Ceridian-UCLA Pulse of Commerce Index is down 1 percent in September

The most recent edition of the Ceridian-UCLA Pulse of Commerce Index (PCI) brought home about the only consistent theme regarding the stalled economy of recent months: not much seems to be changing.

The PCI fell 1 percent in September on the heels of 1.2 percent and 0.2 percent dips in August and July, respectively. Aside from June the only other month in which the PCI has shown growth was March, which was up 2.7 percent. The PCI has been down in ten of the last 15 months

The report’s authors pointed out that over this period the PCI declined at an annualized rate of 4.3 percent, matching the steepest non-recession quarterly decline since the first quarter of 2000. And this rate has only been topped during the Great Recession of 2008-2009. What’s more, September’s annual decrease of -0.2 percent is the first time the PCI has been down on an annual basis since May and the second time since January 2010.

The PCI, according to Ceridian and UCLA, is based on an analysis of real-time diesel fuel consumption data from over-the-road trucking and is tracked by Ceridian, a provider of electronic and stored value card payment services. The PCI data is accumulated by analyzing Ceridian’s electronic card payment data that captures the location and volume of diesel fuel being purchased by trucking companies. It is based on real-time diesel fuel purchases using a Ceridian card by over the road truckers at more than 7,000 locations across the United States.

The PCI also closely tracks the Federal Reserve’s Industrial Production data as well as GDP growth. For September, it is calling for industrial production to be down 0.55 percent. The Fed’s number is slated for release on October 17.

“All forecasters and businesses are currently trying to figure out what kind of economy we are going to have over the next year,” said Ed Leamer, chief PCI economist and director of the UCLA Anderson Forecast, in an interview. “The most optimistic scenario would be a high growth economy that would put many Americans back to work, and that is not in the cards.”

And with unemployment ostensibly stuck at current levels, the next best scenario, said Leamer, would be GDP growth in the 3 percent range, which he said is also not likely by economic forecasters, as well as shippers and logistics services providers. He quipped that the only true options for the economy at this point are stumbling forward or falling down.

The lack of prospects for a true economic recovery at this point was also echoed by shipper, carrier, and logistics service providers attending the Council of Supply Chain Management’s Annual Conference in Philadelphia last week.

While the September PCI was down year-over-year, Leamer said that is misleading, because the first half of the year was much better than the second half to date. And the decline in trucking since the middle of July has been getting worse on a daily basis through the end of September based on PCI data.

“We imagine that trucking might have been weakest in the beginning of September but probably improved by the end,” he said. “We could be optimistic about October, but in fact it is a deterioration that is very substantial, but on an annual basis we are still looking OK…but that annual comparison disguises the rapid decline we have had since June, with the PCI declining at a rate of ten percent per year since June, which is huge.”

Leamer also said that the PCI data is not culled on a seasonally-adjusted basis, meaning that trucking companies may not look at the data in that way. As an example, he said if September is better than August but is usually much better traditionally rather than a little bit, that is considered a down month, although month-to-month comparisons are heavily based on seasonal patterns. 

And this year the seasonal pattern is different, as retailers are postponing their commitments and are waiting until the economic outlook becomes clearer, while they are risking stock outages by having very lean inventories, noted Leamer.

“If they start to perceive that the holiday period is better than the downside risks suggest, you will see strong trucking activity in October, November, and December,” said Leamer.