The Conference Board Leading Economic Index (LEI) for the U.S. marginally improved this month – but the authors believe the outllook “suggests economic growth will remain moderate into the New Year, with little reason to expect growth to pick up substantially”
This index is designed to forecast the economy six months in advance. The market (from Bloomberg) expected this index’s month-over-month change at -0.3 % to 0.4 % (consensus 0.2%) versus the +0.1 % reported.
ECRI’s Weekly Leading Index (WLI) is forecasting very slow or possible negative growth over the next six months.
Additional comments from the economists at The Conference Board add context to the index’s behavior.
The Conference Board Leading Economic Index® (LEI) for the U.S. increased 0.1 percent in August to 123.7 (2010 = 100), following no change in July, and a 0.6 percent increase in June.
“The U.S. LEI suggests economic growth will remain moderate into the New Year, with little reason to expect growth to pick up substantially,” said Ataman Ozyildirim, Director of Business Cycles and Growth Research at The Conference Board. “Average working hours and new orders in manufacturing have been weak, pointing to more slow growth in the industrial sector. However, employment, personal income and manufacturing and trade sales have all been rising, helping to offset the weakness in industrial production in recent months.”
The Conference Board Coincident Economic Index® (CEI) for the U.S. increased 0.1 percent in August to 112.6 (2010 = 100), following a 0.4 percent increase in July, and a 0.1 percent increase in June.
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LEI as an Economic Monitoring Tool:
The usefulness of the LEI is not in the headline graphics but by examining its trend behavior. Econintersect contributor Doug Short (Advisor Perspectives / dshort.com) produces two trend graphics. The first one shows the six month rolling average of the rate of change – shown against the NBER recessions. The LEI has historically dropped below its six-month moving average anywhere between 2 to 15 months before a recession.
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