Thursday, February 11, 2010

On The Pulse: Ceridian-UCLA Pulse of Commerce Index January 2010

Yesterday, an exciting new index was launched as a joint effort between Ceridian Corporation, a business solutions firm that, among other things, provides payment services to the trucking industry, the UCLA Anderson School of Management and Charles River Associates.

Termed the “Ceridian-UCLA Pulse of Commerce Index™” (PCI), this series is compiled from vast numbers of real time diesel fuel payment transactions that are executed daily by truckers through Ceridian’s electronic card payment services.

Ceridian suggests that this index will serve as a timely indicator of the state of the U.S. economy that, while closely matching the trend seen in the Federal Reserve’s Industrial Production series, will be released as much as a week in advanced.

The latest release of the PCI suggests that the economy may have slowed a bit in January with the seasonally adjusted index declining 3.78% as compared to December 2009 yet, on an year-over-year basis, the index rose 3.57%.

Further, the three month moving average, while also slowing since December registered its first year-over-year increase in 21 months indicating that January’s Industrial Production data (released next week) could show a similar annual gain.

As cited in the release, the PCI is closely correlated to the industrial production series but given the broad nature of the series it’s not surprising to see that it correlates well with other macro data.

Looking at the chart below (click for full-screen dynamic version) you can see that while a pretty reasonable correlation exists between the PCI and the S&P/Case-Shiller Composite-10 Home Price Index (CSI), the CSI reached its peak roughly a year before the PCI.

Could the latest easing of home prices foretell a general slowing trend in the economy?