Pulse of Commerce Index is up 1.7 percent in July

While talk of a possible “double-dip recession” gains momentum, results from the most recent Ceridian-UCLA Pulse of Commerce Index (PCI) are doing its part to quell that theory.

July’s PCI was up 1.7 percent, following a 1.9 percent decline in June and a 3.1 percent increase in May. 

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.

The PCI closely tracks the Federal Reserve’s Industrial Production data as well as GDP growth.

“The key takeaway from the July report is that the economy continues to recover – which is encouraging – but the pace needs to substantially pick up to put people back to work,” said Ed Leamer, chief PCI economist, in a statement. “With the unemployment rate still at 9.5 percent and consumers understandably nervous about opening their wallets, it is hard to be very optimistic about economic growth. On the other hand, there is nothing about the PCI that is supportive of the pessimistic double-dip view.”

As LM reported last month, June’s PCI decline was due, in part, to a late Memorial Day holiday leading to a sluggish first half of the month, followed by a strong second half of June. Todd Dooley, senior vice president of finance for Ceridian, told LM that Memorial Day was on the latest date in May it has for the last ten years, coupled with trucking activity around Memorial Day slowing down for about a week to ten days, which negatively impacted June’s results.

July’s PCI, on the other hand, was up 8 percent year-over-year and represents the eighth straight month of mid-to-high single digit growth after two years of declines, according to Ceridian and UCLA. But the report said annual growth of 10-to-15 percent is needed to truly drive an increase in employment.

“The economy continues to grow at a steady rate but not at a rate that is going to put Americans back to work in significant quantities,” said Dooley. “July was a strong month over all. What you are hearing in the marketplace is there a lot of choppiness in the economy, with many people at the end of June saying there would be a double-dip recession. And, now, the Federal Reserve is downgrading outlooks along with being concerned about unemployment. Our position remains unchanged in that we expect 2-to-3 percent GDP type of growth [the U.S. Department of Commerce’s estimate for GDP growth from the first quarter to the second quarter is 2.4 percent] in the second quarter, whereas 5-to-6 percent growth is what is needed to put people back to work.”

As things currently stand, Dooley said the current numbers represent a solid but unspectacular recovery. 

And with evidence of freight volumes slowing down, coupled with a dismal 2009, Dooley said year-over-year comparisons, which showed significant growth in the first half of 2010 are likely to slow down in the second half of the year. But even with a slow and steady recovery—with 2-to-3 percent GDP growth, the eight straight months of growth in the PCI is expected to continue, noted Dooley.