The Ceridian-UCLA Pulse of Commerce Index fell in January and February, but was still the 15th straight month of year over year growth, indicating that economic recovery, while fragile, remains under way.

The PCI, which is based on fuel purchases, fell 1.5 percent during February. Coupled with the 0.3 percent loss from January, this latest data eliminates the strong gain (1.8 percent) in December 2010.

"The PCI performance in the first two months of this year suggests weakness in some parts of the economy," said Ed Leamer, chief PCI economist and director of the UCLA Anderson Forecast. "Nevertheless, our outlook for 2011 is for continued economic recovery - we expect GDP to grow at the historically 'normal' rate of 3 percent, accompanied by a persistent level of high unemployment."

Relative weakness in the PCI over the first two months of this year suggests that GDP for the first quarter will come in below consensus, near the lower end of the range of current forecasts that range between 2 percent and 5.5 percent, say the index analysts. For the year, the index continues to suggest GDP growth sufficient to drive continued modest growth in employment but not back to the peak levels attained in late 2007.

"February's spike in diesel fuel prices to well over $3 a gallon likely did not drive the weakness in the PCI this month," explained Craig Manson, senior vice president and index expert for Ceridian. "However, if the trend persists, higher prices will likely have an impact in the coming months as consumers are robbed of spending power. As a leading indicator for the goods-producing segment of the economy, the PCI is sensitive to this dynamic and should provide early indications of direction and magnitude as higher fuel prices impact the broader economy."

The complete February report, regional analysis and additional commentary are available at