Freight tonnage is set to grow at a slower rate as the economy is putting the brakes on the expansion of manufacturing, retail sales and consumer spending, according to American Trucking Assns. (ATA) chief economist Bob Costello.
Despite discouraging ATA tonnage data for April, which marked a 0.9% drop from March and a 0.3% decline compared to April 2004, Costello says the pieces are still in place for tonnage to trend upward through 2005.
“The economy is in a constant state of flux,” Costello told Fleet Owner. “I do believe there are pockets that are weakening. For instance, steel is being trimmed back, which spills over into heavy goods. But overall, I certainly don’t think 2005 will be a down year.”
In the U.S., manufacturing output rose 0.6% in May, which marks 2.7% more activity year-over-year, according to the Federal Reserve.
“In manufacturing the rate of growth is definitely slowing and that will be reflected in our tonnage data,” Costello said.
Retail sales, on the other hand, fell 0.5% from April, the Census Bureau said. This still marks a 6.4% increase over the same period last year.
Construction continues to be a bright spot. In the 2005 period ending in April, construction spending amounted to $309.5 billion. This marks a 9.1% growth year-over-year. The housing market is also showing strong growth, with a seasonally adjusted annual sales rate of 1.3 million in April—a 13.3% jump over the same period last year.
“There are always things we’re concerned about, and the price of fuel is an obvious one,” Costello said. “Potentially if housing continues to grow at an unbelievable pace that could be concern. Certainly high energy prices are sapping some of the growth of the economy. If the price of oil were lower, the rate of economic growth would be higher.”