Ceridian-UCLA Pulse of Commerce Index is up 2.7 percent in March

Following a cumulative 1.8 percent decline in January and February, the March edition of the Ceridian-UCLA Pulse of Commerce Index (PCI) was up 2.7 percent in March.

This increase marks the third time the PCI has been up in the last eight months and the 16th consecutive month it has been up on an annual basis.

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. In February, it was correct in predicting Industrial Production would be flat to even at .02 percent. And for March it expects a 0.8 percent gain in industrial production.

“The PCI growth of 3.9% for the first quarter of 2011 is a middle-of the-road number, signaling that we are not in either one of the extremes,” said Ed Leamer, chief PCI economist and director of the UCLA Anderson Forecast, in a statement. “In other words, the recession is over, but we are not yet experiencing a robust recovery. This means that for the coming quarter, the PCI is expecting GDP growth close to historically normal levels of around 3% and normal increases in payroll jobs at approximately 150,000 per month.  The unemployment rate is likely to hold stubbornly to its current level but could be driven down by discouraged workers dropping out of the labor force.”

The report is pegging first quarter GDP growth at 3 percent, putting it on the low range of expectations, according to Leamer.

While March’s performance essentially nullified the losses incurred during January and February, gas prices continue to steadily increase.

“These numbers reflect solid and continued economic growth in the U.S.,” said Todd Dooley, Ceridian senior vice president of finance. “This has been occurring for a year now and bodes generally well. But we are still not seeing the employment gains required—in certain sectors like housing and construction—to put people back to work.”

With the economy growing at a 3 percent GDP clip, which Dooley described as normal, he said this number matches up well with what is being forecasted for industrial production, too.

But with fuel prices steadily rising, consumers in the short-term will likely have less disposable income and buy fewer consumer-related merchandise items like clothing and groceries, which Dooley said is likely to shift consumer-buying patterns.

“This will take a while to factor into manufacturing cycles and how companies respond,” said Dooley. “The concern is if it is a long-term secular trend and consumer spending patterns really do tighten up, there will then be overcapacity for businesses which could put pressure on inventory levels and overall growth.”

For related articles, please click here.