Weak conditions in both the U.S. and global economies have led to the continued decline in freight shipments. Inventories are building beyond the levels needed to support expected sales, and many retailers and manufacturers have pulled back on restocking. Worldwide orders are in a state of steady decline. In fact, the Chinese Manufacturing Index has fallen in each of the last 10 months, with export orders in August falling at the sharpest rate since March 2009, at the height of the recession. The Institute for Supply Management's August report showed that activity in the U.S. factory sector, which has been carrying the admittedly weak recovery up to this point, has declined now for three months in a row (the index dropped from 49.8 in July to 49.6 in August). ISM's new orders indicator fell another 0.9 percentage points to 47.1.

The Consumer Reports Index measuring consumer financial health showed that back‐to‐school sales have not met retailers' expectations. Their Index fell from 9.9 to 9.4 in August and is well below last year's 12.0 percent. In addition, retailers are reporting more and deeper discounting in an effort to move goods off the shelves. All of this points to a continued drop in freight volume for the remainder of the year.

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