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Economy in Brief

U.S. Index of Leading Indicators Falls for a Second Month
by Tom Moeller  February 18, 2016

The Conference Board's Index of Leading Economic Indicators fell 0.2% in January (+2.2% y/y), following a revised 0.3% December decline. The fall matched expectations in the Action Economics Forecast Survey. The three-month change in the index fell to zero, its weakest reading since September. Lower stock prices, higher initial jobless insurance claims, a weaker ISM new orders index and fewer building permits accounted for the decline. These losses were offset by a steeper interest rate yield curve, a longer workweek, more nondefense capital goods orders, the leading credit index and improved consumer expectations for business & economic conditions.

The coincident index improved 0.3% (1.8% y/y) after an unrevised 0.1% uptick in December. The three-month rate growth rate rose to 1.4% (AR). Each of the component series contributed to the rise in the overall index, including industrial production, nonfarm payrolls, personal income less transfers and manufacturing & trade sales.

The lagging index ticked 0.1% higher (3.7% y/y) after an unrevised 0.2% gain. The three-month growth rate slowed to 2.7% (AR), the weakest growth since August. More C&I loans, a higher prime interest rate charged by banks, a higher consumer installment credit/personal income ratio and a stronger services CPI were the largest contributors to the index rise. These were offset by a shorter average duration of unemployment and lessened unit labor costs per unit of output.

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 slightly in January from its December low.

The Conference Board figures are available in Haver's BCI database; the components are available there, and most are also in USECON. The forecast figures for the Consensus are in the AS1REPNA database. Visit the Conference Board's site for coverage of leading indicator series from around the world.

Business Cycle Indicators (%) Jan Dec Nov Jan Y/Y 2015 2014 2013
Leading -0.2 -0.3 0.5 2.2 4.3 5.8 2.9
Coincident 0.3 0.1 0.0 1.8 2.5 2.6 1.4
Lagging 0.1 0.2 0.4 3.7 3.7 3.7 3.9
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