Tuesday, July 13, 2010

Rail Traffic softens further in June

by Bill McBride on 7/13/2010 03:20:00 PM

From the Association of American Railroads: Rail Time Indicators. The AAR reports traffic in June 2010 was up 10.6% compared to June 2009 - but traffic was still 10.2% lower than in June 2008.

Rail Traffic Click on graph for larger image in new window.

This graph shows U.S. average weekly rail carloads. Traffic increased in 16 of 19 major commodity categories year-over-year.

From AAR:

• U.S. freight railroads originated 1,415,630 carloads in June 2010, an average of 283,126 carloads per week — up 10.6% from June 2009 (see chart) but down 10.2% from June 2008 on a non-seasonally adjusted basis.

• On a seasonally adjusted basis, U.S. rail carloads fell 1.3% in June 2010 from May 2010, following a 1.1% decline in May 2010 from April 2010. After bottoming out in May 2009, seasonally adjusted rail carloads trended upward, with some fits and starts along the way, through April 2010. They’ve now declined for two consecutive months.

• The declines in rail carloads over the past couple months have not been huge, and they certainly don’t prove that the wheels are coming off the economy’s bus.

• That said, an economy several months into a recovery from the worst recession in decades should be yielding rail traffic levels heading north, not south. (Remember, demand for rail service occurs as a result of demand elsewhere in the economy for the products that railroads haul.) Thus, rail traffic in June 2010 is consistent with an economy that is in far better shape than it was nine months or a year ago, but is, in the words of former Federal Reserve Chairman Alan Greenspan, “more than likely” undergoing a “pause.
excerpts with permission
As the graph above shows, rail traffic collapsed in November 2008, and now, a year into the recovery, traffic has only recovered about half way. This is more evidence of a sluggish recovery ... also the declines in May and June are concerning although the declines were small.