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Economy in Brief

U.S. Leading Economic Indicators Index Holds Steady
by Tom Moeller  December 19, 2019

The Conference Board's Composite Index of Leading Economic Indicators remained unchanged (+0.1% y/y) during November. This came after October's 0.2% decline, revised from -0.1%, and an unrevised 0.2% shortfall in September. The index also fell 0.2% in August. The latest reading matched expectations in the Action Economics Forecast Survey. The series is comprised of 10 components which tend to precede changes in the overall economy.

Performance amongst the components of the Leading Indicator index remained mixed last month. Contributing positively to the index change were stock prices, factory orders for consumer goods, building permits, the yield spread between 10-year Treasuries & Fed Funds, consumer expectations for business/ economic conditions and the leading credit index. Contributing negatively were initial claims for unemployment insurance and the ISM new orders index. Holding steady were the average workweek and nondefense capital goods orders excluding aircraft.

Three-month growth in the leading index of -1.4% (AR) was negative for the second straight month and below the high of +9.1% in December 2017. The y/y change eased slightly to 0.1% compared to a 6.6% high in September of last year.

The Index of Coincident Economic Indicators rose 0.4% during November (1.5% y/y) after easing 0.1% in October, revised from no change. Each of the component series contributed positively to last month's rise including payroll employment, personal income less transfer payments, manufacturing & trade sales and industrial production.

Three-month growth in the coincident index held steady m/m at 1.5% (AR) but was down from 2.3% in August.

The Index of Lagging Economic Indicators improved 0.5% in November (2.6% y/y) after rising 0.2%, revised from 0.1%. Contributing positively to the index change were the average duration of unemployment, the ratio of consumer credit outstanding to personal income and six-month growth in the services CPI. The prime rate charged by banks and growth in factory sector unit labor costs contributed negatively to the index change. The business sector I/S ration held steady as did commercial & industrial loans outstanding.

Three-month growth in the lagging index was 3.0%, up from -1.1% in October. Twelve-month growth has been fairly steady at 2.6%.

The ratio of coincident-to-lagging economic indicators is sometimes considered a leading indicator of economic activity. It was unchanged from October but up from the July 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 (%) Nov Oct Sep Nov Y/Y 2018 2017 2016
Leading 0.0 -0.2 -0.2 0.1 5.7 4.0 1.0
Coincident 0.4 -0.1 0.1 1.5 2.2 2.0 1.1
Lagging 0.5 0.2 0.1 2.6 2.4 2.5 3.0
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