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Economy in Brief

U.S. Leading Economic Indicators Strengthen
by Tom Moeller  January 26, 2017

The Conference Board's Composite Index of Leading Economic Indicators increased 0.5% during December (1.1% y/y) following a revised 0.1% November uptick, initially reported as unchanged. It was the strongest gain since July, and equaled expectations in the Action Economics Forecast Survey. During all of last year, the index rose 1.1%, the weakest rise of the economic expansion.

A steeper interest rate yield curve had the largest positive effect on the leading index last month, followed by higher stock prices, improved consumer expectations for business/economic conditions, a higher ISM new orders index and the leading credit index. Higher initial claims for unemployment insurance contributed negatively.

The Index of Coincident Economic Indicators increased 0.3% (1.2% y/y) after no change in November. It too was the strongest increase since July. During all of last year, the index rose 1.2% following gains of roughly 2.5% in the prior two years. Each of the component series contributed positively to the coincident index last month, including payroll employment, real personal income less transfers, industrial production and manufacturing & trade sales.

The Index of Lagging Economic Indicators rose 0.3% (3.0% y/y) after a 0.4% gain. The 3.0% gain during all of last year was on a par with the increases back to 2012. Commercial & industrial loans outstanding, the prime rate, the average duration of unemployment and the ratio of consumer installment credit to personal income contributed positively to the index.

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.

Business Cycle Indicators (%) Dec Nov Oct Dec Y/Y 2016 2015 2014
Leading 0.5 0.1 0.2 1.1 1.0 4.3 5.8
Coincident 0.3 0.0 0.2 1.2 1.4 2.5 2.6
Lagging 0.3 0.4 0.2 3.0 3.3 3.7 3.7
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