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Economy in Brief

U.S. Leading Economic Indicators Surge
by Tom Moeller  November 20, 2017

The Conference Board's Composite Index of Leading Economic Indicators jumped 1.2% during October following a 0.1% September rise, revised from -0.2%. It was the strongest monthly increase since November 2013 and occurred as hurricane effects on the economy subsided. A 0.5% rise had been expected in the Action Economics Forecast Survey. Three-month growth in the index strengthened to 6.7% (AR) from 2.8% in September.

Performance amongst the components of the leading index broadly improved, led by a decline in weekly unemployment insurance claims. This accounted for nearly half of the total's increase. The ISM new orders index, building permits, the interest rate spread between 10-Year Treasuries & Fed Funds, consumer expectations for business/economic conditions, stock prices, consumer goods orders and the length of the average workweek also registered positive effects. Nondefense capital goods orders contributed negatively.

The Index of Coincident Economic Indicators increased 0.3% (1.9% y/y) following an unrevised 0.1% uptick in September. Each of the component series, including industrial production, personal income less transfer payments, business sales and payroll employment, contributed positively to the index. Three-month growth in the index rose 1.7% (AR), its best in three months.

The Index of Lagging Economic Indicators rose 0.2% (2.5% y/y) following no change in September, revised from -0.1%. A longer average duration of unemployment had a sharp positive effect on the index as it bounced back from a September decline. Commercial & industrial loans outstanding and the change in the services CPI also had positive effects, while other series were little changed. Three-month growth of 1.9% in the lagging index was reduced from nearly 3.0% early in the year.

The ratio of coincident-to-lagging indicators is often considered to be a leading indicator of economic activity. As economic slack diminishes relative to current performance, the ratio will rise. It improved slightly last month to the highest level in three months.

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 (%) Oct Sep Aug Oct Y/Y 2016 2015 2014
Leading 1.2 0.1 0.4 5.2 1.2 4.4 5.6
Coincident 0.3 0.1 0.0 1.9 1.6 2.3 2.5
Lagging 0.2 0.0 0.2 2.5 3.4 3.7 3.6
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