Ceridian-UCLA Pulse of Commerce Index is down in January for first time in four months

January marked the end of a three-month growth streak for the Ceridian-UCLA Pulse of Commerce Index (PCI).

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.

January’s PCI dipped 1.7 percent after a 0.4 percent December gain and increases of 0.1 percent and 1.1 percent in November and October, respectively. With this decline, the PCI has seen growth in five of the last 11 months.

On an annual basis, the PCI is down 2.2 percent compared to January 2011, which equates to “essentially no growth” since the summer of 2010, a year-and-a-half span. The report’s authors noted that while the PCI appears to have stalled out when compared to other economic metrics showing growth such as industrial production and real retail sales, its annual changes, however, make it look more accurate.

As an example, the report cited how the three-month moving average, which peaked at 8 percent in July 2010 has dropped to close to zero percent in January. The report noted how the July 2010 peak and deterioration throughout 2011 correctly anticipated the same movement of Industrial Production, Total Business Real Inventories, and Real Retail Sales, with the PCI weakness suggesting further weakness for these indicators or a big gain in trucking activity in February, March, and April.

“Going back a few months, there has been this divergence between several [economic] indexes,” said Ed Leamer, chief PCI economist and director of the UCLA Anderson Forecast. “Industrial production, retail sales are showing improvements and the labor market is healing substantially, which is making most people optimistic about 2012 compared to 2011.”

But when looking at trucking, Leamer said it could still be too early to tell if 2012 will be an improvement, as it was initially thought that the divergence would be resolved by weaker industrial production or retail sales or by strengthening in trucking.

What’s more, he said there was an expected improvement in trucking heading into December, which did not occur, and in January trucking activity on a seasonally-adjusted basis was also down.  And today’s relatively weak retail sales also tend to support the January PCI output, he said.

“It seemed like there was a puzzle that needed to be resolved in terms of why is it that so many measures optimistic and improving substantially, whereas trucking is not, and it occurred to me that there is a variety of reasons as to why we could have a misreading on trucking,” he said.

Among the potential reasons was a shift from trucking to rail and intermodal transportation, and another was fuel efficiency, as there is a higher emphasis on fuel efficiency—with rising prices truly back—than there was before.

Another possibility was that there fewer trucking customers using Ceridian’s electronic card payment data.

“Modal shifts and fuel efficiency are doubtlessly important forces, but they are going to be more evident in longer-term annual comparisons more than month-to-month,” explained Leamer. “We are left with the possibility that a very warm January may have allowed more fuel efficient activity to occur. The divergence of trucking and these other economic measures cannot continue indefinitely so it has to be resolved either with improved trucking activity in February, March, and April, or the U.S. economy is going to be much slower than most people think.”