February PCI Continues to Signal Slow Growth

Economic recovery slows but continues as February marks 15th consecutive month of year-over-year growth

Mar 09, 2011, 09:00 ET from Ceridian-UCLA Pulse of Commerce Index

MINNEAPOLIS and LOS ANGELES, March 9, 2011 /PRNewswire/ -- 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 1.5 percent during the month of February. Coupled with the 0.3 percent loss from January, this latest data eliminates the strong gain (1.8 percent) experienced in December 2010. However, February marks the fifteenth straight month of year over year growth indicating that economic recovery, while fragile, remains underway.

"The PCI performance in the first two months of this year suggests weakness in some parts of the economy," states Ed Leamer, chief PCI economist and director of the UCLA Anderson Forecast. "Nevertheless, our outlook for 2011 is for continued economic recovery – we expect GDP to grow at the historically 'normal' rate of 3 percent, accompanied by a persistent level of high unemployment."

Over time, the PCI has shown a strong correlation with the government's Industrial Production (IP) figures. For January, the PCI forecast of modest growth (.3 percent) was more positive than the Fed's initial reported estimate of negative 0.6 percent. For February 2011, the PCI estimates that IP will experience a slight decline of 0.02 percent when it is reported on March 17. Similarly, relative weakness in the PCI over the first two months of this year suggests that GDP for the first quarter will come in below consensus, near the lower end of the range of current forecasts that range between 2 percent and 5.5 percent.  For the year, the index continues to suggest GDP growth sufficient to drive continued modest growth in employment but not back to the peak levels attained in late 2007.  

"February's spike in diesel fuel prices to well over $3 a gallon likely did not drive the weakness in the PCI this month," explained Craig Manson, senior vice president and index expert for Ceridian. "However, if the trend persists, higher prices will likely have an impact in the coming months as consumers are robbed of spending power.  As a leading indicator for the goods producing segment of the economy, the PCI is sensitive to this dynamic and should provide early indications of direction and magnitude as higher fuel prices impact the broader economy."

The complete February report, regional analysis and additional commentary are available at www.ceridianindex.com 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.

About Ceridian-UCLA Pulse of Commerce Index

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 and also offers companies access to more detailed fuel-use information. 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 leading global consulting firm that offers economic, financial, and business management expertise to organizations around the world.

For additional information on the Ceridian-UCLA Pulse of Commerce Index, please visit www.ceridianindex.com.

SOURCE Ceridian-UCLA Pulse of Commerce Index