The Ceridian-UCLA Pulse of Commerce Index, a real-time measure of the flow of goods to U.S. factories, retailers and consumers, fell 0.5 percent on a seasonally and workday adjusted basis in April, marking a continuation of the see-saw economic performance experienced over the past 12 months.
The Ceridian-UCLA Pulse of Commerce Index, issued Wednesday 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.
“Though down in April, the decline offset only a fraction of the exceptional 2.7 percent gain posted in March, which was sufficient to drive continued growth in the three-month moving average of the PCI,” said Ed Leamer, chief PCI economist and director of the UCLA Anderson Forecast.
“However, the disappointing 1.8 percent growth of real GDP in the first quarter remained consistent with the pattern of modest, fitful economic growth reflected by the PCI since the first quarter of 2010," Leamer said. "The most recent report reinforces our long-held cautious, below-consensus outlook for growth in GDP and employment.”
“Until we see acceleration in the PCI, we expect monthly employment gains to remain range-bound between 150,000 and 200,000 new jobs,” Leamer continued. “For the second quarter, the PCI suggests GDP growth in the 2 percent to 3 percent range, not the 5 percent to 6 percent range necessary to drive meaningful reductions in unemployment.”
Year-over-year growth in April was again positive, up 3.5 percent. This was the 17th straight month of year-over-year improvement in the PCI and a clear indication that the economic recovery continues.
From an absolute standpoint, GDP remains ahead of the previous peak reached in the fourth quarter of 2007. But the PCI and industrial production are still about 5 percent below their previous peaks – meaning that the goods-producing component of GDP is still well below its previous high.
“Over time, the PCI has shown a substantial correlation with industrial production,” explained Craig Manson, senior vice president and index expert for Ceridian.
“In fact, the PCI forecast of 0.8 percent growth in industrial production for March matched the estimate subsequently released by the Federal Reserve. This was the second straight month that the PCI matched the subsequent government estimate. Based on the relatively weak April result, the PCI is calling for growth of 0.25 percent in industrial production when the government reports its number on May 17.”
The PCI is not only closely correlated with industrial production, it has also shown a remarkable correlation with retail sales over the past 10 years.
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