U.S. Leading Economic Indicators Resume Decline in March
by:Tom Moeller
|in:Economy in Brief
Summary
- Drop in leading index follows first rise in two years.
- Coincident Indicators exhibit strength.
- Lagging index holds steady after two monthly increases.
The U.S. Leading Economic Index fell 0.3% (-5.5% y/y) during March after a 0.2% February increase, revised from 0.1%, according to a report by The Conference Board. These two changes followed a 0.5% January decline. A 0.1% slip in March had been expected in the Action Economics Forecast Survey.
Five of ten components contributed negatively to the overall index in March including average weekly claims for unemployment insurance, the ISM new orders index, building permits, the spread between the 10-year Treasury and the Fed funds rate, and consumer expectations for business/economic conditions. The length of the average workweek, stock prices and the leading credit index contributed positively. New orders for capital goods and new orders for consumer goods made minimal positive contributions to the index change.
A 0.3% increase in the Coincident Economic Index in March followed a 0.1% February rise. These gains came after a 0.3% January decline. All four of the components made positive contributions to the coincident index in March, including personal income less transfers, industrial production, nonagricultural payroll employment and real manufacturing & trade sales.
The Lagging Economic Index held steady last month (+1.0% y/y) after increasing 0.3% in February and 0.6% in January. Two of the index’s seven components made slightly negative contributions last month, the average duration of unemployment and commercial & industrial loans outstanding. The six-month change in business inventories and the six-month change in labor costs made minimally negative contributions. The six-month change in the services CPI contributed positively, while banks’ prime rate and the ratio of consumer credit-to-income were unchanged.
The ratio of the coincident index to the lagging index is also viewed as a leading indicator of economic activity. This measure rose 0.2% in March, following two straight monthly declines. It was 0.7% below its most recent peak in December of last year.
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 website for coverage of leading indicator series from around the world.
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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