Recent government reports indicate that manufacturing activity and retail sales continued to expand while inventories have remained thin, setting the stage for a relatively strong first quarter for the trucking industry.

The Federal Reserve reported that industrial production in December expanded—albeit at a slowing rate— by 0.6% in December. This marks a deceleration from November and October, which grew 0.8% and 1%, respectively. For the fourth quarter, industrial production increased at a 3.8% annual rate.

In December, production of consumer goods rose 0.2%-- up 1.3% vs. December 2004. Nondurable consumer goods climbed 0.9%. Production for business equipment maintained very strong levels as it increased 0.5% and was 10% above the same month last year.

In November, the business inventory to sales ratio was 1.26—indicating that inventories remained lean compared to sales, according to the Census Bureau. It appears that retailer inventories were at higher levels (1.46), while manufacturer and wholesaler inventories stayed low at 1.18 and 1.15, respectively.

Retail sales in the holiday shopping month of December increased a modest 0.2% when volatile automobile sales are excluded, the Census Bureau said. Sporting goods, hobby, book and music stores did particularly well, with a 1.5% sales increase while general merchandise and department store sales sagged—decreasing 0.3% and 1.5%, respectively. Gasoline stations posted a 0.9% increase.

The most recent economic news supports economic forecasts for 2006 to see an expanding but decelerating economy.

“It appears that the growth rate of retail sales is moderating a bit,” Chris Brady, president of Commercial Motor Vehicle Consulting told FleetOwner. “Inventories are lean so consumer spending will pull commodities through the supply chain, stimulating linehaul traffic. You’re going to see linehaul freight growth expand faster than retailer sales because of the supplying of inventory through the supply chain.”