The Conference Board Leading Economic Index (LEI) for the U.S marginally improved this month – and the authors believe “the outlook remains positive with little chance of a downturn in the near-term”.

This index is designed to forecast the economy six months in advance. The market (from Bloomberg) expected this index’s value at 0.1 % to 0.3 % (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 February to 123.2 (2010 = 100), following a 0.2 percent decline in January, and a 0.3 percent decline in December.

“The U.S. LEI increased slightly in February, after back-to-back monthly declines, but housing permits, stock prices, consumer expectations, and new orders remain sources of weakness,” said Ataman Ozyildirim, Director of Business Cycles and Growth Research at The Conference Board. “Although the LEI’s six-month growth rate has moderated considerably in recent months, the outlook remains positive with little chance of a downturn in the near-term.”

The Conference Board Coincident Economic Index® (CEI) for the U.S. increased 0.1 percent in February to 113.3 (2010 = 100), following a 0.3 percent increase in January, and a 0.2 percent increase in December.

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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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