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Economy in Brief

U.S. Leading Economic Indicators Improve
by Tom Moeller  April 18, 2019

The Conference Board's Composite Index of Leading Economic Indicators increased 0.4% (3.1% y/y) during March following a 0.1% uptick in February, revised from 0.2%. A 0.4% rise had been expected in the Action Economics Forecast Survey. The series is comprised of 10 components which tend to precede changes in the overall economy.

The improvement in the Leading Indicators reflected fewer initial claims for unemployment insurance, improvement in the leading credit index, higher stock prices and increased nondefense capital goods orders. Contributing negatively to the index change were the interest rate spread between 10-Yr. Treasury yields and Fed funds, fewer building permits, consumer expectations for business/economic conditions, the ISM new orders index and factory orders for consumer goods & materials. The length of the average workweek had no effect on the leading index change.

Three-month growth of 1.8% (AR) in the leading index remained sharply below the growth logged during 2017 and 2018.

The Index of Coincident Economic Indicators edged 0.1% higher (2.1% y/y) in March, the same as in February. The change in personal income less transfer payments, nonagricultural payroll employment and manufacturing & trade sales contributed positively to the index change while industrial production had a negative effect.

Three-month growth in the coincident index fell sharply to 0.8% from 3.1% growth three months ago.

The Index of Lagging Economic Indicators rose 0.1% last month (2.9% y/y) following no-change in February, and firm gains in the prior four months. The number of commercial & industrial loans outstanding, the ratio of consumer credit outstanding-to-personal income and six-month growth in the services CPI had positive effects on the index change. These gains were offset by a decline in the average duration of unemployment.

Three-month growth in the lagging index eased to 2.7% (AR) and remained stronger than six months earlier.

The ratio of coincident-to-lagging economic indicators is sometimes considered a leading indicator of economic activity. It continued its long-lived sideways movement during March.

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

Business Cycle Indicators (%) Mar Feb Jan Mar Y/Y 2018 2017 2016
Leading 0.4 0.1 0.0 3.1 5.7 4.0 1.0
Coincident 0.1 0.1 0.0 2.1 2.2 2.0 1.1
Lagging 0.1 0.0 0.6 2.9 2.4 2.5 3.0
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