Leading index forecasts U.S. growth into 2016

A monthly index forecasting economic performance in the United States continues to increase, forecasting growth into the new year.

The Conference Board reported that its Leading Economic Index rose four-tenths of a percent to 124.6 in November. With the latest gain, the LEI has advanced 1.5 percent over the past six months, slower than the 1.9 percent gain over the previous six-month span.

Separate measures of current and past economic performance also increased in November.

“Although the six-month growth rate of the LEI has moderated, the economic outlook for the final quarter of the year and into the new year remains positive,” said Ataman Ozyildirim, an economist with the Conference Board, a business research and membership association.

Slowing in the growth of the LEI has corresponded with slowing in the growth of gross domestic product, the broad measure of goods and services produced in the country. GDP grew at an annual rate of 2.1 percent in the third quarter after a 3.9 percent gain in the second quarter.

For November, five of 10 components of the LEI advanced: building permits, interest rate spread, a leading credit index, new orders for consumer goods and stock prices. Four components retreated, including consumer expectations for business conditions, new orders for capital goods and a new orders index. An increase in average weekly initial claims for unemployment benefits also pulled down the index. Average weekly manufacturing hours held steady.

The Coincident Economic Index, a measure of current performance, edged up a tenth of a percent to 113.3. The index has climbed 1.2 percent over the past six months.

For November, three of four components of the index increased: payrolls, personal income and sales. Industrial production decreased.

The Lagging Economic Index, a measure of past performance, rose three-tenths of a percent to 119.6. The index has gained 1 percent over the previous three months.

For November, three of seven components of the index advanced: commercial and industrial financing, consumer credit and cost of services. Inventories and labor costs retreated. The average duration of unemployment and average prime rate charged by banks remained unchanged.