Thursday, August 12, 2010

Pulse of Commerce Index Reaches 23-Month High

MINNEAPOLIS, Minn., August 11, 2010 – "All signs continue to point to an economy in recovery with the latest release of the Ceridian-UCLA Pulse of Commerce Index (PCI) by UCLA Anderson School of Management. The July PCI climbed 1.7 percent after dropping 1.9 percent in June.

Though the PCI fell significantly in June, a careful examination of the daily data revealed that June was not as bad as the headline number suggested because of a late Memorial Day and due to the second half of June being stronger than the first. This more positive interpretation of the June data has now been confirmed with a strong July PCI.

Year-over-year growth for July of 8 percent represented the eighth straight month of mid to high single digit year-over-year percentage growth after approximately two years of decline. The sustained growth is welcome news; however, the PCI needs to reach year-over-year growth of 10 to 15 percent in the near term to drive a meaningful increase in employment.

“The key takeaway from the July report is that the economy continues to recover – which is encouraging – but the pace needs to substantially pick up to put people back to work,” said Ed Leamer, chief PCI economist. “With the unemployment rate still at 9.5 percent and consumers understandably nervous about opening their wallets, it is hard to be very optimistic about economic growth. On the other hand, there is nothing about the PCI that is supportive of the pessimistic double-dip view.”"

MP: The chart above shows the seasonally-adjusted, three-month moving average (data here) version of the PCI, which has increased now for the last thirteen months in a row starting in July 2009, which is likely when the recession ended.  In July of this year, the PCI reached 110.62, the highest level since the 111.23 reading in August of 2008 almost two years ago.

Related: Trucking Activity Fuels TravelCenter Earnings

HT: Scott Grannis, who reported on the PCI yesterday.


At 8/12/2010 9:40 AM, Blogger juandos said...

Hmmm, so who's doing all the purchasing?

Jobless claims jump to 5-month high

At 8/12/2010 9:45 AM, Blogger morganovich said...

pulse of commerce index? i've never even heard of it. is there any evidence that this index has any predictive value?

the more commonly used LEI is showing some severe red flags:

"From Travis Berge and Oscar Jorda at the San Franscisco Fed: Future Recession Risks

An unstable economic environment has rekindled talk of a double-dip recession. The Conference Board’s Leading Economic Index provides data for predicting the probability of a recession but is limited by the weight assigned to its indicators and the varying efficacy of those indicators over different time horizons. Statistical experiments with LEI data can mitigate these limitations and suggest that a recessionary relapse is a significant possibility sometime in the next two years.

The authors make some adjustment to the LEI, including removing the yield curve:

However, the term structure may not presently be an accurate signal. Monetary policy has been operating near the zero lower bound to provide maximum monetary stimulus. In addition, the Greek fiscal crisis has generated a considerable flight to quality that has pushed down yields on U.S. Treasury securities. Indeed, ... omitting the rate-spread indicator generates far more pessimistic forecasts. For the period 18 to 24 months in the future, the probability of recession goes above 0.5, putting the odds of recession slightly above the odds of expansion."

At 8/12/2010 10:18 AM, Blogger PeakTrader said...

The pace of hiring will likely pick-up. The question is how fast?

It'll likely remain slow until after the election when the Obamanites (for lack of a better term, which includes the Pelosi House) are neutralized to at least stop the damage. Perhaps, between Nov and Jan, uncertainty about taxes will be lifted.

Nonetheless, there's a lot of ground to make up (from article):

"Thirteen months into recovery from a deep recession, this is disappointing. The economy must add 13 million private sector jobs by the end of 2013 to bring unemployment down to 6 percent. U.S. President Barack Obama's policies aren't creating conditions for businesses to hire those 320,000 workers each month, net of layoffs."

At 8/12/2010 10:20 AM, Blogger juandos said...

"An unstable economic environment has rekindled talk of a double-dip recession"...

Well morganovich they have something similer going on over at the Business Insider: 15 Economic Statistics That Just Keep Getting Worse


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