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

The latest release of the Ceridian-UCLA Pulse of Commerce Index™ (PCI) suggests that the economic activity declined slightly in February with the seasonally adjusted index declining 0.68% as compared to January yet, on an year-over-year basis, the index rose 5.06%.

Further, the three month moving average registered another year-over-year increase indicating that February’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?