by Bill McBride on 2/14/2012 11:35:00 AM
Tuesday, February 14, 2012
This is the UCLA Anderson Forecast and Ceridian Corporation index using real-time diesel fuel consumption data: Pulse of Commerce Index Dropped 1.7 Percent in January; Compared with Prior Year, the PCI is Down 2.2 Percent
The Ceridian-UCLA Pulse of Commerce Index® (PCI®), issued today by the UCLA Anderson School of Management and Ceridian Corporation, fell 1.7 percent in January following the 0.4 percent decrease in December. January’s data places the PCI 2.2 percent below year-ago levels with essentially no growth in the year-and-a-half since the summer of 2010.Click on graph for larger image.
“It seems difficult to square the behavior of the PCI with the evident improvement in a number of economic indicators, most notably the increase in payroll jobs and the decrease in initial claims for unemployment,” said Ed Leamer, chief economist for the Ceridian-UCLA Pulse of Commerce Index and Director of the UCLA Anderson Forecast. “The PCI also seems out-of-sync with Industrial Production and with Real Retail Sales, which continue to grow in a healthy manner while the PCI is stalled out.”
The year-over-year changes in the PCI, however, make it look very accurate – the three-month moving average peaked at 8 percent in July 2010 and has fallen steadily to essentially zero percent in January. “The PCI year-over-year peak in 2010 and the deterioration throughout 2011 have correctly anticipated the same movement of Industrial Production, Total Business Real Inventories, and Real Retail Sales. The weakness in the PCI is suggesting either further weakness in these indicators or a big gain in trucking in February, March and April,” said Leamer.
This graph shows the index since January 2000.
This index has been weaker than other measures of transportation such as the ATA trucking index or the AAR rail traffic report. In the full report, Dr. Leamer looks at several possible explanations for the divergence - a shift to rail traffic, the difference between diesel fuel transaction (up for the year) and gallons (down for the year), and possible efficiency due to the high price of diesel fuel. There isn't a clear explanation.
Note: This index does appear to track Industrial Production over time (with plenty of noise). From Ceridian: "Based on the latest PCI data, the forecast for January Industrial Production is a 0.44 percent decrease when the government estimate is released on February 15."
Posted by Bill McBride on 2/14/2012 11:35:00 AM