Leading index forecasts accelerating growth
An index forecasting economic performance in the United States has increased for a third straight month, signaling faster growth in the months ahead.
The Conference Board reported that its Leading Economic Index climbed eight-tenths of a percent to 100.9 in March. Over the past six months, the index has increased 2.7 percent.
Separate measures of current and past economic conditions also increased in March.
“After a winter pause, the leading indicators are gaining momentum and economic growth is gaining traction,” said Ataman Ozyildirim, an economist for the Conference Board, a business research and membership association.
“While the improvements were broad-based, labor market indicators and the interest rate spread largely drove the March increase, offsetting the negative contribution from building permits. And for the first time in many months, the consumer outlook is much less negative.”
Ken Goldstein, another economist with the Conference Board, said the index forecasts accelerated growth for the spring and summer.
“The economy is rebounding from widespread inclement weather, and the strengthening in the labor market is beginning to have a positive impact on growth,” Goldstein said. “Overall, this is an optimistic report. But the focus will continue to be on whether improvements in the labor market can be sustained, fueling stronger economic performance over the next few months.”
Even as the Leading Economic Index has increased, so has gross domestic product, the broad measure of goods and services produced in the country. GDP expanded at an annual rate of 2.6 percent during the fourth quarter of 2013 after increasing 4.6 percent during the third quarter.
For March, six of the 10 components of the Leading Economic Index advanced: average weekly manufacturing hours, interest rate spread, a leading credit index, new orders for capital goods and stock prices.
Moreover, a decline in average weekly initial claims for unemployment benefits also bolstered the index. Three components retreated: building permits, consumer expectations for business conditions and a new orders index. New orders for consumer goods held steady.
The Coincident Economic Index, a measure of current performance, rose two-tenths of a percent to 108.3 in March. The index has increased nine-tenths of a percent over the past six months.
For March, all four indicators of the index advanced: industrial production, nonfarm payrolls, personal income and sales.
The Lagging Economic Index, a measure of past performance, increased six-tenths of a percent to 123 in March. The index has 1.5 percent over the past three months.
For March, six of seven components of the index advanced: commercial and industrial financing, consumer credit, cost of services, inventories and labor costs. A decline in the average duration of unemployed also bolstered the index. The average prime rate charged by banks remained unchanged.