Canadian fourth quarter freight rail figures give hope

By Freddie Pierce
Concerns over the fate of the U.S. economy are troubling, but news today out of its neighbor to the north is encouraging. Canadian National Railway and...

Concerns over the fate of the U.S. economy are troubling, but news today out of its neighbor to the north is encouraging.

Canadian National Railway and Canadian Pacific Railway, the country’ two biggest freight rail companies, posted strong numbers toward the end of 2011. Freight rail is often a bellwether for signs of economic progress, and if that truly is the case, Canada could be in good shape.

According to data posted by the Association of American Railroads, Canadian freight volumes grew the fastest in the fourth quarter in 2011. Commodity carloads were also showing promising signs, and grew 6.8 percent from November to December on seasonally adjusted rates.

An intriguing set of numbers in research conducted by Bloomberg who that rail carload changes have successfully predicted GDP changes three months into the future 63 percent of the time since 2000.

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Railroads in Canada moved approximately 609,000 units in December in record-setting fashion, ending 2011 on a high note. The benchmark was set during the peak season of 2007, but last year’s figures were a 3.3 percent increase over the previous high.

Despite those signals that Canada’s economy could be on the fast track to growth, RBC Global Asset Management chief Economist Eric Lascelles warns against looking at traditional economic indicators.

“One of the great challenges right now is there is an incredible skew among economic indicators,” said Lascelles. “Now is the sort of time when you want to look at unusual indicators because the traditional ones just aren’t giving a clear picture.”

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