Haver Analytics
Haver Analytics
| Apr 20 2023

U.S. Leading Economic Index Falls in March to the Lowest Level Since Nov. ’20

  • LEI down for the 12th straight month and deeper than expected.
  • Coincident Economic Index up for the fourth consecutive month.
  • Lagging Economic Index down for the first time since Aug. ’21.

The U.S. Leading Economic Index (LEI) fell 1.2% m/m in March after drops of 0.5% in February (-0.3% initially) and 0.5% in January (-0.3% previously), according to a report released today by The Conference Board. A 0.3% m/m March decline had been expected in the Action Economics Forecast Survey. The March LEI at 108.4 was the lowest level since November 2020. Over the six-month period between September 2022 and March 2023, the LEI had fallen 4.5%, deeper than its 3.5% drop over the prior six months (March–September 2022). The year-on-year rate of decline worsened to -7.8% in March, the deepest y/y rate since May 2020, from -6.7% in February. The Conference Board LEI has been a very accurate leading indicator of recessions over the past 60 years. Today’s readings are not good news, flashing signs of a near-term U.S. recession.

Seven of the LEI's ten indicators in March contributed negatively to the index change including initial claims for unemployment insurance, the ISM new orders index, building permits for new private housing units, the S&P 500 index of stock prices, the interest rate spread (10-year Treasury bonds less federal funds rate), average consumer expectations for business conditions, and the leading credit index. Meanwhile, manufacturers’ new orders for nondefense capital goods excluding aircraft orders and manufacturers’ new orders for consumer goods & materials contributed positively. Average weekly hours in manufacturing were unchanged.

The Coincident Economic Index (CEI) rose 0.2% m/m (1.8% y/y) to 110.2 in March, the fourth successive monthly rise, after upwardly revised increases of 0.2% in February (+0.1% initially) and 0.4% in January (+0.2% previously). All four of the CEI’s components made positive contributions to the March rise; they were payroll employment, personal income less transfer payments, industrial production, and manufacturing & trade sales.

The Lagging Economic Index (LAG) fell 0.2% m/m (+5.5% y/y) to 118.3 in March, the first monthly fall since August 2021, after rising 0.2% in February (unrevised) and holding steady in January (+0.1% previously). Four of the LAG's seven components made negative contributions to the index change including the average duration of unemployment, the change in factory sector unit labor costs, commercial & industrial loans outstanding, and the change in the services CPI. In contrast, the average prime rate charged by banks, the manufacturing & trade inventory-to-sales ratio, and the consumer installment credit-to-income ratio contributed positively.

The ratio of the CEI to the LAG, also seen as a leading indicator of recession, rose 0.4% m/m to 93.2 in March after holding at 92.8 in February, a 0.3% January increase and five straight monthly drops. Despite the March m/m rise, the ratio remained down from its March 2021 high of 100.1.

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.

  • Winnie Tapasanun has been working for Haver Analytics since 2013. She has almost 20 years of working in the financial services industry. As Vice President and Economic Analyst at Globicus International, Inc., a New York-based company specializing in macroeconomics and financial markets, Winnie oversaw the company’s business operations, managed financial and economic data, and wrote daily reports on macroeconomics and financial markets. Prior to working at Globicus, she was Investment Promotion Officer at the New York Office of the Thailand Board of Investment (BOI) where she wrote monthly reports on the U.S. economic outlook, wrote reports on the outlook of key U.S. industries, and assisted investors on doing business and investment in Thailand. Prior to joining the BOI, she was Adjunct Professor teaching International Political Economy/International Relations at the City College of New York. Prior to her teaching experience at the CCNY, Winnie successfully completed internships at the United Nations.   Winnie holds an MA Degree from Long Island University, New York. She also did graduate studies at Columbia University in the City of New York and doctoral requirements at the Graduate Center of the City University of New York. Her areas of specialization are international political economy, macroeconomics, financial markets, political economy, international relations, and business development/business strategy. Her regional specialization includes, but not limited to, Southeast Asia and East Asia.   A bilingual (English and Thai) with competency in French, Winnie loves to travel (almost 30 countries) to better understand each country’s unique economy, fascinating culture and people as well as the global economy as a whole.

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