The Ceridian-UCLA Pulse of Commerce Index™ fell in October 2010. The headlines from the press release:
The Ceridian-UCLA Pulse of Commerce Index™ (PCI), a real-time measure of the flow of goods to U.S. factories, retailers, and consumers, fell 0.6 percent in October following a decline of 0.5 percent in September and a decline of 1.0 percent in August. The three consecutive month decline is the first since January 2009, when the U.S. was still deep in recession. The negative month-over-month trajectory for October, typically a peak month for America’s trucking industry, may also prelude a disappointing holiday retail season.
“The October PCI sounds an alarm about growth in the fourth quarter, and our latest PCI data indicates retailer wariness about future sales prospects,” said Ed Leamer, chief PCI economist and director of the UCLA Anderson Forecast.
On a year-over-year basis, the October 2010 PCI is 4.1 percent higher than October 2009, which typically signals better sales prospects. However, year-over-year increases in the PCI have continued to fall since May’s 9.0 percent growth peak, dropping to 8.6 percent in June, 8.0 percent in July, 6.0 percent in August, 5.8 percent in September, and now 4.1 percent in October. The quarter-over-quarter findings show a similar downward trend with the first quarter 9.7 percent above the fourth quarter of 2009, the second quarter 6.2 percent above the first, and the third quarter 2.1 percent above the second.
“We have had a recovery ‘time out,’” summarized Leamer. “Since May’s peak, trucking has receded 8.3 percent. Fortunately, the full stew of economic information does not appear to foretell a double dip in the coming. Rather, the economic malaise that set-in this summer is still very much with us.”
With the three-to-one relationship between the PCI and GDP growth in recessions and recoveries, the 4.1 percent PCI growth figure translates into 1.3 percent year-over-year GDP growth.
Econintersect evaluates the unadjusted data which is a factor of diesel usage in the USA. Diesel usage is a remarkable economic pulse point as freight is moved in the USA almost exclusively with diesel as its source of propulsion. The unadjusted data graphed YoY:
Comparing the YoY data as diesel use is seasonal – it is clear October 2010’s diesel use is declining even though the quantities being consumed are higher MoM (September 2010 to October 2010). August and October are the highest diesel fuel usage months during the calendar year.
This data set this month is clearly indicating a contraction. Ceridian-UCLA says this is the third month of negative growth. Whether August or September 2010 is negative depends on whether you believe there is a new normal. The unadjusted data is inconclusive. You might even want to call the August or September 2010 flat. This index bears watching.
This index is at slight odds with the American Association of Railroads October 2010 data. This rail data set showed a normal October – but not necessarily increasing. This begs the question: Is declining movement of goods by truck occurring because traffic is being transferred to rail and supporting rail traffic numbers?
In any event, the total of transport data is not showing an expanding economy. But there is nothing that indicates a recession is imminent either. Using the terminology of John Mauldin, we may just be in a muddle through process.
Rail Movements Continue to Show Strength in October by Steven Hansen
Ceridian – Pulse of Commerce Index Down Now for Two Months by Steven Hansen
Moving the Goods by John Lounsbury