The Ceridian-UCLA Pulse of Commerce Index, issued Wednesday, Aug. 10, dipped 0.2 percent in July on a seasonally and workday adjusted basis, offsetting some of the relatively strong 1.0 percent gain posted in June.
“In July, the U.S. economy remained in ‘she loves me, she loves me not’ mode,” says Ed Leamer, chief PCI economist and director of the UCLA Anderson Forecast. “July’s result falls in the ‘she loves me not’ category and represents a continuation of the idling economic conditions that have persisted for over a year. Over this time period, bad news has been alternating with good, leaving investors and forecasters nervous and unable to identify sustainable trends.”
Leamer says the PCI – issued by the UCLA Anderson School of Management and Ceridian Corp. – has started the second half of 2011 on a slightly down note, and wobbly, slow growth is expected to continue for the rest of this year as the economy struggles to find a catalyst. “However, another dip appears unlikely, as the traditional sources of recessions – homes and automobiles – are not currently positioned to produce a downturn,” he says.
Craig Manson, senior vice president and index expert for Ceridian, says the PCI continues to prove its value as a predictor of both GDP growth and industrial production. “Last month, the PCI result further reinforced our long-held cautious outlook for below-consensus growth in GDP,” Manson says. The PCI forecast for below-consensus GDP growth was confirmed by the U.S. government’s subsequent estimate of 1.3 percent GDP growth for the second quarter, he says.
“Over time, the PCI has also proven to be a leading and amplified indicator of industrial production,” Manson says. For June, the PCI was anticipating industrial production to show modest growth of 0.17 percent; the government’s subsequent release on July 15 turned out to be 0.19 percent, “which was almost identical to our forecast.” This represented the fifth time in the past six months in which the monthly PCI forecast for U.S. industrial production was in line with the government’s subsequent report, he says.
Manson says that based on the weakness evident in the PCI over the last several months, “our forecast calls for a flat performance in July’s industrial production when the government estimate is released on August 16.”