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Economy in Brief

U.S. Leading Indicators Rose Slightly
by Tom Moeller February 19, 2009

For January, the Conference Board reported that the composite index of leading economic indicators rose 0.4% after a revised 0.2% December increase. The peak index level occurred in July of last year and the six-month rate of decline has improved slightly.

Five of the ten components of the leading index rose last month with the largest positive contributions coming from faster money supply growth, a steeper yield curve and higher consumer expectations. These gains were offset by lower stock prices, lower building permits and higher claims for unemployment insurance.

The breadth of one-month increase amongst the leaders' 10 components improved to 50% but over a six-month period the breadth of gain amongst the components remained stuck at a quite low 30%.

The leading index is based on actual reports for eight economic data series. The Conference Board initially estimates two series, orders for consumer goods and orders for capital goods.

Reflecting the recession, the coincident indicators dropped sharply again. For the third month in a row, the index fell 0.5%. Half of the four component series fell with outsized drops registered by employment and production. Year-to-year the coincident indicators fell 3.5% and over the last ten years there has been a 76% correlation between this y/y change and real GDP.

The lagging index fell 0.1% after a 0.2% December decline. The ratio of coincident-to-lagging indicators (a measure of economic excess) fell further to its lowest level since 1975.

The Conference Board figures are available in Haver's BCI database. Visit the Conference Board's site for coverage of leading indicator series from around the world.

The minutes to the latest meeting of the Federal Open Market Committee are available here.

Business Cycle Indicators (%) January December November Oct. 6-Month % (AR) 2008 2007 2006
Leading 0.4 0.2 -0.7 -3.7 -2.8 -0.3 1.5
Coincident -0.5 -0.5 -0.5 -5.4 -0.8 1.6 2.5
Lagging -0.1 -0.2 0.6 2.5 2.9 2.8 3.3
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