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Economy in Brief

U.S. Index of Leading Economic Indicators Increases Sharply in October
by Tom Moeller  November 18, 2021

• Most components are positive.

• Coincident indicators resume increase.

• Lagging indicators rise moderately.

The Conference Board's Composite Index of Leading Economic Indicators increased 0.9% (9.3% y/y) during October following a 0.1% September uptick, revised from 0.2%. The August gain was revised to 0.7% from 0.8%. It was the largest increase in three months. A 0.8% rise in October had been expected in the Action Economics Forecast Survey. The Leading Index is comprised of 10 components which tend to precede changes in overall economic activity.

Eight of the ten components contributed positively to the October increase, including fewer unemployment claims, an increase in the ISM orders diffusion index, more building permits, a widening of the interest rate spread between  10-year Treasuries and Fed funds as well as the leading credit index. Orders for consumer goods & materials, nondefense capital goods orders and stock prices also added marginally to the index rise. Working lower were the length of the average workweek and consumer expectations for business & economic conditions.

The Index of Coincident Economic Indicators rose 0.5% (3.2% y/y) in October after holding steady in September, unrevised from the initial report. Nonagricultural employment, personal income less transfers, industrial production and real manufacturing & trade sales all rose.

The Index of Lagging Indicators increased 0.4% (1.0% y/y) in October after improving 1.0% during September, revised from 0.3%. Roughly half of the component series rose including the average duration of unemployment, the business inventory/sales ratio and the 6-month change in unit labor costs. Three of the other seven lagging indicators held steady while the consumer debt/personal income ratio fell.

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 2020 2019 2018
Leading 0.9 0.1 0.7 9.3 -4.9 1.6 5.6
Coincident 0.5 0.0 0.1 3.2 -4.3 1.6 2.4
Lagging 0.4  1.0 -0.3 1.0 1.0 2.8 2.5
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