Ceridian-UCLA Pulse of Commerce Index is up in December for third straight month

In conjunction with slight ongoing signs that economic improvement is happening, the Ceridian-UCLA Pulse of Commerce Index (PCI) showed positive growth for the third straight month in December.

December’s PCI was up 0.2 percent, following increases of 0.1 percent and 1.1 percent in November and October, respectively. The PCI has now been up in five of the past ten months.

But even with December being up, it was down 1.2 percent compared to June, and the fourth quarter increased at an annualized rate of 0.5 percent compared to the third quarter, with the December PCI up 0.7 percent annually and up 0.9 percent compared to November.

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 December, it is calling for industrial production to be up 0.29 percent. The Fed’s number is slated for release on January 18.

In a recent interview with LM, Ed Leamer, chief PCI economist and director of the UCLA Anderson Forecast, said that current trucking activity is symptomatic of a growing economy but not a robustly-growing economy. And he added that while there is speculation regarding fourth quarter GDP growing to 3 percent he explained that current levels of trucking activity do not support that type of growth.

“That trucking activity is essential in order to support supply chain inventories that are essential to economic growth,” he said. “Something has to give here.”

In prepared comments for the December PCI, Leamer said that the PCI measures inventories destined for factories, stores, and homes, with the third quarter PCI decline correctly anticipating the large negative contribution of inventories to GDP growth. The report noted that fourth quarter GDP growth is expected to come in between 0.0 percent to 2.0 percent.

Leamer also said that with real retail sales growing at a faster rate than the PCI over the last two quarters that could set the stage for an inventory-rebuilding period during the first half of 2012, which in turn could allow inventories to make a major contribution to GDP growth.