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generic_containers.jpgWASHINGTON, DC-A trio of reports for May and June show a continued downturn in statistical measures relating to users of industrial real estate. While the negative trends suggest demand for space is unlikely to pick up in the immediate future, there are signs that at least some of the measures may have bottomed or are close to bottoming, which could lead to a resurgence in demand late this year or early next year.

According to the latest report from the US Census Bureau, the nation’s shipments of manufactured durable goods fell in May for the tenth consecutive month, lengthening what was already a record streak of declines. Following a 0.5% drop in April, shipments in May dropped another 2.1% to $169.9 billion. Meanwhile, unfilled orders and inventories also continued their record declines, with the former decreasing 0.2% to $747.3 billion and the latter falling 0.6% to $513.3 billion. The two measures have fallen for eight and nine consecutive months, respectively.

On the other hand, new durable goods orders increased for the third time in four months, rising 1.8% to $163.9 billion. They increased by the same percentage in April. In addition, orders for nondurable manufactured goods increased 0.7% in May to $184.5 billion, while shipments of petroleum and coal products rose 8.3% $2.5 to $32.3 billion. Some analysts believe the boost in new orders and surge in energy shipments indicate the economy may have bottomed out and begun to move upward.

Freight rail traffic also fell in May, according to the Association of American Railroads. US rail carload traffic fell 24.7% to 989,306 carloads compared to May 2008, while US rail intermodal traffic fell 19.7% to 723,898 units. Canadian rail carload traffic (which includes both the Canadian and US operations of CN and Canadian Pacific) fell 32.8% in May to 213,517 carloads, while Canadian intermodal traffic fell 18.1% to 157,446 trailers and containers.

For the first five months of the year, intermodal traffic was down 16.9% on US railroads, 14.8% on Canadian railroads and 20.5% on Mexican railroads. “Industrial production is still down sharply across the board,” says AAR senior vice president John T. Gray. “That means lower demand for rail service for everything from chemicals and scrap metal to cement and ores. Basically, railroads are in a waiting game – waiting for the economy to turn.”

June appears to have sent mixed messages. While the Cass Freight Index of domestic US shipping fell 20% compared to June ’08, it was up 2.2% from May. Furthermore, the closely watched measure from Cass Information Systems Inc. in Bridgeton, MO has grown 6.6% since April, suggesting freight activity has begun to pick up following a steep decline over the past year. The company’s index of freight spending also grew 4.1% in June, a sign that shippers are increasing the delivery of consumer goods. Nonetheless, the freight expenditures index fell a record 29.4% on a year-over-year basis, though Cass attributes at least part of the fall to the steep rise in fuel costs that occurred last summer.

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