Ceridian-UCLA Pulse of Commerce Index falls 0.9 percent in May

The May edition of the Ceridian-UCLA Pulse of Commerce Index (PCI) Index dipped 0.9 percent, following April’s 0.5 percent slide.

The PCI has not seen growth since being up 2.7 percent in March and has been down sequentially in eight of the last 12 months. And it was flat year-over-year, snapping a streak of 17 consecutive months of annual growth.

The PCI, according to Ceridian and UCLA, is based on an analysis of real-time diesel fuel consumption data from over-the-road trucking and is tracked by Ceridian, a provider of electronic and stored value card payment services. The PCI data is accumulated by analyzing Ceridian’s electronic card payment data that captures the location and volume of diesel fuel being purchased by trucking companies. It is based on real-time diesel fuel purchases using a Ceridian card by over the road truckers at more than 7,000 locations across the United States.

It also closely tracks the Federal Reserve’s Industrial Production data as well as GDP growth. For May, it is calling for industrial production to be up 0.05 percent, down from a previous estimate of 0.25 percent. The Fed’s number will be released on June 15.

The report added that GDP growth for the second quarter will be less than 2 percent, which is down from last month’s estimate of 2-to-3 percent, and matches up with a cautious economic outlook.

“The PCI makes it clear that the high-growth recovery lasted only four quarters from 2009Q3 to 2010Q2,” said Ed Leamer, chief PCI economist and director of the UCLA Anderson Forecast, in a statement. “Since then the PCI and the economy have been idling, not powering forward.  We are going to have to get the recovery going again to make a material dent in the chronic jobless problem.”

Leamer added in his comments that “one small glimmer of good news” is that May 2010 was the strongest month in all of 2010, which was nearly topped by May 2011. But the lack of growth, he said, points to the fact the economy is stuck in neutral.

The renewed economic slowdown appears to be gaining traction in recent weeks, as evidenced by flattish retail sales, a still-struggling housing market, and high gasoline prices, which have seen some moderation in recent weeks but are still up roughly $1.00 year-over-year.

“We are seeing a stagnation—or a pause—in economic growth,” said Todd Dooley, Ceridian senior vice president of finance, in an interview. “While the PCI saw annual growth for 17 straight months prior to May, the levels of annual growth in recent months have been at smaller percentages. And we are now back to zero growth, which basically says the economy has not grown annually and is an indication of a stagnated economy.”

This slow growth, said Dooley could result in second quarter GDP being on the low end of estimates and dint job growth, which typically creates more demand for goods and services.”

As gasoline prices have declined in recent weeks, Dooley said the impact of fuel prices on the PCI is on consumer purchasing patterns, as they are spending more money of gasoline and less on other items.

“As fuel prices moderate, it will free up disposable income,” said Dooley. “Whether that translates back into economic growth is an interesting question, with so many people struggling to get by, especially in recent months.”

And the drain on the economy caused by the housing market remains intact, too, noted Dooley, explaining that every house built in the United States requires 18 truckloads of material.