Leading index dips in April, but forecasts growth
A monthly index forecasting economic conditions in the United States has dipped, but signals continued growth.
The Conference Board reported that its Leading Economic Indicator (LEI) fell three-tenths of a percent to 114 in April. The monthly decrease is only the second, however, since March 2009.
Separate measures of current and past economic performance increased in April.
“Overall, the composite indexes still point to strengthening business conditions in the near term, although the path may be uneven,” said Ataman Ozyildirim, an economist with the Conference Board, a business research and membership group.
Ken Goldstein, another economist with the Conference Board, agreed. “The economy has been growing moderately and delivering some new jobs,” Goldstein said. “Economic growth will likely continue through the summer and fall, but the pace of economic activity may be choppy.”
For April, six of the 10 components used to calculate the LEI retreated: building permits, manufacturing hours, supplier deliveries and new orders for both consumer and capital goods. Moreover, average weekly claims for unemployment insurance were up. The advancing indicators were consumer expectations, interest rate spread, the real money supply and stock prices.
The LEI rose a combined 1.6 percent in March and February. With the April decline, though, the pace of growth in the LEI has moderated to 3.5 percent. That’s still up from the 2.8 percent rate for the previous six months.
Gross domestic product, the broad measure of goods and services produced in the country grew at an annual pace of
1.7 percent during the first quarter of 2011, down from 3.1 percent growth in the fourth quarter of 2010.
The Coincident Economic Index (CEI), a measure of current economic conditions, edged up a tenth in April to 102.8. The CEI has increased two-tenths of a percent over the past three months and 1.3 percent over the past six months.
For April, three of four components used in the CEI advanced: nonfarm payrolls, personal income and sales. Production held steady.
The Lagging Economic Index (LAG), a measure of past economic performance, rose five-tenths of a percent to 108.8 in April. The LAG has climbed 1.1 percent over the past three months.
For April, four of seven components of the index advanced: business loans, labor costs and the price of services. Moreover, the average duration of unemployment declined. Consumer credit dropped, while inventories and the average prime interest rate held steady.