Global| Aug 18 2016U.S. Leading Economic Indicators Rise
by:Tom Moeller
|in:Economy in Brief
Summary
The Conference Board's Composite Index of Leading Economic Indicators increased 0.4% during July (1.2% y/y) following an unrevised 0.3% June gain. It was the third rise in the last four months. Expectations had been for a 0.3% [...]
The Conference Board's Composite Index of Leading Economic Indicators increased 0.4% during July (1.2% y/y) following an unrevised 0.3% June gain. It was the third rise in the last four months. Expectations had been for a 0.3% increase in the Action Economics Forecast Survey. The three-month change in the index eased slightly to 2.3% (AR), and was below its peak growth of 7.1% roughly one year ago.
Virtually all of the component series contributed positively to the total, including higher stock prices, a steeper interest rate yield curve, longer average weekly production sector hours-worked, lower initial claims for unemployment insurance and the leading credit index. Lower consumer expectations for business/economic conditions had a negative influence and building permits were neutral.
The coincident index increased 0.4% (1.6% y/y) following a 0.2% rise, revised from 0.3%. It was the strongest rise since December 2014. Three-month growth of 1.8% (AR) was the strongest since February. Each of the component series, including nonfarm payrolls, industrial production, personal income less transfers and manufacturing & trade sales contributed positively to the index.
The lagging index improved 0.1% (3.0% y/y) following an unrevised 0.1% fall. Three-month growth weakened further to 1.7% versus a 4.7% high two months ago. A higher consumer credit-to-income ratio and a higher inventory-to-sales ratio had the largest positive effects on the total index last month. Offsetting these gains were a longer duration of unemployment, fewer commercial & industrial loan outstanding, and lessened 6-month growth in the services CPI.
The ratio of coincident-to-lagging indicators also is a leading indicator of economic activity. It measures excesses in the economy relative to its ongoing performance. This ratio rose to the highest level in three months.
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 (%) | Jul | Jun | May | Jul Y/Y | 2015 | 2014 | 2013 |
|---|---|---|---|---|---|---|---|
| Leading | 0.4 | 0.3 | -0.2 | 1.2 | 4.3 | 5.8 | 2.9 |
| Coincident | 0.4 | 0.2 | -0.1 | 1.6 | 2.5 | 2.6 | 1.4 |
| Lagging | 0.1 | -0.1 | 0.4 | 3.0 | 3.7 | 3.7 | 3.9 |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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