NEW YORK – Railroad shipments are the highest in almost three years, helping to defy concerns about a double-dip recession.

Total rail volumes excluding grain and coal averaged 381,831 carloads in August, the most since October 2008, according to data from the Association of American Railroads in Washington. These shipments represent the bulk of materials for industrial production, so rising volumes show the economy is still growing, according to Art Hatfield, a transportation analyst in Memphis, Tenn., at Morgan Keegan & Co.

“We’re not seeing declines in rail volumes that are synonymous with a recession,” Hatfield said. “We remain in a slow-growth environment.”

The correlation between the 12-month average of total rail volumes, excluding grain and coal, and the three-month average of the Federal Reserve’s manufacturing industrial-production index is 0.82, according to Bloomberg News calculations. A correlation of 1 would show they move in lockstep. A value of zero signals no relationship.

Manufacturing output — which makes up 75 percent of all U.S. factory production — rose 0.5 percent in August, the fourth consecutive increase, according to Fed data released this month.

“Industrial-production growth is slow but positive,” said Kurt Rankin, an economist at PNC Financial Services Group Inc. in Pittsburgh, who forecasts a 0.3 percent increase in September from August. This indicates the “gradual” expansion is still in place, he said.

Gross domestic product climbed at a 1.0 percent annual rate in the second quarter, after almost stalling with a 0.4 percent gain from January to March, Commerce Department data show GDP will rise 1.6 percent this year, according to the median estimate of 63 economists surveyed by Bloomberg.

 

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