The economic recovery, which stalled in April as measured by the movement of goods across the nation’s highways, is back on the road, according to the most recent Ceridian-UCLA Pulse of Commerce Index (PCI).
The index, which tracks real-time diesel fuel consumption by over-the-road trucking companies, jumped 3.1 percent, the biggest month-to month gain since February 1999, and offers a hopeful sign for continued economic growth.
“Its virtually pre-ordained well have strong GDP (gross domestic product) growth in the second quarter,” said said Ed Leamer, the PCI’s chief economist, in an interview. The May results suggest GDP growth in the range of 3 to 5 percent for the second quarter. “The closer we get to the 5 percent range, the better” for driving down unemployment, he added.
Month-to-month growth in the index shows a “strong underlying trend” with “the industrial center of the country” leading the recovery, Leamer said. The biggest increase, 6.2 percent, was seen in the east north central region, which includes Wisconsin, Ohio, Indiana, Illinois and Michigan.
The Pacific region (California, Washington, Orgeon) — up 3.8 percent — and the west north central region (Minnesota, North and South Dakota, Iowa, Kansas, Nebraska and Missouri) — up 3.6 percent month-to -month — also exceeded the 3.1 percent national average. The Middle Atlantic region (New York, New Jersey and Pennsylvania) — the only region to slow down — dropped from 0.8 percent growth in April to 0.6 percent in May.
Year over year, the index grew 9 percent, the sixth straight month of positive year-over-year PCI comparisons.
“Absent good news from the usual recovery indicators — consumer optimism expressed by buying homes and cars, and business optimism expressed by hiring — the spike in the PCI is indeed very welcome news for the economy,” Leamer said in a prepared release. “One month does not make a trend, but at least we are back in a recovery groove.”
“The uptick in trucking activity during the month was apparent nationwide,” said Craig Manson, senior vice president and index expert for Ceridian. “More importantly, even though we’re still well below 2008 levels, the positive year-over-year growth trend in the index over the past six months is encouraging.”
The Ceridian-UCLA Pulse of Commerce Index, Jan 2006 – May 2010
The May result makes up for April’s decline of 0.3 percent and for the PCI’s flat, overall performance during the first four months of 2010, Leamer observed. The PCI index has also been used to predict the Federal Reserve’s monthly index of Industrial Production. The slowdown in the PCI from January through April was matched by sluggish industrial production growth. With the current spike in the PCI index, Leamer has forecast the Fed’s May industrial production numbers, scheduled for release June 16, to increase by 0.85 percent, up from a previous forecast of 0.59 percent.
The PCI is based on an analysis derived from Ceridian’s electronic and stored-value card-payment processing services.
Same diesel consumption today as in 2006 when population was 8% lower.
We are far below the previous peak – this is a sluggish and choppy recovery. I’m a little surprised by the increase in May – and we have to remember it is just one month and this is a new index.