An index that measures the health of the US economy by analysing real-time diesel consumption of trucks has cast doubt on the strength of the economic recovery after recording a sharp decline in January.
The Pulse of Commerce Index was created by Ceridian, which processes electronic card transactions, and the UCLA Anderson School of Management. It receives data every time a commercial driver fills up a truck with diesel, generating a picture of manufacturing and retail traffic.
The index, which launches on Wednesday, has data going back to 1999. Its performance closely tracked rises and falls of gross domestic product. But while the PCI and GDP both rose in the last quarter of 2009, the PCI stalled in January.
The decline in the PCI suggests US economic activity slowed in January after the index fell at an annualised rate of 36.8 per cent.
The new index provides a window into the economic health of the US, said Edward Leamer, chief economist for the PCI and director of the Anderson Business Forecast: "Inter-state freeways that criss-cross the country are the arteries of the US economy and goods that are transported on them are the lifeblood."
The three-month moving average PCI grew 7.3 per cent in December, mirroring the recently announced 5.7 per cent last-quarter GDP growth figure.
The US economy needed a strong January, said Prof Leamer. "But it just didn't happen. The economy is a lot softer than the GDP numbers suggest."
Recoveries from past recessions often have GDP growth nearing 5 per cent, which is why the data from the final quarter of 2009 was received so positively, mainly because it suggested the job market was set to rebound.
But while US unemployment fell slightly dipped from 10 per cent to 9.7 per cent in January, the overall jobs picture has failed to improve significantly. Professor Prof Leamer said the weak performance of the PCI in January supported those forecasting lower rates of GDP growth in 2010.
The movement of lumber from the Pacific north west to California may also provide some early clues about a rebound in commercial construction and housing, which will show up in the PCI, Professor Leamer added. "Goods have to be transported for an economy to grow, so it will be important to monitor this index to see if the economy really is on the move," said Craig Manson, senior vice-president and index analyst with Ceridian.