Using the Ceridian-UCLA Pulse of Commerce Index™ (PCI) for its published purposes, economic activity fell in May 2011. The press release stated the PCI:
….fell 0.9 percent on a seasonally and workday adjusted basis in May, after falling 0.5 percent in April. The index has now declined in four of the first five months of 2011, and in eight of the past twelve months. It is clear that the economy is idling, and growth remains a struggle.
On a year over year basis, the PCI was flat in May. This was disappointing in that it ended a string of seventeen straight months of year over year improvement in the index. One glimmer of good news is that May of last year was the strongest month of 2010, and this month’s result nearly cleared that hurdle. Nevertheless, the PCI showed no growth, and this is another indication that the economy is stuck in neutral.
The May result reinforces our long-held cautious outlook for below consensus growth in GDP, and suggests that GDP growth will be less than 2 percent for the second quarter.
The PCI is modeled using Ceridian’s diesel distribution network to forecast economic growth – primarily Industrial Production and GDP. Econintersect extracts the unadjusted (not modeled) diesel index for its economic model. Graphically, the unadjusted data has a slightly different feel.
The unadjusted data YoY data for May actually improved when compared to the April YoY data. If this was the sole economic data Econintersect used to model the economy, it would be saying the USA economy may have improved marginally. However, using one data set to create a model is dangerous as a drop in on-road diesel use could be offset by increased use of railroads or barges. Our comment last month:
Econintersect suggests that using its railroad traffic analysis, that a tipping point has been reached on use of railroads versus trucking – particularly railroad intermodal transport which is up 9% YoY in April 2011. All intermodal movements could be either on rail or by truck. The diesel [cost] increases could be simply making on road trucking uncompetitive.
Econintersect’s alternate view of the data should in no way diminish UCLA Anderson School of Management’s view. UCLA has honed their model using nuances in sub-data sets which are not released publicly. Econintersect uses this publicly distributed data set with other data sets to create its forecast.
Container Imports & Exports Grow in April 2011 by Steven Hansen
Railroad Data Suggests No Economic Growth in May 2011 by Steven Hansen
Trucking Tonnage Less Good in April 2011 by GEI News