shock to the economy, we cannot expect that the Light Traffic Index's usual 6-month lead on economic growth will hold this year. However, the data does show that the economy had decent momentum going in, which is helpful.
Although the overall Heavy Traffic Index fell 3%, there were more marked falls in areas where logging trucks are a larger proportion of heavy traffic. Through Te Puna, west of Tauranga Port, both light and heavy traffic fell sharply. The charts against GDP look alarming, but the impact on the broader economy will be overstated due to the oversized impact of the abrupt forestry slowdown in this region. The indexes therefore shouldn't be taken at face value as GDP indicators, given the unusual nature of developments, which are much more complicated than a cyclical demand slowdown. They do, however, give an indication of how dramatic the impact of the trouble in China's logistics chain has been on New Zealand primary producers.
The report ends by saying, they will continue to pay close attention to traffic data as a timely indicator of both production (heavy traffic) and on how New Zealanders are changing their behaviour in response to the COVID-19 threat (light traffic).