As the U.S. economy emerges out of a recession, it appears that the transportation sector and its exchange traded funds (ETFs) are following, but at a slower pace.

Accordint to Mark Gongloff of The Wall Street Journal, the transportation sector as a whole has gained 84% since the March 9 market low, outpacing the Dow Jones Industrial Average.  The transportation sector is of much importance because it’s a good indicator of the overall health of the economy. (How to use sector ETFs).

Six of the 20 companies that make up the Dow Jones Transportation Average reported earnings last week, though, and it wasn’t all great news:

  • Burlington Northern Santa Fe (NYSE: BNI) reported a 30% drop in third-quarter profit, and it doesn’t expect an improvement in the fourth quarter
  • Union Pacific’s (NYSE: UNP) earnings declined 26% in the third quarter as freight volume fell
  • CSX (NYSE: CSX) reported a 23% drop in profit, as well, but that beat Wall Street’s expectations

The transportation sector includes airlines, railways and package carriers, all sectors used to transport goods and industrial materials from one place to the next.  With this in mind, it is only logical to think that as the overall economy improves, more orders will be shipped and industrial production will increase and the transportation sector should ultimately follow suit. (Will the rail stimulus help?)

For more stories on the transportation sector, visit our transportation category.

  • iShares Dow Jones Transportation Index Fund (NYSEArca: IYT): up 9.8% year-to-date

Kevin Grewal contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.