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Railroad shipping volumes show positive economic signs


Growth in railroad shipping volume indicates that the U.S. economic expansion is gaining momentum, even with rising energy prices in the first quarter, Bloomberg reported.

Total rail volumes, excluding grain and coal shipments, rose 7.9 percent to 4.6 million carloads in the quarter ended March 31, according to data compiled by the Association of American Railroads. It was the second-highest increase in a first quarter, following last year’s 9.3 percent rise.

Rail-car shipments such as chemicals and metals represent the bulk of materials that go into industrial production, so an increase in volumes bodes well for the broader economy, said John Mims, a transportation analyst at BB&T Corp. in Richmond, Va.

“This is almost double the first-quarter growth rates of the last economic recession, during the 2003-2006 recovery period,” he told Bloomberg. Rail volumes were on the “high end” of his expectations for the first quarter, and his projections for the second quarter assume the pace of volume recovery will continue.

Mims has a “buy” rating on Union Pacific Corp. in Omaha and Florida-based CSX Corp., the two largest companies in the Standard & Poor’s 500 Railroads index.

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