It’s more good news-bad news on the economic front: The Ceridian-UCLA Pulse of Commerce Index (PCI), released today by the UCLA Anderson School of Management and Ceridian Corp., climbed 1.0% in June on a seasonally and workday adjusted basis.
Although the index compilers called that a “welcome rebound following declines in the previous two months,” they also stressed the “economy continues to remain in idle with the PCI remaining below its level at the end of the first quarter.”
According to Ceridian and UCLA, the PCI is based on real-time diesel fuel consumption data for over-the- road trucking and “serves as an indicator of the state and possible future direction of the U.S. economy.” By tracking the volume and location of fuel being purchased, the index closely monitors the movement of raw materials, goods-in-process and finished goods to U.S. factories, retailers and consumers.
“Over the past year the U.S. economy has been in ‘she loves me, she loves me not’ mode,” said Ed Leamer, chief PCI economist and director of the UCLA Anderson Forecast. “Bad news has been alternating with good, leaving investors and forecasters nervous and unable to identify sustainable trends.”
“The PCI has had five positive and seven negative months in the last year, registering a tepid 2.0 percent increase year-over-year,” Leamer added. “Over the same time period, GDP and payrolls have shown wobbly growth, failing to drive a real recovery or reduction in the unemployment rate.”
According to Leamer, June’s 1.0% increase in the PCI “could be the start of a positive trend, but a one –month spike does not make a trend, particularly in light of the many false starts experienced over the last year.
“Until there is enough data to declare a new trend,” he emphasized, “expect more of the same, somewhat disappointing result – persistent, wobbly uncertain growth.”
UCLA-Ceridian said the drivers behind this wobbliness are clearly visible.
“The glimmerings of a recovery experienced in both the PCI and in the GDP during the second half of 2009 and the first half of 2010 were driven mostly by the replenishment of inventories,” it said. But when restocking had run its course, neither new job creation nor consumer spending on big-ticket items turned out to be robust enough to sustain a steady recovery.
“Over time, the PCI has proven to be a leading and amplified indicator of both industrial production and GDP,” noted Craig Manson, senior vp & index expert for Ceridian. “In fact, the monthly PCI forecast for U.S. industrial production was right in-line with the government's subsequent report in four of the past five months. This trend continued last month, as the PCI forecast of 0.1 % growth in industrial production in May again matched the initial government estimate.
“The June PCI is anticipating industrial production to show modest growth of 0.17% for June when the number is released by the government on July 15, 2011,” he continued. “Similarly, the most recent PCI result further reinforces our long-held cautious outlook for below consensus growth in GDP, suggesting that second quarter GDP growth will be 1.8%, similar to the tepid performance reported for Q1.”
The complete June report, regional analysis and additional commentary are available at www.ceridianindex.com or by contacting [email protected]. The site offers further detail such as Index graphs and downloadable data, video commentary and sound bites, information on how the data is obtained, and the opportunity to receive updates on the latest information via e-mail and RSS feeds.
