Some Indicators Signal US Economy Headed North

Some Indicators Signal US Economy Headed North

$DIA, $SPY, $QQQ, $VXX

A few recent economic indicators suggest that the US economy could be turning North. That would be a very big surprise given all the recession fears at the beginning of this year.

Consider this: February was a super month for truck tonnage. The American Truck Associations’ measure soared 7.2% M-M, and 8.6% Y-Y.  The index, which is a good indicator of the broader economy since trucks account for 69% of tonnage carried by all carriers, rose to a new record high.

ATA’s Chief Economist Bob Costello cautions: “The strength was mainly due to a weaker than average January, including bad winter storms, thus there was some catch-up going on in February.” The result was a big seasonally adjusted gain. Costello also cited inventory overhangs as a reason he’s waiting to see March’s data before getting too excited.

There is a good correlation between the trucking index and real business inventories, which may be somewhat bloated as Mr. Costello notes. However, even if there is some payback in March, the uptrend in the US trucking business may boost sales of medium-weight and heavy-weight trucks, which have been stalled at a cyclical high over the past year.

The Big Q: What are trucks hauling?

The Big A:

1. Imports have surged recently at the West Coast ports, and inbound traffic of 20-ft equivalent containers made a good showing during February, rising 8.6% Y-Y based on its 12-month moving sum, a year ago imports were depressed by strikes at the ports.
2. Regional factory boom, manufacturing business survey results came in strong for 3 of the earliest reporting Fed districts: New York, Philadelphia, and Richmond. The average of their composite manufacturing indexes shot straight up from -7.8 in February to 11.7 this month, the highest since November 2014. Of the contributing components, new orders and shipments rose sharply, while employment readings were steady to slightly positive.

Thursday, US major stock market indexes finished mixed at: DJIA +13.14 at 17515.73, NAS Comp +4.64 at 4773.49, S&P 500 -0.77 at 2035.92

Volume: trade was light again with less than 870-M/shares were exchanged on the NYSE

• Russell 2000 -5.0% YTD
• NAS Comp -4.7% YTD
• S&P 500 -0.4% YTD
• DJIA+0.5% YTD

Have a terrific Easter Holiday weekend.

Paul Ebeling

HeffX-LTN

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