Slumping Transport Sector Flashing Red Signals: Pro

Despite a recent surge in stocks, a key transportation bellwether index is flashing worrying signals about the health of the U.S. economy, one analyst said Friday.

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The Dow Jones U.S.Transportation Services Index — widely considered by market participants to justify gains in the Dow Jones Industrial Average — is actually diverging from its blue-chip counterpart.

“It's not that the stocks are somehow omniscient … it’s the heartbeat, the pulse of what’s happening in the economy,” analyst Donald Broughton told CNBC’s “Squawk Box.” He added that “goods flow is contracting, or at least decelerating.”

Citing a clutch of transportation companies, such as FedEx, UPS

, and Norfolk Southern that have disappointed markets, Broughton said it could presage that an economic downturn is on its way — or that it could already be here.

“It’s just not pretty,” said the managing director of Avondale Partners. He added that a drop off in international freight activity could also have a drag on the all-important holiday season.

“We're still seeing negative air freight. You look at import container volume, it’s the worst it’s been since 2009,” Broughton said. “So that begs the question, if the consumer really shows up this holiday, is there going to be anything to buy?” he asked.

Broughton’s remarks echoed those of a number of analysts who doubt the staying power of the recent stock market surge, as major economic indicators continue to disappoint. On Friday, U.S. consumer sentiment rose, but manufacturing activity fell into contraction unexpectedly.

Investors have cheered expected monetary stimulus from both the Federal Reserve and the European Central Bank, yet economists say the health of the global economy is debatable at best.

“If the current trends continue, our projections right now are for U.S. (gross domestic product) to grow at 0.9 percent in the third quarter, and 0.4 percent in the fourth quarter,” Brighton said. “So if current trends continue, our forecasts in the first half of 2013 will be negative.”