Falling retail sales and freight activity: Cause for concern?

The rally in bellwether transport stock Fedex was short-lived and it is once again testing primary support at $164. Declining 13-week Twiggs Momentum, below zero, warns of a primary down-trend. Breach of support would confirm, suggesting a broad slow-down in US economic activity.

Fedex

The Freight Transportation Services Index reinforces this, declining since late 2014.

Freight Transportation Services Index

But the LoDI Index contradicts, continuing its climb.

LoDI Index

The LoDI Index uses linear regression analysis to combine cargo volume data from rail, barge, air, and truck transit, along with various economic factors. The resulting indicator is designed to predict upcoming changes in the level of logistics and distribution activity in the US and is represented by a value between 1 and 100. An index at or above 50 represents a healthy level of activity in the industry.

Growth in retail trade (excluding Motor Vehicles, Gasoline and Spares) also declined for the last two quarters but remains above core CPI.

Retail Trade ex-Gasoline, Motor Vehicles and Spares

On a positive note, however, light motor vehicle sales are climbing.

Light Motor Vehicle Sales

New housing starts are edging upwards while building permits jumped sharply, indicating further increases.

Housing Starts and Building Permits

And overall construction spending is steadily rising.

Construction Spending

Solid rises in spending on durables suggests further employment growth. This makes me reasonably confident that retail sales and freight/transport activity will recover. All the same, it would pay to keep a weather eye on Fedex and the transport indices.