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Economy in Brief

U.S. Leading and Coincident Indicators Remain Healthy in October
by Gerald D. Cohen  November 19, 2020

• Leading index rises 0.7% in October.

• Coincident indicators up 0.5%, suggesting a healthy start to Q4.

• October coincident measure is up 4.3% annualized above the Q3 average.

The Conference Board reported that its Composite Index of Leading Economic Indicators increased 0.7% during October (-2.9% year-on-year); in line with expectations and the second consecutive gain of this magnitude. The Leading Index is comprised of 10 components which tend to precede changes in overall economic activity. Seven of those components contributed positively, led by declining jobless claims, which just rose in the latest week. Two were unchanged, while new orders of nondefense capital goods excluding aircraft were a drag. Given the dependence of the economy on the progression of COVID-19, the normally forward-looking measures of the Leading Index are less telling.

The Index of Coincident Economic Indicators increased 0.5% in October (-3.8% y/y) following an upwardly revised 0.4% gain in September (was 0.2%). This puts the October coincident index 4.3% annualized above the Q3 average, suggesting a healthy start for Q4. For Q3 as a whole, the coincident index jumped at a 26.7% annual rate while GDP grew 33.1%. Even with its rebound in the last six months, the coincident index is still down 4.6% from its February peak. All four component series of the coincident measure increased led by payroll employment.

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 (%) Oct Sep Aug Oct Y/Y 2019 2018 2017
Leading 0.7 0.7 1.6 -2.9 1.6 5.7 3.9
Coincident 0.5 0.4 0.9 -3.8 1.8 2.5 2.2
Lagging 0.1 -0.3 -0.2 -1.3 2.8 2.5 2.4
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