WELLINGTON, Aug 10 (Reuters) - If an unconventional economic indicator made in New Zealand is on the right track, the country with stunning scenery is currently heading down the road - literally - to slower growth.
Former U.S. Federal Reserve chairman Alan Greenspan used corrugated box shipments and China-watchers keep tabs on electricity volts. New Zealand has a “truckometer” that measures trucking miles as a proxy for economic activity.
The latest index from ANZ, New Zealand’s biggest lender, showed heavy traffic - meaning trucks and buses - fell 5.7 percent in July from June, suggesting the third quarter got off to a sluggish start.
“Detour” was the headline on the ANZ Truckometer released on Tuesday.
New Zealand, whose currency is the world’s 10th most traded, may be the only place with trucking as a proxy for economic activity.
Though many countries release traffic flow information, obtaining detailed raw traffic data, often from multiple state or local governments, is difficult in places such as Australia and the United States.
In 2012, ANZ economist Sharon Zollner asked New Zealand’s transport agency for access to years of traffic flow numbers. She sliced and diced the data to represent the roads around major ports and dairy-product factories - sources of a key Kiwi export - and separated trucks from cars.
The result was the Heavy Traffic Index - there’s a light one too - that’s a window into economic activity published well before official gross domestic product figures released three months after a quarter.
“It’s real activity that’s happening as opposed to a measure of sentiment,” said Zollner. “Firms may or may not follow through on their intentions, whereas this is stuff that’s actually happening.”
The Heavy Traffic Index has a base of 1,000, from January 2004. The July reading was 1,335, down from the previous month’s 1,417.
One downside of the monthly index is its volatility, which makes it difficult to be certain there was a slip in July, as that runs counter to other indicators suggesting growth.
Zollner acknowledged the index “does have drawbacks... it gets affected by weather, by roadworks.”
Some traders keep an eye on the truckometer.
“It’s a forward read on the economy,” said Graham Parlane, a Wellington-based adviser at broker OM Financial. “I’ve been following it for as long as it’s been around.”
Even the country’s central bank uses the underlying data, though it creates its own models rather than use the ANZ Truckometer, Reserve Bank of New Zealand spokesman Angus Barclay said. (Reporting by Charlotte Greenfield; Editing by Richard Borsuk)