Forecasting Cycles in the Transportation Sector

This paper predicted fluctuations in the transportation sector using leading indicators. From 25 initial candidates, we selected seven leading indicators, using various screening techniques and modern time series models. A composite leading index was constructed and found to perform well in predicting transportation reference cycles. The leading index signals downturns in the transportation sector 10 months ahead and upturns six months ahead on average. The index predicted the latest recession in transportation with a lead of 20 months. The analysis also confi rms the predictive contents of the composite leading index (CLI) in relation to transportation growth cycles. These evaluation criteria ensure accurate forecasts of the general state of the transportation sector in a timely fashion