ANZ Truckometer (Heavy) for July -0.3%
- prior +2.0% revised from +1.6%
- it has now receded six months out of the last seven; a clear slowdown is apparent
- ANZ comment that "The Heavy Traffic Index suggests a weak GDP growth outturn in Q2, and a fairly flat July is not a great start to Q3. The Light Traffic Index is more upbeat about near-term growth but is now also losing steam
- Signals from our Truckometer reflect an economy facing strengthening headwinds. Until global dairy prices find a floor (and broader commodity prices too - as a bellwether of China's economic health) all economic forecasts remain a moving target."
On the ANZ Light traffic index (The ANZ Light Traffic Index leads GDP by six months)
- Down falls 0.2% m/m
More from ANZ on these indicators (bolding is mine):
- Seasonally adjusted traffic flows fell on 10 of 11 roads in the Heavy Traffic Index in July, and rose on one
The Light Traffic Index gives a 6-month lead on the economy. Its long lead means it gives a take on where the economy is headed if left well enough alone. It fell 0.2% in July (sa) and is unchanged on a smoothed 3-month/3-month basis. It suggests strong momentum over the next six months (figure 2) but we are not buying that story, given the unanticipated plunge in global dairy prices that has occurred since these numbers were measured.
- The Light Traffic Index is now also looking toppy.
- Traffic flows fell in July on five of ten roads in the index, with four higher and one flat (sa)
If the broad signals from our Truckometer Heavy Traffic Index are correct- and they usually are-the economy has slowed down markedly in the past half year. With business confidence now in retreat and dairy prices yet to find a floor, we expect further cuts in the Official Cash Rate.
