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Economy in Brief

U.S. Index of Leading Indicators Continues to Decline in August
by Tom Moeller  September 22, 2022

• Fall is seventh in eight months, raising recession risk.

• Coincident indicators edge higher.

• Lagging indicators continue to increase.

The Conference Board's Composite Leading Economic Indicators Index fell 0.3% (-1.0 y/y) in August following a 0.5% July decline, revised from -0.4%. The Action Economics Forecast Survey expected no change in the Leading Indicators index for last month.

Four of the Leading Index's ten components made negative contributions in August. Declines came from the factory sector workweek, the ISM new orders index, building permits and consumer expectations for business/economic conditions. Initial jobless insurance claims, the slope of the yield curve, nondefense capital goods orders less aircraft, stock prices and the leading credit index contributed positively to the index change. Factory orders for consumer goods held steady.

The Index of Coincident Economic Indicators improved 0.1% (2.2% y/y) in August following a 0.5% July increase, revised from 0.3%. Payroll employment, personal income and business sales made positive contributions to the August increase. Industrial production contributed negatively.

The Index of Lagging Economic Indicators increased 0.7% (7.1% y/y) in August following an unrevised 0.4% July gain. Three of the index's seven components made positive contributions, one made a negative contribution and three were unchanged.

The ratio of the Coincident index to the Lagging index also is seen as a leading indicator. The ratio has been steadily declining since November, another indication of rising recession risks.

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.

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