By Colin Kellaher

North American rail traffic fell 16.5% last week, marking the smallest weekly decline in nearly two months, as the economy shows signs of slowly recovering from the coronavirus pandemic, data from the Association of American Railroads showed.

Carload volume slid 22.8% for the week ended May 30 on 12 reporting U.S., Canadian and Mexican railroads, while intermodal traffic fell 9.9% for the week, the trade group said Wednesday.

In the week ended May 23, North American rail traffic fell 18.7%. For the first 22 weeks of the year, North American traffic is down 11.6%, compared with a year-to-date decline of 11.4% reported a week earlier.

The AAR said U.S. rail traffic fell 17.3% last week, as carloads tumbled 24.2% and the volume of intermodal containers and trailers fell 10.6%. However, the AAR said more than half of the carload categories it tracks, including several major commodity areas, showed improved loading rates compared with the previous four weeks.

"Perhaps most notably, automobile loadings improved to about one-third the normal level as assembly plants began the intricate process of reopening," said John Gray, AAR senior vice president. "While this is still a long way from where we would like to be, it is far better than the 10% of norm of only two weeks ago."

U.S. rail traffic is now down 13% for the year to date, the AAR said, compared with a year-to-date decline of 12.8% reported a week earlier.

Canadian rail traffic fell 12.2% last week, with carloads down 17.8% and intermodal units off 5.2%. Canadian rail traffic is down 7.3% for the first 22 weeks of the year.

Mexican rail traffic slid 23% for the week, with carloads dropping 26% and intermodal units falling 19.3%. Mexican rail traffic is now down 9.3% for the year, the AAR said.

Write to Colin Kellaher at colin.kellaher@wsj.com