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Economy in Brief

U.S. Leading Economic Indicators Decline Unexpectedly
by Tom Moeller   May 20, 2011

The Conference Board reported that its Leading Economic Indicators Index unexpectedly declined 0.3% in April after an upwardly revised 0.7% March increase, originally reported at 0.4%. Consensus expectations were for a 0.1% uptick during last month. The latest was the first decline since last June. It helped reduced three-month growth in the series to 5.4% (AR) which was down from its early-2010 high of 10.8%.

The breadth of increase among the components, measured by the 1-month diffusion index, fell to 35%, down from its 80% peak last month. Higher initial claims for jobless insurance, lower (quicker) vendor performance, lower building permits and shorter weekly hours-worked had the largest negative effects on the index. These were offset by a steeper interest rate yield curve, higher consumer expectations and higher stock prices.

The index of coincident indicators ticked 0.1% higher in April after an unrevised 0.2% March increase. The three-month annualized rate of change was 0.8%, down from its January high of 4.4%. Three of the four component series contributed to the April increase.

The lagging indicator index rose 0.5% in April, the fourth increase in the last five months. Strength was led by higher C&I loans and a longer average duration of unemployment. The ratio of coincident-to-lagging indicators, which tends to "lead" the "leaders" fell for the third consecutive month to 94.5%.

The Conference Board figures are available in Haver's BCI database; the components are available there and most are also in USECON. The expectations figure is the AS1REPNA database. Visit the Conference Board's site for coverage of leading indicator series from around the world.

Business Cycle Indicators(%) Apr Mar Feb Y/Y 2010 2009 2008
Leading -0.3 0.7 0.9 5.0 7.8 0.3 -3.1
Coincident 0.1 0.2 -0.1 2.0 1.1 -5.4 -1.3
Lagging 0.5 0.3 0.3 1.8 -2.9 -1.9 3.1
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