Ceridian’s trucking data index shows economy stalled in April

The economic recovery may be waiting for consumer spending to pull it out of a stall, according to Minneapolis-based Ceridian Corp.’s latest economic index, which tracks movement of goods around the country. 

The Ceridian-UCLA Pulse of Commerce Index (PCI), issued by the UCLA Anderson School of Management this morning, fell 0.3 percent from March to April and is showing flat overall performance during the first four months of 2010, said Todd Dooley, senior vice president of finance for Ceridian and one of the developers of the index.

The PCI is based on an analysis of real-time diesel fuel consumption by over-the-road trucking companies derived from Ceridian’s electronic and stored value card payment processing services.

The more cautious tone differs from a decidedly bullish note sounded in March, when the index showed robust growth. That earlier report prompted Ed Leamer, the PCI’s chief economist, to project 4 percent GDP growth for the first quarter, well above consensus estimates of 3 to 3.5 percent growth and actual growth of 3.2 percent reported by the U.S. Bureau of Economic Analysis (PDF).

With three months of no growth, the April PCI reflects the continuing weak labor market and early reports on April retail sales, consistent with a zero GDP quarterly growth outlook for the second quarter. “The optimism felt in the fourth quarter is not reflected in what we are seeing today,” Dooley said, and reflects “an evolution in our view.”

Despite the recent slowdown, the PCI index is still up 6.5 percent on a year-over-year basis, the fifth straight month of steady increase at “better than normal” levels. However, year-over-year growth of 10 to 15 percent in the PCI is required to drive down the unemployment rate, and the modest rate of recovery “is not enough to put Americans back to work,” Dooley said.

“The latest PCI numbers are disappointing and cast considerable doubt on the strength of the recovery and the strength of GDP numbers for 2010,” said Leamer in the release. “The next two months will tell if the first quarter’s healthy consumer spending will help lift the PCI and propel stronger GDP growth for the year.”

The U.S. Department of Commerce recently reported that growth in consumer spending accelerated to 3.6 percent in the first quarter, up from 1.6 percent growth in the fourth quarter.

Dooley pointed out that consumer spending “is not factored into the second quarter (PCI forecast) … People out spending money has a pull-through effect on the economy.”

Ceridian said in its release that “consumers were back to their profligate ways in the first three months of this year, spending freely, and creating a need for more inventories in the supply chain and more trucking in the months ahead. But it will take income growth and job growth to sustain that rate of growth of consumer spending.”

The Ceridian-UCLA Pulse of Commerce Index also provides data for the nine Census regions. Five of the nine regions were weak in April, explaining the overall PCI decline of 0.3 percent. Heavy trucking areas such as the East North Central region (e.g., Ohio and Michigan) fell 1.7 percent, the South Atlantic region (e.g., Virginia and the Carolinas) declined 1.1 percent and the East South Central was down 0.4 percent. The significant West South Central region experienced zero growth in April. The West North Central region, ranging from Minnesota and the Dakotas to Missouri and Nebraska, declined 0.2 percent.

Source: Ceridian-UCLA Pulse of Commerce Index

Ceridian developed the index last year with UCLA and claims that it closely tracks the Federal Reserve’s monthly Industrial Production index. The PCI forecast for industrial production has been declining each month and now indicates industrial production is likely to grow by 0.4 percent in April, down from an earlier projection of 0.64 percent growth. Industrial production numbers are due to be released on May 14.

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Comments (2)

  1. Submitted by Gregory Lang on 05/12/2010 - 06:49 pm.

    An interesting “yardstick” but like the devil, the railroad(s) is getting smarter all the time.

    When driving I watch two related factors. The first is the white “Triple Crown” truck trailers http://www.triplecrownsvc.com/. If you look closely there is a “nub” in front of the trailer. They hook these together with rail wheel sets (think of the middle wheels on our light rail trains). More seem to be appearing.

    Next, I regularly use the Pierce Butler route in St. Paul. After the “crash” I noticed upended trailers on big racks in the container yard just south of the State Fair grounds.

    Rail is cheaper than truck for longer distances. I recently tracked a low priority fedex ground I was getting. It took five days to get from Southern California to here (that’s OK a cheap shipping deal) Somehow I think that the “long haul” moved via rail.

    I’ve also noticed a lot more Fedex double trailer units on the freeways. This is all ancendotal but it wouldn’t show up on the Ceridan data.

  2. Submitted by Richard Schulze on 05/13/2010 - 06:50 am.

    Same consumption as Dec 2004 when there were 15 million fewer Americans. The thing to remember however is that when there is excess transportation capacity, substitution can affect these numbers as the supply chain can optimize delivery methods unconstrained by capacity issues.

    I think the daily spin is:
    Diesel consumption down means less impact on oil inventories from worst oil spill ever. Markets sky-rocket.

    From the Association of American Railroads: //Rail Time Indicators. The AAR reports traffic in April 2010 was up 15.8% compared to April 2009 – although traffic was still 11.5% lower than in April 2008.//

    Rail traffic collapsed in November 2008, and now ten months into the recovery, traffic has only recovered half way.

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