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Economy in Brief

Leading Indicators Tick Higher
by Tom Moeller March 17, 2005

The Conference Board reported that the Composite Index of Leading Economic Indicators ticked 0.1% higher in February following an unrevised 0.3% decline the prior month. Six-month growth in the leaders remained negative at -0.2%. Growth in the leaders deeper than -2.5% preceded past US recessions.

The breadth of one month gain amongst the 10 components of the leading index improved markedly to 60% from a downwardly revised 25% in January. Fewer claims for unemployment insurance and higher stock prices were the main positive contributors to last month's leading index increase.

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 recovered 0.4% following a downwardly revised 0.6% decline in January. Six-month growth in the index was 3.3% and during the last ten years there has been an 84% correlation between six month growth in the coincident indicators and two quarter growth in real GDP.

The lagging indicators rose 0.4% and have been moving higher for most of the last year versus declines during the prior three years. Higher C&I loans account for much of the gain.

The ratio of the coincident to the lagging indicators which measures actual economic performance relative to excess rose 0.5% (3.1% y/y).

Visit the Conference Board's site for coverage of leading indicator series from around the world.

Business Cycle Indicators Feb Jan 6-Month Chg 2004 2003 2002
Leading 0.1% -0.3% -0.2% 3.0% 1.3% 2.2%
Coincident 0.4% -0.6% 3.3% 2.6% 0.4% -0.5%
Lagging 0.4% 1.0% 1.0% -2.0% -1.9% -2.3%
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