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Economy in Brief

U.S. Leading Economic Indicators Suggest Continued Expansion
by Tom Moeller  April 20, 2017

The Conference Board's Composite Index of Leading Economic Indicators increased 0.4% (3.5% y/y) during March following a 0.5% February rise, initially reported as 0.6%. A 0.2% rise had been expected in the Action Economics Forecast Survey. The latest rise left three-month growth at 6.2% (AR) after 3.6% growth during Q4'16.

Most of the component series contributed to the index rise. A steeper interest rate yield curve and a higher ISM new orders index had the largest positive effects. These were followed by improved consumer expectations for business/economic conditions, higher stock prices, more building permits and the leading credit index. A shorter workweek and more initial claims for unemployment insurance contributed negatively to the index.

The Index of Coincident Economic Indicators increased 0.2% during March (2.0% y/y) following a 0.2% February rise, which was revised slightly lower. January's reading also was revised down to no change. The latest gain left the three-month growth rate at 1.4% (AR) after a 2.5% Q4 rise. Each of the index component series contributed positively to last month's rise, including payroll employment, real personal income less transfers, manufacturing & trade sales and industrial production.

The Index of Lagging Economic Indicators remained unchanged (2.3% y/y) following two months of 0.2% increase. Three-month growth fell to 1.6%, its weakest increase since August. A rise in the prime rate charged by banks and an increase in the business sector inventory-to-sales ratio where offset by slower growth in the services CPI and a shorter duration of unemployment.

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 increased slightly after two months at its 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 (%) Mar Feb Jan Mar Y/Y 2016 2015 2014
Leading 0.4 0.5 0.6 3.5 1.2 4.4 5.6
Coincident 0.2 0.2 0.0 2.0 1.6 2.3 2.5
Lagging 0.0 0.2 0.2 2.3 3.4 3.7 3.6
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