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The Labor Department in September reported disappointing growth in employment, but other surveys for the same period said the labor market was strong. Similarly, GDP declined an alarming 2% in the first quarter, but the report was so full of statistical noise that the market mostly ignored it. In the following quarter it beat estimates, but no one’s exactly sure whether that’s because of genuine economic gains or something else—for example, the weather improved.
Economic forecasting is a fraught process. Numbers lie, signals are mixed, and even the most widely accepted measures of economic health can often be misleading. So are there any metrics out there that can float above the fray? Try shipping.
For years economists have been tracking global maritime trade for information not just on the health of the global economy but on how it’s evolving and where it’s headed. Shipping makes up the lifeblood of global markets. Nearly 90% of goods traded across borders were transported by sea during at least some part of their journey to your shopping cart.
“I see GDP growth as the surface,” says Peter Sand, chief shipping analyst at BIMCO, the world’s largest international shipping association. “Global trade in goods is a vital indicator for gaining insight beyond the surface.”
And what does shipping tell us about the state of the economy today? While there’s not yet overwhelming data, some nascent signals indicate that things could be looking up.
In April the World Trade Organization revised upward its earlier estimates for growth in global trade, pegging it at a 4.7% increase this year. That’s more than double the rate of last year. And in August shipping giant A.P. Moller-Maersk’s stock soared after releasing a standout earnings report. Because Maersk moves such a large portion of global goods, some 15% of all containerized trade, the $58 billion company is seen as a market bellwether. In the second quarter it reported an unexpectedly strong 6.6% increase in container volume.
Despite the encouraging initial signs shipping offers, Doug Mavrinac, a managing director at Jefferies, says he’s still waiting on the industry to offer concrete evidence of a comeback. In particular, he’s watching throughputs at ports for longer-lasting gains than have occurred so far. Once imports really start to pick up, he says, that will be a leading indicator, but it hasn’t happened yet. Eventually, maybe as soon as 2016, supply will come back under control too, leading to an increase in prices. And then, just maybe, the Baltic Dry Index will be worth looking at again.
Read more: An economic indicator that floats
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