Tags: UCLA | Pulse | Diesel | Index | Growth

UCLA Pulse: Diesel Index Reflects Stalled Growth

Tuesday, 13 Sep 2011 12:25 PM

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 1.4 percent in August on a seasonally and workday adjusted basis, following a 0.2 percent decline in July.

The Ceridian-UCLA Pulse of Commerce Index, issued Tuesday by the UCLA Anderson School of Management and Ceridian Corp., is based on real-time diesel-fuel consumption data for over-the-road trucking and serves as an indicator of the state and possible future direction of the U.S. economy.

By tracking the volume and location of fuel being purchased, the index closely monitors the over the road movement of raw materials, goods-in-process and finished goods to U.S. factories, retailers and consumers.

“July and August results indicate that the PCI will decline in the third quarter, suggesting GDP growth of 0.0 to 1.0 percent,” said Ed Leamer, chief economist for the Ceridian-UCLA Pulse of Commerce Index and director of the UCLA Anderson Forecast.

“The August number supports the pattern of sluggish economic growth coming out of a recession, which is something that we’ve seen in the past. What we’re experiencing is the ‘new normal,’ where the U.S. economy will continue to stumble forward until a new growth engine is identified. Essentially, the economy is in need of an innovation burst,” he said.

“The PCI continues to prove its value in providing insight into the U.S. economy. While previously being flat, recent, seven-day-average diesel volumes have dropped by 2 percent from July 23 to Aug. 19, excluding the holiday impact. However, the last week of August suggests some improvement.”

On a year-over-year basis, the PCI was up 0.4 percent in August. While the year-over-year growth trend continues – the PCI has grown on a year-over-year basis every month since January 2010 except for May 2011 – this is down from the 1.0 percent year-over-year increase in July.

During the past four months, the year-over-year increase of the PCI has fallen below 1.0 percent compared to 3.0 percent in the first four months of the year, further indicating the weakness in the economy.

The weakness in the PCI over the last several months called for a zero percent change in the July Industrial Production – the initial release of 0.9 percent was stronger, although subject to revisions. Due to the continued weakness evident in the PCI, the forecast for August Industrial Production is a 0.26 percent decline when released on Sept. 15.

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