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Economy in Brief

U.S. Leading Economic Indicators Increase For Sixth Straight Month
by Tom Moeller October 22, 2009

The Conference Board's Index of Leading Economic Indicators suggested pending economic recovery with a 1.0% September increase that was the sixth consecutive monthly rise. The 5.7% increase during those six months was the strongest since early-1983 and the index itself was at the highest level since October 2007. 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.

The breadth of the increase amongst the component series was impressive last month. Eighty percent of the components rose, led by a steeper yield curve, higher consumer expectations, lower initial claims for jobless insurance and higher stock prices. These gains were offset slightly by shorter weekly hours worked and lower building permits.

Continuing to suggest that the rate of decline in the economy is slowing were the coincident indicators. They were unchanged during September after a modest 0.1% August gain. These declines compare with monthly shortfalls of 0.6%-to-1.1% dating back to September. Fostering the turnaround have been slight increases in industrial production, real personal income and higher business sales, as well as diminished monthly declines in payrolls.

In a continued sign that excesses in the U.S. economy are falling, the lagging index fell for the ninth month in the last ten. Commercial and industrial loans outstanding fell sharply for the tenth straight month and consumer credit versus personal income was off for the sixth month this year. Regardless, the average duration of unemployment shortened and the change in CPI for services eased. The ratio of coincident-to-lagging indicators (a measure of economic excess) also continued higher for the sixth straight month to the highest level since November.

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.

Business Cycle Indicators (%) September August July June 6-Month % (AR) 2008 2007 2006
Leading 1.0 0.4 1.0 11.8 -2.8 -0.3 1.5
Coincident 0.0 0.1 0.1 -2.2 -0.9 1.6 2.5
Lagging -0.3 -0.2 -0.6 -6.4 2.9 2.8 3.3
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