Courtesy of Doug Short.
The latest Ceridian-UCLA Pulse of Commerce Index (PCI), a measure of the economy based on diesel fuel consumption, is now available.
The published report highlights the 1.7% December January decline with some interesting discussion of the ongoing disconnect between the PCI and other widely followed economic indicators.
Here is an excerpt from the report followed by a pair of charts to illustrate the behavior of this indicator, the second of which adjusts for population growth.
| 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.
“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 first chart shows the PCI index unadjusted and seasonally adjusted. As we can readily observe, the index had been trending up since end of the Great Recession, but it has yet to achieve the highs of the immediate pre-recession months and now appears stalled. In fact, we’re tracking at approximately the same range as December 2005.
In the chart below the 3-month moving average of the PCI is shown with the dotted blue line. The solid line is the same moving average of the data series adjusted for population growth based on the Bureau of Economic Analysis mid-month population data, which is available from the St. Louis Federal Reserve here. The current level of the population-adjusted metric is equivalent to the level of January 2004.
PCI and Other Economic Indicators
An interesting excerpt from of the PDF report is the discussion of the relationship between PCI and some widely followed economic indicators.
| …a look at the year-over-year changes in the PCI [down 2.%2] make it look very accurate. The year-over-year change of the three-month moving average peaked at 8 percent in July 2010 and has fallen steadily to essentially 0 percent in January. We analyzed the data of the three-month moving average as there is too much noise in the month-to-month data. That pattern we see is an early and amplified version of what has happened to Industrial Production, Business Inventories and Real Retail Sales. In other words, the PCI has correctly signaled slowing growth in all of these indicators, and is signaling still weaker growth ahead, unless trucking starts rebounding in February, March and April. (PDF full report) |
The Ceridian Index continues to support a fascinating perspective on various mainstream economic indicators, and of late it has suggested a skeptical view of the growing optimism about the economic recovery.
