Forecasting Cycles in the Transportation Sector
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The purpose of this paper is to develop a method for predicting fluctuations in the
transportation sector using leading indicators. From twenty-five initial candidates, we select
seven leading indicators using various screening techniques and modern time series models.
A composite leading index is constructed and found to perform well in predicting their
reference cycles. The leading index signals downturns in the transportation sector by 9
months and upturns by 6 months, on average. The former predicted the latest recession in
transportation 20 months ahead. We also confirm the predictive contents of the 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.