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Economy in Brief

U.S. Leading Economic Indicators Decline
by Tom Moeller  September 22, 2016

The Conference Board's Composite Index of Leading Economic Indicators fell 0.2% during August (+1.1% y/y) following a 0.5% July gain, revised from 0.4%. It was the first decline in three months. Expectations had been for no change in the Action Economics Forecast Survey. The three-month change in the index held steady at 2.3% (AR), but was below its peak growth of 7.1% roughly one year ago.

Contributing negatively to the index last month were a shorter factory sector workweek, more initial claims for jobless insurance, a lower ISM new orders index, fewer nondefense capital goods orders and fewer building permits. These declines were offset by positive readings from a gain in stock prices, a steeper interest rate yield curve and the leading credit index.

The coincident index improved 0.1% (1.6% y/y) following a 0.3% increase, revised from 0.4%. Three-month growth of 2.5% (AR) was the strongest since September. Nonfarm payrolls, personal income less transfers and manufacturing & trade sales contributed positively to the index. Industrial production contributed negatively for the first time in three months.

The lagging index rose 0.2% (3.0% y/y) after a 0.2% gain, revised from 0.1%. Three-month growth weakened further to 0.7% versus a 5.1% high three months ago. The average duration of unemployment, higher consumer credit-to-income ratio and a higher services CPI had the largest positive effects on the total index last month. Offsetting these gains were fewer commercial & industrial loans outstanding.

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 reversed July's increase.

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 (%) Aug Jul Jun Aug Y/Y 2015 2014 2013
Leading -0.2 0.5 0.2 1.1 4.3 5.8 2.9
Coincident 0.1 0.3 0.3 1.6 2.5 2.6 1.4
Lagging 0.2 0.2 -0.2 3.0 3.7 3.7 3.9
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