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Are Some Small Signs of Economic Relief in Sight?

The Ceridian-UCLA Pulse of Commerce Index, issued by the UCLA Anderson School of Management and Ceridian Corporation, rose 1.1 percent in October after three consecutive months of negative numbers.

The Ceridian-UCLA Pulse of Commerce Index 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. Working with economists at UCLA Anderson School of Management and Charles River Associates, Ceridian provides the Index monthly. Ceridian is a global business services company providing electronic and stored value card payment services and human resources solutions. UCLA Anderson School of Management is perennially ranked among top-tier business schools in the world. Charles River Associates is a global consulting firm that offers economic, financial, and business management expertise to organizations around the world.

Over the past three months, compared to the prior three months, the PCI declined at an annualized rate of 5.8 percent and the PCI remains lower than it was during most of the first half of 2011. "The October data offer some welcome relief from the double-dip fears that were rampant a month ago, but one month does not mean a new trend. Until we get a series of positive months, it remains a she-loves-me, she-loves-me-not economy with bad news followed by good followed by bad," said Ed Leamer, chief economist for the Ceridian-UCLA Pulse of Commerce Index and director of the UCLA Anderson Forecast.

On a year-over-year basis, the PCI was up 1.3 percent in October compared to the -0.2-percent decrease in the prior month. This contrasts with the trend over the prior four months where the year-over-year change in the PCI was rapidly declining.

"Given the weak PCI, the advance estimate of third quarter GDP growth of 2.5 percent was surprising, but the final estimate may be lower," according to Leamer. "The PCI measures inventories in motion, and it is noteworthy that the inventory component of GDP contributed minus 1.1 percent to the overall 2.5-percent growth rate."

Based on the latest PCI data, our forecast for October Industrial Production is a 0.12-percent increase when the government estimate is released on November 16.

The complete October report, regional analysis and additional commentary are available here or by contacting index@ceridian.com. The site offers further detail such as Index graphs and downloadable data, video commentary and sound bites, information on how the data is obtained, and the opportunity to receive updates on the latest information via e-mail and RSS feeds.

Source: Ceridian

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