The American freight train slows down

Attentive American trainspotters won’t have missed that some economic engines have been running a bit slow for some time now. According to data from the Association of American Railroads (AAR), rail freight volumes have fallen for five consecutive months on a year-on-year basis. The most recent figures1, which include the week ending July 6, show a decline of 7.6% compared to the previous year. Our "Chart of the Week" shows that the rolling 3-month averag- es have been below the previous year's levels for about a year. The lows of mid-2016 have not yet been reached, but the drivers have been similar. "The declining freight vol- umes are a result of a weakening economy. In addition, many companies are currently reducing their inventories," says Marcus Poppe, Portfolio Manager for Global Equities at DWS. There is one difference to 2016 - the oil sector. While its slowdown was worse than that of other sectors in 2016, it is now one of only four categories2 whose freight volumes have risen since the beginning of the year. All 16 other categories are in the red, with crushed stones, steel and coke doing worst of all.