The ANZ Truckometer heavy traffic index fell 3% month-on-month in July while the light traffic index was up 0.6%.
Chief economist Sharon Zollner says the fall in the heavy traffic over the past two months “accords with anecdotal evidence of momentum in the domestic economy taking a leg lower”.
“Weaker logging activity likely also played a part,” she says.
Although light traffic lifted slightly, its uptrend was “mild” despite strong growth in the population, Zollner says.
“This is consistent with discretionary spending being under pressure as tighter monetary policy bites.”
“Heavy traffic tends to provide a good steer on production GDP. The primary export sector is under particular pressure at the moment.
“Agricultural production, and thus transport needs, are mostly determined by the weather, particularly rainfall, in the short run, with demand determining the prices.
“But logging activity can be turned on and off to a greater extent, and lower activity in this sector is likely contributing to the drop in heavy traffic.
“More generally, less restocking of wholesale goods is a sign of weaker actual and expected demand.
“We will be watching the heavy traffic index closely to see whether the July fall is start of a recessionary pattern.
“The lockdowns make the monthly move look small, but it is potentially a meaningful signal.
“Heavy traffic is threatening to break out of the ‘normal’ range into recessionary territory. It could just be normal monthly volatility. We’ll see what next month brings,” Zollner says.
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