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.”
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.”
