·
The composite index of leading economic indicators, reported by the
Conference Board, increased 0.1% in March after an unrevised 0.3%
February decline. It was the leaders' first increase in six months.
· During the last ten years there has been a 59% correlation between the y/y change in the leading indicators index and the lagged change in real GDP.
· The breadth of one month increase amongst the 10 components of the leading index improved to 60%. It was the first month over the break even level of 50% since last September. Over a six month period, however, the breadth of gain amongst the leaders components remained quite low at 30%.
· Last month, a more positive yield spread between the 10 Year Treasury Bond and the Fed funds rate, stronger money supply growth and vendor performance made the largest positive contributions to the leading index. That was offset by lower stock prices, lower consumer expectations and higher claims for jobless insurance.
· The method of calculating the
contribution to the leading index from the spread between 10 year
Treasury securities and the Fed funds rate has been revised. A negative
contribution will now occur only when the spread inverts rather than
when declining as in the past. More details can be found here.
· The leading index is based on eight previously reported economic data series. Two series, orders for consumer goods and orders for capital goods, are estimated.
· The coincident indicators rose 0.1% or the first gain in five months. Over the last ten years there has been an 86% correlation between the y/y change in the coincident indicators and real GDP growth. Half of the coincident series components fell.
· The lagging index rose again as the
average duration of unemployment rose. The ratio of coincident to
lagging indicators (a measure of economic excess) fell yet again and was
at its lowest since early 1991.