Glasgow Daily Times, Glasgow, KY

Business

June 15, 2012

Truckers as leading indicator show stable U.S. growth

(Continued)

Contacts at trucking companies describe a "seasonally stable demand environment," Hartford said. Albrecht agreed, saying two carriers characterized activity in early June as "robust."

These anecdotal "channel checks" are consistent with sentiment reported by Landstar System in its mid-quarter update, Albrecht said. The Jacksonville, Fla.-based trucking company affirmed on May 29 its second-quarter earnings estimate of 71 cents to 76 cents a diluted share. This compares with first-quarter earnings of 57 cents a share.

Both the economy and the operating environment for Landstar are "pretty much as forecasted," moving "in a northerly direction, albeit in a slow and sometimes choppy pace," Chairman and Chief Executive Officer Henry Gerkens said then.

Landstar reiterated its guidance even as U.S. retail sales weakened. A 0.2 percent drop in May matched an April decline that previously was reported as a gain, based on data from the Commerce Department. This prompted some economists, including those at Goldman Sachs, Morgan Stanley and Credit Suisse, to cut forecasts for second-quarter growth.

The sequential declines are "consistent with retailers' broader concerns about consumer demand and validate cautious recent inventory strategies among retail and consumer shippers," Hartford said.

There also are "clouds of global economic uncertainty" hanging over the industry that could cause activity to falter, he added, with the possibility of a Greek exit from the euro area contributing to doubts about the future of Europe's monetary union.

There occasionally have been "head fakes," such as between November 1995 and September 1996, when annual tonnage was negative and the economy didn't enter a recession, Albrecht said. Still, industry data and anecdotal comments from carriers, both of which "have a good track record of signaling downturns or upturns," are "remarkably consistent in demonstrating slow but steady economic growth," he said.

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