Rail Week Ending 15 July 2017: Economic Intuitive Slowing Continues

Week 28 of 2017 shows same week total rail traffic (from same week one year ago) improved according to the Association of American Railroads (AAR) traffic data. The economically intuitive sectors slowing continues.

Analyst Opinion of the Rail Data

We review this data set to understand the economy. If coal and grain are removed from the analysis, rail over the last 6 months been declining around 5% – but this week it grew 0.6 % (meaning that the predicitive economic elements grew year-over-year). Also consider total rail movements are below 2015 levels – even though they are above 2016 levels. This week the one year rolling averages continue in expansion for the seventh week after contraction beginning in late 2015.

The strength this week was intermodal – which is economically positive (and is contrary to the slowness of the economically intuitive carload counts).

The following graph compares the four week moving averages for the rail economically intuitive sectors (red line) vs. total movements (blue line): Rail’s intuitive sectors have been bouncing around the zero growth line for most of 2017 but have recently moved above the zero growth line – but this week it remained below the zero growth line for the second week.

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 +3.4 % decelerating decelerating 13 week rolling average +5.2 % unchanged accelerating 52 week rolling average +1.4 % accelerating accelerating