Air Cargo Volume Points to Continued Economic Weakness

Here’s a nice alternative indicator from our friend Martin over at Macronomics.  He provides us with Nomura’s air cargo indicator and some more color on the current reading:

A regular economic activity and deflationary indicator we have been tracking has been Air Cargo. It is according to Nomura a leading indicator of chemical volume growth and economic activity:

“Over the past 13 years’ monthly data, there has been an 84% correlation between air cargo volume growth and global industrial production (IP) growth, with an air cargo lead of one to two months (second graph). In turn, this has translated into a clear relationship between air cargo and chemical industry volume growth”

Our air cargo indicator of industrial activity came in at -7.4% (y-o-y) in April, following -3.8% in March and -7.8% in February. As a readily available barometer of global chemicals activity, air cargo volume growth is a useful indicator for chemicals volume growth.”

Air cargo volume growth vs global industrial production growth, y-o-y, % – source Nomura:



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Cullen Roche

Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services. He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance and Understanding the Modern Monetary System.

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  • kman

    Interesting. That chart overlays well with the PMI’s that have been in a downtrend since 2010. It’s the muddle through downtrend, as it’s angle is ever so slight, not steep enough to cause worry I guess until it goes below ZERO.

  • Conventional Wisdumb

    Signal to noise ratio in this market is so high, who knows what data means anymore?

  • Adam P.

    I think that all these indicators are too noisy. Why not focusing of just two numbers 1) inflation 2) energy prices. We all know that oil is expensive and that extraction costs are increasing so if prices are not increasing and if inflation is decreasing what does it mean ? Do we really need to look at all these indicators ? I know that a trader is always looking for the perfect indicator which tells him when to get in/out from the market but it’s like the sacred graal, he will never find it. But inflation and energy prices are telling us something very very important…

  • ilya

    the x axis on the graph is at -10% kman, not 0%. Just be careful reading graphs. So it has been negative for a year

  • http://pragcap Michael Schofield

    Right, indicators are noisy. Price action is always the start and the final word for a trader, or at least for me. Everything else is secondary, although often very useful.

  • KB


    Thank you for posting it. I understand it relates to international volumes, not to US only.

    Have you considered an integration of rail, truck, and air data to get a better picture of economic activity?

  • shawn

    Agreed. I am no expert, but the signal appears to be Asian contraction, especially given the Japanese QE and subsequent deterioration of other ASEAN economies. Time to make a prediction, give it a probability and invest appropriately?

  • shawn


    Would you comment on J. Hussman’s commentary this week…..Are the naysayers totally deluded.

    Thank You

  • JackH

    I get the connection between air cargo and global industrial production. What I don’t understand is the extrapolation to the chemical industry in particular. Air transport works best for high value to weight (or volume) products such as electronics. I would think most chemicals would travel by water or rail?

  • sachin

    Is this cago tracking system is still valid in Rajasthan area. can you tell me more about it.
    Never less this is the great post that contain some good information about the cargo tracking system.
    Hope this link provide all useful information.