Week 27 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 0.4 % (meaning that the predictive economic elements declined 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 fourth week after contraction beginning in late 2015.
Also, note that whenever a holiday is in a week – there are seasonality issues (this week had July 4th).
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 fell below the zero growth line..
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).
