Ceridian-UCLA Pulse of Commerce Index is down 1.2 percent in August
September 13, 2011
The uneven trajectory of the economic recovery was highlighted once again in the most recent edition of the Ceridian-UCLA Pulse of Commerce Index (PCI) Index.
The PCI was down 1.2 percent in August, following a 0.2 percent slide in July. The PCI was up 1.0 percent in June, following consecutive declines in April and May. Aside from June the only other month in which the PCI has showed growth was March, which was up 2.7 percent.
The PCI has been down in 9 of the last 14 months, and on an annual basis August was up 0.4 percent compared to August 2010. The report’s authors noted that the PCI has shown annual growth on a monthly basis going back to January 2010, with the only exception being May 2011. And over the last four months the annual increase has been below 1.0 percent compared to annual growth of 3 percent or more throughout the first four months of 2011.
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.
The PCI also closely tracks the Federal Reserve’s Industrial Production data as well as GDP growth. For July, it is calling for industrial production to be flat. The Fed’s initial July release came in at 0.9 percent, and August is projected to be down 0.26 percent, with the number slated for release on September 15.
“This results of this report range between bad and worse; this was a very disappointing number,” said Ed Leamer, chief PCI economist and director of the UCLA Anderson Forecast, in an interview.
Using history as a guide, Leamer explained the same sort of struggling economy was intact in 2003, with uncertain and wobbly economic growth also occurring at that time. But this period eventually gave way to the housing boom which helped to re-start the economy.
And he said a similar situation arose on 1990, when the economy was in a stall-speed mode, which preceded the end of a recession in the form of a jobless recovery.
“The economy has been stumbling forward for a while now,” said Leamer. “August is one of the three peak months as far as trucking is concerned [with June and October being the others] so this is a reflection of manufacturers and retailers indicating that the economy is not doing well, as their supply chains are not growing in a way that resembles a rapidly growing economy. It is very troubling.”
Looking at GDP numbers for the first half of 2011, which are very low, Leamer said the primary reason for that is lack consumer spending as well as low durable and non-durable orders, too, coupled with weak state and local government. The business side, compared to these things looks fairly normal in terms of contribution to GDP.
A lot of the prolonged economic weakness is directly related to frugal consumers.
“We still have a troubled and worried consumer, meaning that a large amount of Americans were spending more than they earned over the last decade or two,” he said. “It is only natural that consumers are doing some belt-tightening; that is a good thing. But while that is happening they are not the locomotive that is pulling the economy forward.”
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