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Pace of economic recovery quickening

By David Cullen, executive editor
Penton Business Media

As 2012 approaches, some key indicators strongly suggest the U.S.  economic recovery is at last truly picking up speed. For starters, new U.S.  claims for unemployment benefits fell to a 3-1/2 year low last week, according  to the Dept. of Labor’s (DOL) Unemployment  Insurance Weekly Claims Report released today.  

Also, the Ceridian-UCLA Pulse of  Commerce Index (PCI), issued this week by the UCLA Anderson School of  Management and Ceridian Corp., rose 0.1% in November. That followed a 1.1%  increase in October. 

And FTR Associates’ Shippers  Conditions Index (SCI) improved in October by 1.1 points from the previous  month to a current reading of -3.6. The SCI sums up all market influences that  affect shippers, with a reading above zero suggesting a favorable shipping  environment and one below zero an unfavorable one.  

According to DOL, in the week ending Dec. 10, the advance figure for  seasonally adjusted initial unemployment claims was 366,000 - a decrease of  19,000 from the previous week’s revised figure of 385,000. The 4-week moving  average was 387,750 - a decrease of 6,500 from the previous week’s revised  average of 394,250.

Per a report posted  today by Reuters, the DOL prior week’s claims data was revised up to  385,000 from the previously reported 381,000. Economists polled by the news  organization had forecast claims rising to 390,000 last week. Reuters pointed  out that “the unexpected drop in claims last week pushed them closer to the  350,000 mark that analysts say signals labor market strength.”

The Reuters report further observed that the unemployment claims data “offered  further evidence of increased momentum in the pace of economic activity, even  though retail sales rose modestly in November” and added that this performance  is in “sharp contrast to Europe, where the festering debt crisis has already  pushed some economies into recession.”

According to Ceridian-UCLA, over the past three months - compared to  the prior three months—its PCI declined at an annualized rate of 4.8%.  But  on a year-over-year basis, the PCI grew 0.9% in November and saw a 1.3%  year-over-year increase in October. 

“The continuing weakness in the PCI is out-of-sync with real retail  sales,” pointed out Ed Leamer, chief economist for the Ceridian-UCLA PCI and  director of the UCLA Anderson Forecast. “The year-over-year increase in real  retail sales through October was 3.6% compared with an increase in the PCI of  1.3%. The disconnect between real retail sales and the PCI suggests that  retailers have learned to better manage their inventory.”

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And, based on the latest PCI data, Leamer added that “our forecast for  November industrial production is a 0.06% increase when the government estimate  is released.”

Leamer noted that the PCI is based on real-time diesel fuel consumption  data for over-the-road trucking and serves as an “indicator of the state and  possible future direction of the U.S. economy.” By tracking the volume and  location of fuel being purchased, he said the PCI closely monitors the  over-the-road movement of raw materials, goods-in-process and finished goods to  U.S. factories, retailers and consumers. 

FTR said its Dec. 12 Shippers Update pegs the current environment for  shippers as “stable through early 2012 with only modest increases in costs and  acceptable available capacity levels.”

However, the research firm cautioned shippers could “start to  experience a much more negative environment” as early as mid-2012 depending on what  is contained within the revised (HOS) rules, which reportedly will be released  on Dec. 22nd.

“There is more than the usual amount of uncertainty in the outlook for  shippers at the moment as it appears that we are finally approaching the hour  when the FMCSA will issue its much-anticipated revised rules for trucking Hours  of Service,” said Larry Gross, FTR senior consultant. “While court challenges  are inevitable regardless of how the new rule reads, the publishing of the new  rules and the proposed implementation schedule will begin to provide some  much-needed clarity on the contours of 2012 and the driver supply.  

“Our current assumption is that the revised rule will take effect in  late 2012 and will have a substantial negative effect on shipping conditions,”  he continued. “However, any prediction of the results of our current political  process is necessarily fraught with uncertainty.  FTR will closely examine the product of the  rule-making process when it emerges and it is possible that our view of 2012  could change substantially as a result.”

Copyright:© 2011 Penton Media


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