The Ceridian-UCLA Pulse of Commerce Index (PCI), issued today by the UCLA Anderson School of Management and Ceridian Corporation rose 0.1 percent in November following a 1.1 percent increase in October. 

Over the past three months, compared to the prior three months, the PCI declined at an annualized rate of 4.8 percent.  On a year-over-year basis, the PCI grew 0.9 percent in November compared to the 1.3 percent year-over-year increase in October.  "The continuing weakness in the PCI is out-of-sync with real retail sales.  The year-over-year increase in real retail sales through October was 3.6 percent compared with an increase in the PCI of 1.3 percent.  The disconnect between real retail sales and the PCI suggests that retailers have learned to better manage their inventory.  Therefore, shoppers can anticipate fewer bargains in the month ahead, and relatively little stock left for the after-Christmas sales," said Ed Leamer, chief economist for the Ceridian-UCLA Pulse of Commerce Index and director of the UCLA Anderson Forecast.

"Given the weak PCI, the advance estimate of third quarter GDP growth of 2.5 percent was surprising, but the final estimate may be lower," said Leamer in last month's report.  The inventory contribution to third quarter GDP was indeed revised downward to minus 1.55 percent, which accounted for most of the revision of GDP growth to 2.0 percent.  With two months of data available, the PCI suggests fourth quarter GDP growth in range of 0.0 to 1.0 percent.

Based on the latest PCI data, our forecast for November Industrial Production is a 0.06 percent increase when the government estimate is released on December 15.