Ceridian Fuel Index Rises but Compared to What?

Inquiring minds are digging into the Ceridian Report for October which shows the Pulse of Commerce Index Increased 1.1 Percent in October Offsetting the 1.0 Percent Decline in September.

However, appearances may be deceiving because month-over-month comparisons are easy and the three-month moving average is still falling.
The Ceridian-UCLA Pulse of Commerce Index® (PCI®), issued today by the UCLA Anderson School of Management and Ceridian Corporation rose 1.1 percent in October after three consecutive negative months: -1.0 in September, -1.4 percent in August and -0.2 percent in July.

The October data offers a welcome relief from the double-dip fears that were rampant a month ago, but one month does not mean a new trend. Until we get a series of positive months, it remains a she-loves-me, she-lovesme- not economy with bad news followed by good followed by bad.

Moreover, the positive month-on-month news in October is relative to a very disappointing September result. Though the growth in October offsets the September decline, it doesn’t offset the cumulative decline including August and July. The average of the last three months has declined compared with the previous three months at an annualized rate of 5.8 percent, and the PCI remains lower than it was during most of the first half of 2011.
About Ceridian-UCLA Pulse of Commerce Index

The Ceridian-UCLA Pulse of Commerce Index® is based on real-time diesel fuel consumption data for over the road trucking and serves as an indicator of the state and possible future direction of the U.S. economy. By tracking the volume and location of fuel being purchased, the index closely monitors the over the road movement of raw materials, goods-in-process and finished goods to U.S. factories, retailers and consumers.

Year-Over-Year Growth of PCI

Retail Sales and the PCI: Inventories in Motion

Ceridian reports ....
The growth in real GDP is to a large extent driven by growth in consumer spending. In the above figure, both the PCI and the real retail sales have been normalized by their maximum value, making it easy to see that both declined from their peak values by 13 or 14 percent.

Last year the disconnect between the PCI and real retail sales was resolved with a burst in trucking activity, which seems most likely this year although some commentaries suggest retail sales are falling short of expectations.
Retail Sales Short of Expectations

The last line above is interesting because the Financial Times does indeed report US retail sales fall short of expectations
November 3, 2011

US retail sales rose in October but growth decelerated and fell below market expectations as retailers head into a holiday shopping season of fragile sentiment and fierce competition.

In spite of a weak economy, sales increased 3.8 per cent from a year ago to rack up a 26th successive monthly rise, according to Retail Metrics. But they fell below analyst forecasts of 4.4 per cent growth and below the 5 per cent-plus increases of the previous three months.

Fifty four per cent of the retailers that report monthly sales fell short of expectations, among them both those that reported overall increases and declines.
In September, half of the retail sales gains were in autos. Yet, Auto sales are counted when cars are shipped to dealers, not when they are sold to consumers.

Please consider GM Sales Barely Rise, Chrysler's Up 27%; What Does It Mean?
GM Sales Barely Rise, Chrysler's Up 27%
Chrysler Group LLC's October U.S. auto sales rose 27% while General Motors Co. climbed just 1.7% amid a mixed picture for the largest U.S. auto makers.

GM suffered declines in all its brands except Chevrolet, the Detroit auto maker said on Tuesday. Its dealer inventory was up 15% from a year ago and up 6.1% from September.

The auto maker reported total sales for the month of 186,895 vehicles. Its Chevrolet sales rose 6% while Cadillac sales fell 11.9%, Buick declined 7% and GMC sales dropped 4.6%. Overall, GM's retail sales were up 2.6% ...
Sales down and dealer inventory up 15% at GM.

The key takeaway from last months "good" GM sales report is it was largely based on channel stuffing. "Sales" get reported when cars are shipped to the dealer and cars are stacking up at GM dealers.
I do not think sales, especially auto sales, were as robust as reported. Even if they were, there is no reasonable expectation the increase in sales should continue.

Mike "Mish" Shedlock
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