Rail Week Ending Saturday Feb. 9: Continued Soft Data

Week 6 of 2019 shows same week total rail traffic (from same week one year ago) insignificantly improved according to the Association of American Railroads (AAR) traffic data. The economically intuitive sectors rolling averages remain insignificantly positive.

Analyst Opinion of the Rail Data

This rail softness (and the suddenness and depth of its occurrence) is a little surprising. Could this be a precursor to the economic weakness seen in the economy in 2015 and 2016?

We review this data set to understand the economy. The intuitive sectors (total carloads removing coal, grain and petroleum) contracted 3.4 % year-over-year for this week. We primarily use rolling averages to analyze the intuitive data due to weekly volatility - and the 4 week rolling year-over-year average for the intuitive sectors declined from +0.3 % to -2.0 %.

The following graph compares the four week moving averages for carload economically intuitive sectors (red line) vs. total movements (blue line):

Intermodal transport (containers or trailers on rail cars) growth has been relatively strong over the 12 months - and was strong this week also.

This analysis is looking for clues in the rail data to show the direction of economic activity - and is not necessarily looking for clues of profitability of the railroads. The weekly data is fairly noisy, and the best way to view it is to look at the rolling averages (carloads [including coal and grain] and intermodal combined).

  Percent current rolling average is larger than the rolling average of one year ago Current quantities accelerating or decelerating Current rolling average accelerating or decelerating compared to the rolling average one year ago
4 week rolling average +0.3 % accelerating decelerating
13 week rolling average +1.1 % decelerating decelerating
52 week rolling average +2.5 % decelerating decelerating
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