Source: Cass Information Systems, Inc.
Not only have both the Shipments and Expenditures Indexes have now been positive for six months in a row, but they are showing accelerating strength. Throughout the U.S. economy, there is a growing number of data points suggesting that the economy continues to get slightly better. Some data points are simply less bad, but an increasing number of them are better, and even a few are becoming outright strong.
The 4.8% YoY increase in the June Cass Shipments Index is yet another data point which confirms that the first positive
indication in October was a change in trend. In fact, it now looks as if the October 2016 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.
Although not as strong on a nominal basis as May (which hit 1.168), the nominal value of 1.163 is higher than the level attained in June of 2015, which is very promising.
Data is suggesting that the consumer is finally starting to spend a little, albeit not with brick and mortar retailers. 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 DUCs (drilled uncompleted wells), especially in the fields with a lower marginal production cost (i.e., Permian and Eagle Ford). 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.
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