- by New Deal democrat
After this morning’s contractionary ISM manufacturing report, it occurred to me to look at heavy truck sales to see if they confirmed the downturn. They did, but like the manufacturing index,
While passenger vehicle sales are very noisy, heavy truck sales convey far more signal than noise, and usually turn down before car and light truck sales, as shown in the below historical graph (averaged quarterly for ease of viewing):
Here is the updated graph since the pandemic, monthly through the latest report from earlier this week for February:
Heavy truck sales were 438,000 annualized, the lowest monthly number since January 2022. The three month average, which does away with most of the noise, was 461,000 annualized, the lowest three months since spring of 2022.
When the three month average of heavy truck sales is down more than -10% from its peak, that has more often than not been a leading indicator of recessions within a year. But note the false positives in 1996, 2016, and 2022, so I am not at the point yet where I am sufficiently confident to say that they warrant a “recession watch,” just a yellow flag caution.
Typically auto and light truck sales have also declined before the onset of recessions, although as noted above they are much noisier. As late as December those made a 3+ year high. I would be looking for the three month average of those to fall below 15 million annualized as a confirmatory signal.
