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Economy in Brief

U.S. Leading Economic Indicators Suggest Continued Recovery
by Tom Moeller February 18, 2010

The uptrend in the Conference Board's Index of Leading Economic Indicators continued last month though it lost a little steam. The rise of 0.3% followed stronger monthly gains dating back to April and the six-month rate of increase at 9.8% (centered) was its weakest since May. The leading index is based on actual reports for eight economic data series. The Conference Board initially estimates two series, consumer and capital goods orders. 

The breadth of increase amongst the component series slipped last month to its lowest since last March. Barely half of the ten components rose during January versus all of them during December. During the most recent six months, however, a stable 80% of the series rose. Prominent in last month's increase was a steeper interest rate yield curve, vendor performance and weekly hours.

Continuing to suggest economic improvement was the coincident indicator series which rose 0.2%. The gain lifted the six-month change to 1.2%, up from -7.9% at its worst in January of last year. Increases in industrial production, real personal income and business sales have been modest but compare to sharp declines late in 2008. Declines in payroll employment also have eased considerably. 

In a continued sign that excesses in the U.S. economy are still falling, the lagging index continues to drop as it has for a year. Leading the decline have been shortened duration of unemployment, lower commercial & industrial loans outstanding and retrenchment in consumer credit. The ratio of coincident-to-lagging indicators (another leading indicator) also continued higher for the tenth straight month to the highest level since September of 2008.

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 latest U.S. Leading Indicators release can be found here here. 

Business Cycle Indicators (%) January December November Oct. 6-Month % (AR) 2009 2008 2007
Leading 0.3 1.2 1.1 9.8 0.4 -2.8 -0.4
Coincident 0.2 0.0 0.3 1.2 -5.1 -1.2 1.4
Lagging -0.1 -0.3 -0.7 -4.6 -1.6 3.2 3.0
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