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Economy in Brief

U.S. Leading Economic Indicators Edge Higher Ahead of Coronavirus
by Tom Moeller  March 19, 2020

The Conference Board's Composite Index of Leading Economic Indicators rose 0.1% during February following a 0.7% January increase, revised from 0.8%. The latest reading compared to zero change expected in the Action Economics Forecast Survey. The series is comprised of 10 components which tend to precede changes in the overall economy.

Last month's gain reflected mixed performance amongst the component series. Contributing positively to the index was the length of the factory sector workweek. Consumer expectations for business/economic conditions, factory orders for consumer goods & materials and the leading credit index also contributed positively. Having a negative effect on the leading index were the ISM new orders index, building permits, the interest rate spread between 10-year Treasuries and Fed funds, and initial claims for unemployment insurance. New orders for capital goods and stock prices exhibited neutral effects.

Three-month growth in the leading index held steady at 2.2% (AR). The y/y change of 0.7% compared to a 6.5% high in September 2018.

The Index of Coincident Economic Indicators rose 0.3% during February, its largest rise in three months. Each of the four the component series contributed positively to last month's index rise including payroll employment, personal income less transfer payments, industrial production and manufacturing & trade sales.

Three-month growth in the coincident index of 1.5% (AR) remained down from 3.5% in August 2018.

The Index of Lagging Economic Indicators rose 0.4% in February following stability in January. Contributing positively to the index change were the average duration of unemployment, the business sector inventory/sales ratio, growth factory sector unit labor costs and the ratio of consumer credit outstanding to personal income. Commercial & industrial loans outstanding had a negative effect. The prime rate charged by banks and growth in the services CPI had neutral effects.

Three-month growth in the lagging index remained low at 1.1%.

The ratio of coincident-to-lagging economic indicators is considered another leading indicator of economic activity. It slipped to 98.6 and remained in a sideways trend.

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 (%) Feb Jan Dec  Y/Y 2019 2018 2017
Leading 0.1 0.7 -0.3 0.7 1.5 5.7 3.9
Coincident 0.3 0.1 0.0 1.4 1.8 2.5 2.2
Lagging 0.4 0.0 -0.1 1.8 2.8 2.5 2.4
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