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This story appears in the Aug. 26 print edition of Transport Topics.

U.S. truck tonnage rose 4.7% in July from the year-ago level and remained near a record high, bolstered by heavy freight related to the housing, oil and natural-gas markets.

American Trucking Associations said Aug. 20 its advanced seasonally adjusted index was 125.4 in July, just below the 125.9 record set in June. It was the third-highest level ever, trailing only the previous two months.

Truck tonnage has risen at the same 4.7% pace for the first seven months. However, ATA said the index was down 0.1% in July from June, the first drop since April.

“It isn’t surprising that tonnage slipped a little in July,” ATA Chief Economist Bob Costello said. “The decrease corresponds with the small decline in manufacturing output during July reported by the Federal Reserve.”

The Fed’s Aug. 15 announcement showed a 0.1% drop in factory output on a sequential basis, after a slight 0.1% gain in June. The July decline was driven by lower auto and machinery production.

The Fed’s broader index of industrial production, which also includes mining and utilities, was unchanged in July from June.

On a year-to-year basis, industrial production is 1.5% higher than July 2012, the slowest pace of growth in about three years.

“The message coming out of the last industrial production report was a very similar flat kind of theme to the latest truck tonnage number,” said James Meil, chief economist at Eaton Corp., highlighting the tonnage-industrial production connection.

“They are both widely followed and fairly well correlated with what goes on in the goods-producing sectors, particularly with retailers and manufacturers,” he said. “Housing continues to be a positive force.”

Costello said, “������ý construction generates a significant amount of tonnage,” and added that oil and gas production is “solid,” with a 20% year-over-year increase reflected in Department of Energy statistics.

Another sign of strength in July was the DAT Freight Index, a load board.

David Schrader, vice president of operations for DAT’s parent, TransCore, told Transport Topics that the first month-to-month increase in July for that index since 1996 was driven by “pent-up demand due to weather earlier in the season.”

Particular strength in the DAT index of freight volumes showed up in flatbed shipments in the Southeast, and refrigerated shipments of produce from California and Midwest locations.

Strength also was visible in the ATA’s non-seasonally adjusted index that measures actual shipments. ATA’s reading was 129.6 in July, 3% above the previous month’s total of 125.9 and 8.1% above the July 2012 level.

“Tonnage continues to surprise on the upside,” Costello said. “I still expect a slowing in growth, but have yet to see it. Oil and gas production should continue to be good in the second half of the year, as well as autos, which will help.”

However, housing-related tonnage growth may ease.

“It will still increase,” he said, “but not at the pace it had earlier in the year [because of rising home prices and, more important, rising mortgage rates].”

That was evident in the latest Commerce Department report that overall housing starts were 21% higher than July 2012, though the pace was just 5.9% from June to July.

“Our best guess is that industrial production trends are more likely to be a summer pause than a prolonged flat period,” Meil said. “Underlying growth in the economy continues to be the major theme.”

He particularly cited strength in sectors such as agricultural machinery manufacturing that are buoying the economy.

In August, load board activity continued July’s pattern. That runs counter to the industry trends of a June peak followed by consecutively weaker July and August volumes, Schrader said.

“We continue to see fairly robust freight volumes,” he told TT. He added there has been a little bit of moderation in the last week or so.

Costello added a cautionary note, saying that percentage growth in tonnage likely will outpace freight shipments because of continued contributions from heavy freight.

Indicators and analysts’ reports illustrate that fact. ATA’s latest freight reports show little overall shipment growth.

“Demand continues to follow the trajectory established over the past several years: slow, steady growth,” said an Aug. 15 report by Stifel Nicolaus analyst John Larkin.

In fact, year-over-year truck tonnage has risen in 42 of the past 44 months.

“However, certain sectors, such as the flatbed sector, have seen more dramatic improvement as the housing market continues to recover and the metals industry bounces off the bottom.”

Schrader also said July’s load board increase over June could be an early indicator that federal hours-of-service law changes are requiring fleets to use more trucks to move the same amount of freight that they did before.