Leading index signals growth through 2013
A monthly index forecasting economic performance in the United States continues to signal growth through the end of the year.
The Conference Board reported that its Leading Economic Index (LEI) advanced six-tenths of a percent to 96 in July. With the latest gain, the index has climbed 2 percent over the past six months, almost twice the increase over the six months before that.
A separate measure of current economic performance also moved higher in July, while a measure of past performance slipped. Gains in the measures of future and current performance forecast expanding economic activity at a moderately faster pace.
“Following moderate growth in the last few months, the U.S. LEI picked up in July with widespread gains among its components,” said Ataman Ozyildirim, an economist with the Conference Board. “The pace of the LEI’s growth over the last six months has nearly doubled, pointing to a gradually strengthening expansion through the end of the year.”
Ken Goldstein, another economist with the business research and membership group, agreed, but added a caveat.
“The improvement in the LEI and pickup in the six-month growth rate suggest better economic and job growth in the second half of 2013,”
Goldstein said. “However, the biggest uncertainties remain the pace of business spending and the impact of slower global growth on U.S. exports.”
For July, eight of 10 indicators that make up the LEI advanced: building permits, consumer expectations, interest rate spread, leading credit and new orders indexes, new orders for manufactured consumer goods and materials and stock prices. A decrease in average weekly initial claims for unemployment insurance also bolstered the LEI.
Average manufacturing hours and new orders for capital goods retreated.
The Conference Board Coincident Economic Index (CEI), a measure of current economic performance, increased two-tenths of a percent to 106.3. The CEI has climbed 1.6 percent over the past six months.
For July, all four indicators of the CEI advanced: industrial production, nonfarm payrolls, personal income and sales.
The Conference Board Lagging Economic Indicator (LAG), a measure of past economic performance, decreased two-tenths of a percent to 118.2.
Despite the decline, the LAG has gained three-tenths of a percent over the past three months.
For July, five of seven indicators of the LAG retreated: commercial and industrial financing, inventories and the cost of both labor and services. An increase in the average duration of unemployment also pulled down the index. Consumer credit advanced, while the average prime interest rate charged by banks remained unchanged.