Truckometer - 29% Drop is NOT Business as Usual
Posted: 14-Apr-2020 |
The Light Traffic Index fell 29.3% month on month in March, while the Heavy Traffic fell 8.0% month on month summarises the ANZ Truckometer. However, brace yourselves, because since the month only included nearly one full week of Level 4 lockdown, the April data will be even weaker as it features more weeks of lockdown.
For those that are unaware, the two Truckometer indexes reflect economic activity, with 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.
This month's report says that the relationship between light traffic and output is unlikely to hold over this unusual period of disruption, but there should still be a relationship between heavy traffic and production.
However, we find ourselves in highly unusual times, and the relationship between traffic and GDP growth will not hold. This is particularly true of light (car) traffic, with people only allowed to drive for essential purposes. The relationship between heavy traffic and GDP is likely to be more robust through this period.
As outlined upfront, in March the Light Traffic Index fell 29% and the Heavy Traffic Index fell 8%. The monthly data included a full week of lockdown and a period of reduced travel activity before that. The Heavy Traffic data suggests a sharp drop in quarterly GDP growth in Q1 – their forecast is for GDP to fall 0.8% quarter on quarter, with the big lockdown hit coming in Q2.
The report ends by saying that 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).