The ANZ light and heavy truckometer indexes both fell in May and the bank says this reflects an economy facing strengthening headwinds. It’s time for a rev-up courtesy of a cut in the official cash rate says ANZ.
According to the ANZ the heavy traffic index fell 1.1% last month and it is down 1.4% in on a 3 month/3 month basis.
It has now receded five months in a row which ANZ says is unusual and flags a weaker economy.
The light traffic index leads GDP by six months. It fell 0.6% in May. It is up 0.4% in the last three months versus the previous three months (seasonally adjusted).
The ANZ says if the broad signals from the Truckometer heavy traffic index are correct – and it says they usually are – the economy has slowed down markedly in recent months.
The heavy traffic index has been right two out of the last three times it has called quarterly GDP growth negative says the ANZ.
“The recent falls do not necessarily warn of a broader slowdown, but we can see the warning signs. Drought is part of it but the story may well go deeper,” says the ANZ.
“If the brakes are being applied in some areas then the economy needs to be revved up in others; the OCR should be headed lower.”
