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Economy in Brief

U.S. Leading Economic Indicators Improve Again in December
by Tom Moeller  January 21, 2022

• Component increases are widespread.

• Coincident indicators rise, despite dip in production.

• Lagging indicators increase minimally.

The Conference Board's Composite Leading Economic Indicators index rose 0.8% (8.5% y/y) during December after increasing 0.7% in November, revised from 1.1%. The latest increase matched expectations 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 index components contributed positively to the December increase including unemployment insurance claims, the ISM orders index, building permits, the leading credit index and the interest rate spread between 10-year Treasuries and Fed funds. Orders for consumer goods & materials, nondefense capital goods orders as well as stock prices also contributed positively. The index of consumer expectations for business & economic conditions fell while average factory sector hours held steady.

The Index of Coincident Economic Indicators improved 0.2% (3.2% y/y) during December after edging 0.1% higher in November, revised from 0.3%. Nonagricultural employment, personal income less transfers and real manufacturing & trade sales contributed positively but industrial production had a negative influence on the overall index change.

The Index of Lagging Economic Indicators edged 0.1% higher during December (0.9% y/y), the same as it did in November which was revised from -0.1%. The average duration of unemployment, the manufacturing & trade inventory-to-sales ratio and real C&I loans outstanding contributed positively to the index change. The change in labor costs per unit of output, the six-month change in the services CPI and the consumer installment/personal income ratio contributed negatively. The banks' prime rate held steady.

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 (%) Dec Nov Oct Dec Y/Y 2021 2020 2019
Leading 0.8 0.7 0.7 8.5 7.6 -3.4 1.5
Coincident 0.2 0.1 0.5 3.2 3.9 -3.6 1.1
Lagging 0.1 0.1 0.4 0.9 -2.1 1.1 3.2
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