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Economy in Brief

U.S. Leading Economic Indicators Improve
by Tom Moeller  May 18, 2017

The Conference Board's Composite Index of Leading Economic Indicators increased 0.3% (3.2% y/y) during April, the same as in March, initially reported as 0.4%. A 0.3% rise had been expected in the Action Economics Forecast Survey. Three-month growth eased to 4.5% (AR) from its peak of 6.6% in February.

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

The Index of Coincident Economic Indicators also increased 0.3% during April after a 0.3% March gain, revised from 0.2%. The latest gain left the three-month growth rate at 2.5% (AR), up from 1.4% during Q1. 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 a notable rise in industrial production.

The Index of Lagging Economic Indicators increased 0.3% (2.5% y/y) following a 0.1% uptick, revised from no change. Three-month growth of 2.6% was down from 4.0% growth late in 2015 and early in 2016. A longer duration of unemployment, a higher prime interest rate, more C&I loans and a higher consumer installment credit/personal income ratio where offset by slower growth in the services CPI and lessened growth in unit labor costs.

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 eased slightly m/m, but has been moving sideways since early last year.

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.

Household Borrowing in Historical Perspective from the Federal Reserve Bank of New York is available here.

Business Cycle Indicators (%) Apr Mar Feb Apr Y/Y 2016 2015 2014
Leading 0.3 0.3 0.5 3.2 1.2 4.4 5.6
Coincident 0.3 0.3 0.1 2.0 1.6 2.3 2.5
Lagging 0.3 0.1 0.2 2.5 3.4 3.7 3.6
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