The Ceridian-UCLA Pulse of Commerce Index grew 0.4 percent in November, but it's not enough to offset the 0.6 percent decline of the previous month, nor the 2.1 percent decline experienced in the PCI since July, according to the index's analysts. Though on a year-over-year basis the PCI is up, the three-month moving average has been declining for four months, suggesting relative weakness within the goods producing segments of the economy, they said.
"In short, November's "up" is relative to a low-bar so the growth is only mildly encouraging," explained Ed Leamer, chief PCI economist and director of the UCLA Anderson Forecast. "The flatness we're seeing with the latest PCI data reflects inventories in motion which seem to be signaling a weak fourth quarter."
On a year-over-year basis, the PCI increased 4.5 percent in November, representing the twelfth straight month of annualized growth -- which typically signals better sales prospects. This is slightly above the growth rates during the normal growth period from 2004 to 2006, but below levels needed for rapid recovery to the previous peak in 2007/2008 and rapid return to trend.
"There has been less anxiety about the economy in recent months, but markets are still fragile," said Craig Manson, senior vice president and index expert for Ceridian. "We still have not seen evidence of enough growth to instill confidence in the economic outlook for the fourth quarter and early 2011."
The PCI analysts predict the index forecasts a decline of 0.03 percent in industrial production in November, and upper range GDP growth at 2 percent for the fourth quarter.