Last week’s Institute of Supply Management report that showed continued contraction may actually be good for the trucking industry’s outlook, according to an industry analyst, the Associated Press reported.
ISM last week said the index rose slightly, to 48.6 in March, versus 48.3 in February. Readings below 50 show contraction, while those above 50 indicate growth.
Wachovia Capital Markets analyst Justin Yagerman said the ISM index has proven to be a reliable indicator of stock movements in the truckload and less-than-truckload sectors, AP reported.
Truckload carriers’ stock prices have gained an average of 44% in the five months after two or three consecutive months of ISM readings below 50, AP said.
LTL stocks have climbed an average of 29% during the same period, Yagerman said, while the S&P 500 has risen an average of 14%.
Truckers are considered bellwethers for the growth because they generally see recovery before the greater economy, AP reported.
Trucking companies typically rally in a recession, as retailers buy goods to stock their shelves in preparation for a return of consumer demand, AP said.
But whether the U.S. is actually in a recession is still unknown, AP reported.
