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Economy in Brief

Gains in U.S. Leading Economic Indicators Weaken
by Tom Moeller March 18, 2010

The Conference Board's Index of Leading Economic Indicators rose a modest 0.1% last month following an unrevised 0.3% January increase. While still indicating economic recovery, strength in forward momentum has been lost. The three-month rate of increase at 6.8% was its weakest since April. 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. Four of the ten components rose during February versus nearly all of them during December. During the most recent six months, however, all of the series rose. Prominent in last month's increase was a steeper interest rate yield curve and faster growth in the money supply. A shorter workweek, probably weather related, subtracted 0.3 percentage points from the leaders' increase.

Continuing to suggest just modest economic growth was the coincident indicator series which rose 0.1% after no change during January, revised from 0.2%. The three-month change of 0.8% was diminished from its December peak of 2.0%. 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.

The lagging index rose for the first time since January 2009. A shorter duration of unemployment and a faster increase in labor costs turned the change positive. The ratio of coincident-to-lagging indicators (another leading indicator) slipped following ten months of increase.

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