While the boost in the July PCI showed a U.S. economy in slow recovery, index experts warned last month that August and September must deliver exceptional results to support a strong, third quarter GDP number. The August figure falls short of meeting that requirement.
"The August data is obviously discouraging after the cautious optimism created from July's report," said Ed Leamer, chief PCI economist. "There is not much to feel good about with the August data in terms of the unemployment picture, but there is a silver lining in that the August PCI is still far from double-dip territory."
The August PCI is consistent with a predicted third quarter GDP growth number in the range of 1.5 to 2.5 percent, which is the current consensus view of the economy. The low GDP percentage range is significantly under the 5 to 6 percent rate required to put people back to work.
Year-over-year August PCI growth of 6 percent represents the ninth straight month of growth, but the figure has been steadily dropping since June. PCI results need to reach 10 to 15 percent year-over-year growth for a healthy job market.
"The restocking of inventory and exceptional growth in imports that were helping drive the transportation of goods and materials appears to be over," said Craig Manson, senior vice president and index expert for Ceridian. "We have seen August economic results from the manufacturing sector continuing their positive momentum, but it's too difficult to interpret, at this point, what it means for trucking."
The PCI closely tracks the Federal Reserve's monthly Industrial Production (IP) index and forecasts expected results for the IP, which is released later in the month. The PCI is projecting essentially no growth in the IP with an August figure of 0.1 percent.
The PCI is based on an analysis of real-time diesel fuel consumption data from over the road trucking tracked by Ceridian, a global provider of electronic and stored value card payment services and human resources solutions. By analyzing payment card data for the location and volume of diesel fuel purchased by truck operators, the PCI provides a detailed picture of the movement of goods and materials across the United States.