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Economy in Brief

U.S. Leading Economic Indicators Nudge Higher
by Tom Moeller  November 18, 2016

The Conference Board's Composite Index of Leading Economic Indicators improved 0.1% during October (1.1% y/y) following an unrevised 0.2% September increase. The gain matched expectations in the Action Economics Forecast Survey. The six-month change in the index fell to 1.5% (AR), well below its peak growth of 7.5% in mid-2014.

Contributing positively to the index last month were a steeper interest rate yield curve, factory sector average weekly hours, nondefense capital goods orders, factory orders for consumer goods, building permits and the leading credit index. These were offset by weaker consumer expectations for business/economic conditions, stock prices, a lower ISM new orders diffusion index and more initial claims for unemployment insurance.

The coincident index increased 0.1% (1.4% y/y) after a 0.1% rise, revised from 0.2%. Six-month growth eased to 1.6%. Each of the component series contributed positively to the index, including nonfarm payrolls, personal income less transfers, manufacturing & trade sales and industrial production.

The lagging index rose 0.2% (3.1% y/y) after an unrevised 0.2% gain. Six-month growth fell to 2.5% versus a 4.9% high early last year. The change in commercial & industrial loans outstanding, the consumer installment credit/income ratio and the average duration of unemployment contributed positively to the index. The change in factory sector unit labor costs and the 6-month change in the services CPI contributed negatively.

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 slipped m/m to a record low.

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.

The Final Crisis Chronicle: The Panic of 1907 and the Birth of the Fed from the Federal Reserve Bank of New York can be found here.

Business Cycle Indicators (%) Oct Sep Aug Oct Y/Y 2015 2014 2013
Leading 0.1 0.2 -0.2 1.1 4.3 5.8 2.9
Coincident 0.1 0.1 0.2 1.4 2.5 2.6 1.4
Lagging 0.2 0.2 0.3 3.1 3.7 3.7 3.9
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