Rail Recession: Carloads Tumble To Thee-Year Lows Amid Manufacturing Implosion

Wednesday, October 9, 2019
By Paul Martin

by Tyler Durden
ZeroHedge.com
Tue, 10/08/2019

As manufacturing plummets to the weakest levels since September 2009 and new export orders collapse, the US railroad industry has jus seen carload volumes tumble to three-year lows, according to a weekly report from the Association of American Railroads (AAR), first reported by Bloomberg on Monday.

AAR’s report showed a decline in carloads for 3Q19, down 5.5%, and one of the most significant drops in three years, indicating that the US economy continues to decelerate into year-end. Most of the shipment declines were seen in autos, coal, grain, chemicals, and consumer goods, but there was a small improvement in crude oil shipments.

Bloomberg blames the trade war between the US and China for the rail recession.

“What’s quite clear is that we’re not yet at a trough. Trains have not yet bottomed,” said Ben Hartford, an analyst with Robert W. Baird & Co. “We need to have some clarity in trade policy.”

The manufacturing recession is more widespread than the mid-cycle slowdowns in 2012 and 2015/16. The slowdown has been concentrated in manufacturing for well over a year, driven by a downturn in business investments in 2019.

The rail slowdown is a direct result of a manufacturing recession. As of last week, there is an indication that the downturn has spilled over into service sector output and employment.

Now, “there are no pockets of growth,” said Bloomberg Intelligence analyst Lee Klaskow, who said a “railroad recession” could be imminent in a recent report. “There’s really nothing that’s tapping me on the shoulder saying, ‘Hey look at me. I’m going to be your next growth engine.'”

The Rest…HERE

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