US commercial activity fell in Sept, hinting at Q3 stall in GDP

13 October 2011 15:47  [Source: ICIS news]

WASHINGTON (ICIS)--A key measure of US commercial activity fell in September for the third consecutive month, according to a University of California business index released on Thursday, suggesting that the nation’s third-quarter gross domestic product (GDP) growth will be zero.

The University of California at Los Angeles (UCLA) Anderson School of Management said that its pulse of commerce index (PCI) fell by 1% in September from August, on a seasonally adjusted basis, and followed a 1.4% fall-off in August and a 0.2% dip in July.

The index, compiled by UCLA in cooperation with Ceridian Corp, tracks credit card purchases of diesel fuel by trucking companies across the country and serves as a real-time measure of the flow of raw materials, goods-in-process and finished products.

Ed Leamer, chief economist for the UCLA-Ceridian partnership, said that with the additional drop in the pulse of commerce index in September, “the PCI-based forecast for third quarter GDP growth is zero”.

US first-quarter GDP growth was a slim 0.4%, and while the second-quarter GDP improved to 1.3%, forecasts by business groups and the Federal Reserve Board suggest that third-quarter GDP will be below the second-quarter mark.

The Commerce Department’s first estimate of US third-quarter GDP performance is scheduled to be released in two weeks on 27 October.

Leamer said that the July through September decline in the pulse of commerce index – an annualised fall-off of 4.3% – has been exceeded only during the depths of the 2007-2009 recession.

In his testimony before Congress last week, Federal Reserve Board Chairman Ben Bernanke predicted that US GDP growth would decline over the next several quarters, although he did not say what he thought the just-concluded third quarter pace would be.

Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy

By: Joe Kamalick
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