Trucking Activity Index Drops 1.9 Percent

The Ceridian-UCLA Pulse of Commerce Index dropped 1.9 percent in June after gaining 3.1 percent in May, contributing to signs the economy is slowing.

The index also slowed in the second quarter, growing at an annualized rate of 6.2 percent compared with 9.7 percent growth in the first quarter of 2010.

The index, based on diesel sales to truckers, reflects weaker freight demand in June, but not a recovery in reverse, says PCI Chief Economist Edward Leamer.

By The Numbers: U.S. Diesel Prices.

“The PCI has not been showing the sustained negative numbers characteristic of a double-dip recession," said Leamer, an economics professor at UCLA.

The index declined slightly in three of the first six months of 2010. Its month-to-month decrease in June to 109.3 was off a historic high of 111.4 in May.

The Memorial Day holiday at the end of May probably led to a drop in freight activity and diesel consumption in the first two weeks of June, Leamer said.

The holiday typically sees a decrease in diesel fuel purchased, with the seven-day average sale down 15 percent over a 12 to 13 day period, according to Ceridian.

“By the second half of June, we were seeing strong growth again,” he said, with diesel fuel sales 5 percent above the average for May in that period.

Other economic indicators for May and June released in recent weeks point to a slowing economic growth rate in the second quarter, if not a return to recession.

The dip in the PCI corresponds to a 0.5 percent drop in retail spending in June from May, as well as other indices of retail sales and manufacturing that showed slowing manufacturing growth.

The Ceridian-UCLA index tracks the volume and location of diesel fuel sold across the U.S. through Ceridian’s electronic, card-based fuel purchasing network.

The PCI is still going strong on an annualized basis, Leamer said, climbing 8.6 percent last month compared with June 2009, and 9 percent year-over-year in May.

However, the drop in the quarterly PCI growth figure reflects a decline in inventory restocking, said Craig Manson, senior vice president at Ceridian.