ANZ NZ Truckometer - Detour

KEY POINTS

•Due to a 5.7% fall in July, the slowdown in the Heavy Traffic Index has become conspicuous. It runs counter to almost all other economic indicators and anecdote. The Light Traffic Index, on the other hand, was little changed in July.

•The Heavy Traffic Index was already suggesting weaker economic growth in Q2 than was seen in Q1. The sharp fall in July represents a poor start to Q3, though it is only one month of three.

•Given the weight of other positive evidence regarding the state of the economy we are not reading too much into the turn in the index at present. Indeed, the data is volatile, and a solid bounce-back in August seems the most likely outcome. However, it is worth noting that due to its timeliness the Heavy Traffic Index would be expected to be out of synch with other indicators precisely at turning points.

•Detail: the Heavy Traffic Index[1] fell 5.7% m/m (-1.5% m/m on a 3-month rolling average basis – levels charted below) in July. The Light Traffic Index[2], which broadly leads growth in the economy by six months, fell -0.6% m/m (+0.2% m/m, 3-month average).