Leading index signals growth ahead
An index forecasting economic performance in the United States continues to rise, signaling more growth in the months ahead.
The Conference Board reported its Leading Economic Index rose four-tenths of a percent to 126.7 in March. A separate measure of current economic performance also increased. A measure of past performance held steady.
The Leading Economic Index has increased 2.4 percent over the past six months with growing strength among its individual indicators.
“The March increase and upward trend in the U.S. LEI point to continued economic growth in 2017, with perhaps an acceleration later in the year if consumer spending and investment pick up,” said Ataman Ozyildirim, an economist with the Conference Board, a business research and membership association.
“The gains among the leading indicators were very widespread, with new orders in manufacturing and the interest rate spread more than offsetting declines in the labor market components in March,” Ozyildirim said.
Gross domestic product, the broad measure of goods and services produced in the country, grew at an annual rate of 2.1 percent during the fourth quarter of 2016 after increasing 3.5 percent in the third quarter.
For March, eight of 10 components of the Leading Economic Index advanced, including consumer expectations for business conditions, interest rate spread, leading credit and new orders indexes, new orders for consumer and capital goods and stock prices. An increase in initial claims for unemployment benefits pulled the index down. Average weekly manufacturing hours declined.
The Coincident Economic Index, a measure of current conditions, rose two-tenths of a percent to 114.9. The index has increased 1 percent over the past six months.
For March, all four components of the index advanced: industrial production, nonfarm payrolls, personal income and sales.
The Lagging Economic Index, a measure of past performance, remained unchanged at 123.6. The index has increased four-tenths of a percent over the past three months.
For March, three of seven components of the index advanced: average prime rate charged by banks, consumer credit and inventories. Three components retreated, including the cost of labor and services. An increase in the average duration of unemployment also pulled down the index. Commercial and industrial financing held steady.