NEW YORK (TheStreet) -- The highest year over year increase ever in rail car freight occurred in April (15.8%). Data has been kept only since 1989, but the increase may well be the highest number ever, according to the Association of American Railroads.

In a separate category, intermodal traffic increased by 14.3% year over year, the tenth largest number since 1990. Rail cars are used largely for commodities and raw materials, while intermodal traffic (containers and trailers) is substantially processed and finished goods.

Rail freight continued to grow in April from March levels as well, although by small amounts: 0.5% for rail cars and 1.0% for intermodal freight. While the amount of freight has not gotten back to 2008 levels for April, the levels of 2010 continue to move farther away from depressed 2009 levels, reflecting an improving economy.

April showed increases in rail car freight year over year for the second straight month. This had not happened prior to March for 20 previous months. The graph above shows the rail car data.

April 2010 was 10.8% below the amount of rail car traffic for the same month in 2008. There is still quite a way to go to get back to pre-recession levels.

The intermodal traffic data looks somewhat better. April 2010 is only 6.9% less than the same month two years ago. However, intermodal traffic experienced a modest decrease from April 2007 to April 2008, something not seen in the carloads data. See the AAR graph above.

The above graph summarizes the differences between April 2010 and the four previous years. The improvement from 2009 is significant, improved even more than shown by the March data.

Canadian rail traffic has experienced a stronger recovery than the U.S. April commodity traffic in Canada was within approximately 7% of the quantities seen in 2006-08, while intermodal traffic was essentially the same in April 2010 as in the pre-recession years.

The AAR reports data for 19 distinct categories of freight. In April all 19 categories were up year over year. In March, 16 of 19 were up. The year over year gains were much larger in April compared to March, as well. For example, the largest year over year gain in March was primary metal products, up 66%. The average gain for the top four categories in March was 45%; in April the same number is double that at 91%.

In March, all 19 categories were down from March 2008. Two categories were up over the two-year period in April. The table above shows the four strongest and four weakest categories over one year and over two years.

Rail cargo data in the U.S. and in Canada continue to indicate the economic recovery is strengthening. Data is now comfortably above 2009 levels and is improved in that regard over March.

Rail stocks are rallying today as they did when the March data was announced four weeks ago. The following table shows performance data for Canadian Pacific ( CP), CSX Corp. ( CSX), Canadian National ( CNI), Norfolk Southern ( NSC) and Union Pacific ( UNP). All are near 2010 highs and have gained 25% to 34% from lows earlier this year.

John B. Lounsbury is a financial planner and investment adviser, providing comprehensive financial planning and investment advisory services to a select group of families on a fee-only basis. He worked for 34 years with IBM, and spent 25 years in R&D management and corporate staff positions. He also was a Series 6, 7, 63 licensed representative with a major insurance company brokerage for nine years.

Specific interests include political and economic history and investment strategy analysis. He holds degrees from the University of Vermont, Columbia University and the Illinois Institute of Technology, where he studied chemistry, physics and mathematics. He is a contributor to Seeking Alpha and his own blog, PiedmontHudson.

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