Though the PCI fell significantly in June, a careful examination of the daily data revealed that June was not as bad as the headline number suggested because of a late Memorial Day and due to the second half of June being stronger than the first. This more positive interpretation of the June data has now been confirmed with a strong July PCI.
Year-over-year growth for July of 8 percent represented the eighth straight month of mid to high single digit year-over-year percentage growth after approximately two years of decline. The sustained growth is welcome news; however, the PCI needs to reach year-over-year growth of 10 to 15 percent in the near term to drive a meaningful increase in employment.
“The key takeaway from the July report is that the economy continues to recover – which is encouraging – but the pace needs to substantially pick up to put people back to work,” said Ed Leamer, chief PCI economist. “With the unemployment rate still at 9.5 percent and consumers understandably nervous about opening their wallets, it is hard to be very optimistic about economic growth. On the other hand, there is nothing about the PCI that is supportive of the pessimistic double-dip view.”"
MP: The chart above shows the seasonally-adjusted, three-month moving average (data here) version of the PCI, which has increased now for the last thirteen months in a row starting in July 2009, which is likely when the recession ended. In July of this year, the PCI reached 110.62, the highest level since the 111.23 reading in August of 2008 almost two years ago.
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HT: Scott Grannis, who reported on the PCI yesterday.
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