“Davidson” on Ceridian and Employment

“Davidson” submits:

The UCLA-Ceridian Pulse of Commerce Index rose 1% for June 2011 continuing the up-trend from the Feb 2009 low of 82.32 (the 3mo moving average is shown in BROWN) The full report is available free of charge at: http://www.ceridianindex.com/userfiles/file/Index-Report-June-2011.pdf

The Ceridian Index is deemed as close to real-time index in that it monitors the quantity of diesel fuel consumed by the trucking industry in transporting the nation’s goods from suppliers to consumers. One can observe in the chart below that there is a close correlation between the Ceridian Index and Industrial Production. One can also observe that the Ceridian Index led the Household Survey out of the 2002 and 2009 recessions by ~6mos to 8mos.

Ceridian Index forecasts improved employment ~6mos to 8mos ahead.

Economic activity will always be difficult to measure with a high degree of precision in any economy as there are as many data points as there are individuals and individuals are always in transition regarding their specific supply/demand profiles. What is most important is not the month-over-month change, but the trends that are formed from 6mos+ of combined reporting.

One can readily observe that both the Ceridian Index and US Total Industrial Production have been and continue to be in pronounced up-trends reflecting economic expansion. Employment is pulled higher by expanded economic activity.

I expect the employment reports to reflect an increasing workforce in the coming months and the equity markets to respond favorably.