Since the end of 2009, the trucking industry recovery has been driven primarily by industrial production. What exactly does this mean? It means that the popular concept of what drives the trucking industry – consumers purchasing goods – is only part of the story.

Industrial production refers to the output of America’s manufacturing base. Specifically, we’re talking mainly about raw materials (steel, mining, lumber), components and finished assemblies (including machinery and vehicles), the telecom industry, and the food processing industry. As such, manufacturing’s “customers” are a few steps removed from end consumers.

Basically, an increase in industrial production today means planners see more need for their products tomorrow, which means trucking (and rail and sea and air) will have more freight to move. This is one reason why short-term swings in consumer spending don’t correlate directly to swings in freight volumes. And it’s why the recovery hasn’t depended solely on trucking’s traditional role of transporting finished goods.

How do we keep track of industrial production? First, the Federal Reserve publishes the Index of Industrial Production, which measures changes in production output and also the % of overall manufacturing capacity being utilized. This is the “gold standard” measure, reporting data up to about a month old. Go here for the data:

Second, the Pulse of Commerce Index (PCI), published by UCLA and Ceridan Corp is a neat indicator that uses diesel fuel sales as a proxy for real-time freight activity. Go here for that data: