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Economy in Brief

U.S. Leading Economic Indicators Weaken Again
by Tom Moeller  October 18, 2019

The Conference Board's Composite Index of Leading Economic Indicators eased 0.1% (+0.4% y/y) during September following a 0.2% August decline, revised from no change. A 0.1% increase 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.

Performance amongst the components of the Leading Indicator index was mixed last month. Contributing negatively to index change were the readings for ISM new orders, building permits, the yield spread between 10-year Treasuries & Fed Funds and consumer expectations for business/ economic conditions. Offsetting these declines were initial claims for jobless insurance, stock prices and the leading credit index. The average workweek was unchanged.

Three-month growth in the leading index of 0.4% (AR) remained below the high of 9.1% in December 2017. The y/y change also weakened to 0.4%.

The Index of Coincident Economic Indicators held steady (1.5% y/y) during September following an unrevised 0.3% August gain. Stability in the index reflected increases in payroll employment, personal income less transfer payments and manufacturing & trade sales which were offset by a decline in industrial production.

Three-month growth in the coincident index fell to 1.1% (AR) from 2.3% in August.

The Index of Lagging Economic Indicators improved 0.1% (3.2% y/y) last month following a 0.4% decline during August, revised from -0.3%. The prime rate, the change in unit labor costs and commercial & industrial loans outstanding contributed negatively to the index change. Offsetting these declines were gains in the ratio of consumer credit outstanding to personal income, the average duration of unemployment and the manufacturing & trade I/S ratio. The 6-month change in the services CPI had no effect on the lagging indicator index change.

Three-month growth in the lagging index declined to 1.9%, down from 4.5% growth as of July.

The ratio of coincident-to-lagging economic indicators is sometimes considered a leading indicator of economic activity. It was little changed versus August and higher than the July low.

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.

U.S. Economic Outlook and Monetary Policy from Fed Vice Chair Richard H. Clarida is available here.

Business Cycle Indicators (%) Sep Aug July Sep Y/Y 2018 2017 2016
Leading -0.1 -0.2 0.4 0.4 5.7 4.0 1.0
Coincident 0.0 0.3 0.0 1.5 2.2 2.0 1.1
Lagging 0.1 -0.4 0.7 3.2 2.4 2.5 3.0
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