The Ceridian-UCLA Pulse of Commerce Index jumped 3.1% in May in an optimistic sign for what is looking like an increasingly weak economy.   According to Ceridian-UCLA this points to higher economic growth:

“The increase represents the strongest indicator yet from the PCI that the U.S. economy is on the upswing. The May results suggest the recovery is on pace for GDP growth in the healthy range of 3 to 5 percent for the second quarter of 2010, moving closer to the 5 to 6 percent increase necessary to drive down the unemployment rate. The year-over-year PCI number jumped 9 percent, adding a sixth straight month of positive year-over-year PCI comparisons.”

Ed Leamer, the PCI’s chief economist says the news is a good sign, but no reason to get overly optimistic:

“Absent good news from the usual recovery indicators – consumer optimism expressed by buying homes and cars, and business optimism expressed by hiring – the spike in the PCI is indeed very welcome news for the economy.  One month does not make a trend, but at least we are back in a recovery groove.”

The May result makes up for April’s decline of 0.3 percent and for the PCI’s flat, overall performance during the first four months of 2010. It improves growth expectations for the Federal Reserve’s monthly Industrial Production (IP) economic indicator, which the PCI tracks. The slowdown in the PCI from January through April of this year was matched by sluggish growth in the IP index. Each month, the PCI lowered its growth expectations for the IP, but the May IP release is now forecast to increase by 0.85 percent, up from 0.59 percent.

Source: Ceridian-UCLA