ST. LOUIS — Not only have both the shipments and expenditures indexes been positive for five months in a row, but they are showing accelerating strength.
So says the May Cass Freight Index Report authored by Donald Broughton, founder and managing partner of Broughton Capital, and data-driven economic and equity research firm.
“Throughout the U.S. economy, there is a growing number of data points suggesting that the economy continues to get slightly better,” Broughton wrote. “Some data points are simply less bad, but an increasing number of them are better, and even a few are becoming outright strong.
“The 7.1 percent year-over-year increase in the May Cass Shipments Index is yet another data point which confirms that the first positive indication in October was a change in trend.”
In fact, Broughton wrote, it now looks as if the October Cass Shipments Index, which broke a string of 20 months in negative territory, was one of the first indications that a recovery in freight had begun.
The report said by itself, the 7.1 percent May year-over-year change is very promising, and the nominal value of 1.168 is the highest level attained since August of 2014, which is even more promising.
“Data is suggesting that the consumer is finally starting to spend a little, albeit not with brick and mortar retailers,” the report said. “It also suggests that, with the surge in the price of crude in October of last year, the industrial economy’s rate of deceleration first eased and then began a modest improvement led by the fracking of drilled uncompleted wells, especially in the fields with a lower marginal production cost."
“We have been questioning, ‘how fast will the recovery from here be?’ However, the overall freight recession, which began in March 2015, appears to be over and, more importantly, freight seems to be gaining momentum in most segments,” Broughton wrote.
The May sequential pattern was also promising, the report said.
Following a stronger April, May posted a healthy 4.3 percent sequential improvement. Viewing the shipments index on a nominal basis.
“We continue to assert that the trucking industry provides one of the more reliable reads on the pulse of the domestic economy, as it gives us clues about the health of both the manufacturing and retail sectors,” Broughton wrote. “We should note that as the first industrial-led recovery (2009-2014) since 1961 came to an end, and the shift from ‘brick and mortar’ retailing to e-commerce/omni-channel continues, we are becoming more focused on the number of loads moved by truck and less focused on the number of tons moved by truck.”
He pointed out the following:
“But fear not, recent data out of DAT Solutions suggests that this may be getting better in June,” Broughton wrote.
The bottom line, the report said, is that the trucking industry data released by ATA was getting better and gaining momentum, but recent tepid results by brick and mortar retailers appear to be taking their toll.
The Cass Freight Index represents monthly levels of shipment activity, in terms of volume of shipments and expenditures for freight shipments. Cass Information Systems processes more than $20 billion in annual freight payables on behalf of its clients. The Cass Freight Index is based upon the domestic freight shipments of hundreds of Cass clients representing a broad spectrum of industries. The index uses January 1990 as its base month. Visit http://www.cassinfo.com/frtindex.html or call 314-506-5500 to get detailed information about the Cass Freight Index, including historical data.