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Economy in Brief

U.S. Leading Economic Indicator Index Declines in January
by Tom Moeller  February 18, 2022

• Component changes are mixed.

• Coincident indicators continue to rise.

• Lagging indicators increase for fifth straight month.

The Conference Board's Composite Leading Economic Indicators index declined 0.3% (+7.3% y/y) during January after rising 0.7% in December, revised from 0.8%. It was the first monthly decline since February 2021. A 0.2% increase had been expected in the Action Economics Forecast Survey. The Leading Index is comprised of 10 components which tend to precede changes in overall economic activity.

Four of the index's ten components contributed negatively to the January decline including the length of the average workweek, initial unemployment insurance claims, stock prices and consumer expectations for business & economic conditions. Contributing positively were the ISM orders index, building permits, the leading credit index, the interest rate spread between 10-year Treasuries and Fed funds, orders for consumer goods & materials and orders for nondefense capital goods.

The Index of Coincident Economic Indicators improved 0.5% (3.0% y/y) during January after rising an unrevised  0.2% in December. Each of the four components contributed positively to the index change including nonagricultural employment, personal income less transfers, real manufacturing & trade sales and industrial production.

The Index of Lagging Economic Indicators increased 0.7% (4.1% y/y) during January following a 0.4% December gain, revised from 0.1%. The services CPI, average duration of unemployment, real C&I loans outstanding and the consumer installment/personal income ratio contributed positively to the index change. The change in labor costs per unit of output contributed negatively. The banks' prime rate and the manufacturing & trade inventory-to-sales ratio had no effect on the lagging index change last month.

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 (%) Jan Dec Nov Jan Y/Y 2021 2020 2019
Leading -0.3 0.7 0.8 7.3 7.2 -4.1 1.5
Coincident 0.5 0.2 0.2 3.0 4.0 -3.6 1.1
Lagging 0.7 0.4 0.1 4.1 -2.2 1.1 3.2
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