Diesel Fuel Consumption Index Declines in February

| March 9, 2011

The Ceridian-UCLA Pulse of Commerce Index (PCI)
decreased 1.5% in February, following a 0.3% decline in January. The PCI monitors the real-time diesel fuel consumption of over-the-road trucking, providing a measure of interstate commerce that tracks the Federal Reserve’s Industrial Production Index.

The Ceridian-UCLA Pulse of Commerce Index™ (PCI), issued today by the UCLA Anderson School of Management and Ceridian Corporation fell 1.5% on a seasonally and workday adjusted basis in February, after falling 0.3% in January. The PCI in the first two months of 2011 has now given up all of December’s exceptional 1.8% gain. Because of the very strong performance in December, however, the three month annualized moving average in the index was still up 5.4% over the previous three-month period. Furthermore, February marked the 15th consecutive month of year-over-year growth in the index. Both of these data points suggest that the economic recovery is intact, but it remains tepid.

Over time, the PCI has shown a strong correlation with Industrial Production and with the goods components of GDP. The PCI results over the past two months suggest a small decline in industrial production in February when that data is released by the Federal Reserve on March 17. The February daily data were impacted by the massive snowstorm that was centered in the heavily-trucked Midwest early in the month. However, the daily data also suggests that much of the volume that was “lost” during the first week of the month was “found” later in the month, meaning that weather was not the major reason for the decline in the PCI this month.

The following graph from Calculated Risk displays the long-term view of the PCI.

The index has been moving sideways for nearly a year, and it remains to be seen if the uptrend from 2009 is consolidating before continuing up to new highs or preparing to roll over. In either event, a decisive move out of the current trading range will indicate whether the tepid economic recovery is strengthening or weakening.

Category: Commentary, Market Update

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