ECRI Leading Index of U.S. Economy Flat to Down

The Weekly Leading Index of the US economy from the Economic Cycle Research Institute (ECRI) edged up in the latest week but remained off the series' high reached roughly one month ago. The six month growth rate of 3.4% also declined from the high of 4.0%.

The latest week's up tick was due to declines in claims for jobless insurance and interest rates which were offset by lower stock prices.

During the last ten years there has been a 69% correlation between six-month growth in the ECRI leading index and two quarter growth in real U.S. GDP.

The components of the ECRI weekly leading index are money supply plus stock & bond mutual funds, the JOC-ECRI industrial materials price index, mortgage applications, bond quality spreads, stock prices, bond yields, and initial jobless insurance claims.

The ECRI Leading Index's recent pattern generally mirrors the Conference Board's Index of Leading Economic Indicators, with a slight lead. Construction of the ECRI Leading Index differs from the Conference Board Index but there has been a 70% correlation between the y/y percent change in the two series over the last 10 years.

The median lead of the ECRI index at business cycle peaks has been 10.5 months and at cycle troughs 3.0 months.

The latest from ECRI is available here.

Sales of existing homes rose 1.0% in March to 6.890M versus Consensus expectations for sales of 6.78M.

Improved methodology, better modeling and the addition of condo & co-op sales affected the figures back to 1999. The data reflect closings of home sales in earlier months.

Single-family home sales increased 1.2% in March but remained 1-2% off last year's highs.

Single family home sales rose m/m across the country's regions. In the Northeast sales improved 1.2% (3.7% y/y) and in the Midwest sales rose 1.5% (2.2% y/y). Sales in the South increased 0.9% (5.4% y/y) and in the West sales rose 1.4% (5.7% y/y).

The median price of an existing single family home rose sharply m/m to $193,600 (+11.3% y/y).

The latest release from the National Association of Realtors is available here.

The IFO indexes of business conditions and expectations in Germany declined further in April as heralded by the ZEW indicator of market sentiment, released last week.

The respondents to thesurvey have become more pessimistic regarding their expectations than regarding their current conditions since April of 2004 as shown in the first chart where the year-to-year changes in expectations and current conditions are plotted.

Other confidence measures released recently include Belgium's BNB (Banque Nationale de Belgique) indicators of business and consumer confidence, both of which declined in April. The only bit of optimism, surprisingly, was shown in Italy's ISEA (Instituto Nationale de Statistica) index of consumer confidence which increased by 0.58% from March and 3.05% from April, 2004. The year-to-year changes in this measure are shown in the second chart together with the year-to-year changes in Belgium's measure of consumer confidence. Italy's consumers have, so far this year, shown positive changes from the corresponding months of 2004 while Belgium consumers have become negative.