TruckersÆ fuel gauge signals stalling economy
A monthly index that tracks the amount and location of motor carrier fuel use to draw inferences about the state of the economy fell 0.5 percent in September after declining 1.0 percent in August. It marks the first consecutive months of decline for the index since January 2009.
The Ceredian-UCLA Pulse of Commerce Index (PCI) measures the real-time flow of raw materials, goods-in-process and finished goods to U.S. factories, retailers and consumers by monitoring fuel use by the trucking industry. Ceridian is a large company that provides payroll and human resource services for businesses. Its Comdata subsidiary offers paycards for trucking fleets so that drivers can purchase fuel, electronically retrieve paychecks, and get reimbursed for expenses. The cards allow companies to manage their costs by establishing controls on what employees can purchase, as well as on the frequency, location and size of purchases.
Comdata provides the data collected from fuel card purchases, which is analyzed by economists at UCLA's Anderson School of Management and Charles River Associates.
The August-September results are also the worst combined two-month period since January and February 2009, Ceredian said.
The index shows limited to no increases in over-the-road movement of goods since it peaked in May 2010. Moreover, the PCI forecasts third quarter gross domestic product growth at an anemic 0.7 percent to 1.7 percent, below the PCI’s previous 1.5 percent to 2.5 percent estimate reported last month (which at the time approximated the consensus economic view). The PCI forecast of the Federal Reserve’s monthly Industrial Production index, to be released later this month, also signals factory output for September to be very close to zero with an even-odds chance for a negative number.
'The PCI tells us that inventory is stalled on the nation’s thoroughfares. The good months of growth are now seemingly in our rear view mirror,” said Ed Leamer, chief PCI economist and director of the UCLA Anderson Forecast. “Our economy’s loss in traction is alarming and for the ‘Cassandras of the double-dip,’ may foretell a coming decline in GDP and spike in unemployment. However, with residential investment, consumer durables, business spending, and other component indicators already at or near record lows relative to GDP, it remains unlikely that we will experience an outright decline into recession.”
The PCI began 2010 strongly with the first quarter 9.7 percent above the fourth quarter of 2009. However, the second quarter was only 6.2 percent above the first, and now the third quarter has increased a mere 2.1 percent above the second.
'The ray of hope is that year-over-year (September 2009 to September 2010) the PCI is up 5.8 percent, representing the 10th straight month of growth,” said Craig Manson, senior vice president and index expert for Ceridian. “Year-over-year growth, however, has continued to fall since May’s exceptional 9 percent number. And though we remain in recovery, the tepid growth says our economy lacks the energy to drive employment in the near term.
'October data will be especially telling as this is the peak month for America’s trucking industry and a strong prelude to the holiday season,” Manson added.
The complete report is available at www.ceridianindex.com.
