ANZ Truckometer confirms economy has notched down a gear

ANZ economist Liz Kendall says "We’re not putting too much weight on the recent quarterly uptick."

The economy may be losing momentum but ANZ’s Truckometer says it still has plenty of fuel in the tank.

The Truckometer measures freight traffic in the heavy and light categories as an economic indicator.

The Heavy Traffic Index fell a seasonally adjusted 1.5% in June from the previous month, while annual growth recovered over the second quarter. This was on the back of two solid monthly rises.

By contrast, the Light Traffic Index lifted 0.7% month-on-month but annual growth remained soft, suggesting the economy is navigating some headwinds.

ANZ economists Miles Workman and Liz Kendall say the six-month average in the heavy index shows it has come through a soft patch during the first few months of 2018.

“With recent data flow coming in a little soft around the edges, resilience in the Heavy Traffic Index provides some reassurance that the economic growth engine isn’t about to run out of fuel just yet,” they say.

“Annual growth in the index (on a three-month average basis) continued to recover from April’s post-November 2015 low of 2.9%, running at 6.8% in June.

“This is consistent with GDP growth holding up around trend (about 3%) in the near term. However, other recent data flow suggests activity is travelling at a slightly slower pace than this.”

Growth in light traffic is tracking sideways and is less of an indicator of GDP output.

“Therefore, we’re not putting too much weight on the recent quarterly uptick. Instead, we’ll continue to consider it alongside the broader data flow, which has turned decidedly patchier of late,” the economists add.

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7 Comments & Questions

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So a bit like looking out the window to see what the weathers going to be like. I find it the best way. They could be on to a winner here.

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Anecdotally we're feeling it a bit around here also. Agribusinesses and others are definitely pulling their horns in with all the uncertainty Labour/Greens/Winston has introduced, minimum wage hikes, farmer/rural-bashing, getting heavy on compliance BS, labour law reforms, oil-gas bans, etc. It's not worth the risks if you don't know what they are going to spring on businesses next.

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That's true. And don't forget also with Labour's Tax Working Group tasked with finding ways to increase taxes starting with a Capital Gains Tax you don't know exactly what taxation horror they will come up with to separate you from your hard-earned coin. A punitive CGT on your business, your investments etc?? Who knows! How on earth can you plan for the future and effectively and efficiently allocate capital with that uncertainty hanging over your head?

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If housing prices do not increase in Auckland the economy will grind to a halt !
Labour have damaged the economy when they were in opposition with their baseless housing beat up (how can it be unaffordable when there are record low mortgagee sales and declining interest rates???)

Labour forced Key to go against the Reserve Bank recommendations and hike the LVR to a ridiculous 40%. Labour and Key are equally responsible for crashing the economy in the next few years.

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Nonsense.

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Not sure about you but I can report from the provinces that we have way too many trucks on the road around here. Every second vehicle is a truck in this place so if you don't like trucks, steer clear of Tauranga.

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Liz/ANZ - can you please provide a whitepaper on this metric and evidence as to it's effectiveness as a predictive model?

Seriously interested...

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