Ceridian-UCLA Index Signals Weaker Holiday Season

The Ceridian-UCLA Commerce Index fell 0.5% in October which marks the 3rd consecutive decline for the index. The main reason for the decline was weaker trucking activity, reflecting cautious positioning by retailers ahead of the holiday season. The Ceridian-UCLA index almost perfectly tracks industrial production which means industrial production likely fell in October as well. From the report:
The Ceridian-UCLA Pulse of Commerce Index™ (PCI), a real-time measure of the flow of goods to U.S. factories, retailers, and consumers, fell 0.6 percent in October following a decline of 0.5 percent in September and a decline of 1.0 percent in August. The three consecutive month decline is the first since January 2009, when the U.S. was still deep in recession. The negative month-over-month trajectory for October, typically a peak month for America’s trucking industry, may also prelude a disappointing holiday retail season.

The October PCI sounds an alarm about growth in the fourth quarter, and our latest PCI data indicates retailer wariness about future sales prospects,” said Ed Leamer, chief PCI economist and director of the UCLA Anderson Forecast.

On a year-over-year basis, the October 2010 PCI is 4.1 percent higher than October 2009, which typically signals better sales prospects. However, year-over-year increases in the PCI have continued to fall since May’s 9.0 percent growth peak, dropping to 8.6 percent in June, 8.0 percent in July, 6.0 percent in August, 5.8 percent in September, and now 4.1 percent in October. The quarter-over-quarter findings show a similar downward trend with the first quarter 9.7 percent above the fourth quarter of 2009, the second quarter 6.2 percent above the first, and the third quarter 2.1 percent above the second.

“We have had a recovery ‘time out,’” summarized Leamer. “Since May’s peak, trucking has receded 8.3 percent. Fortunately, the full stew of economic information does not appear to foretell a double dip in the coming. Rather, the economic malaise that set-in this summer is still very much with us.”

Black Swan Insights


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