Leading index signals slow growth ahead
An index forecasting economic conditions in the United States has increased for a third straight month, pointing to continued, albeit slow, growth in the months ahead.
Separate measures of current and past economic performance also increased.
The Conference Board reported that its Leading Economic Index (LEI) climbed five-tenths of a percent in February to 94.8. With gains in each of the last three months, the index has advanced 1.4 percent.
“The U.S. economy is growing slowly now and with this reading increases hope that it may pick up some momentum in the second half of the year,” said Ken Goldstein, an economist with the Conference Board, a business research and membership group.
Still, the latest LEI reading doesn’t yet reflect the effects of federal spending cuts under sequestration that could curb increases in gross domestic product, Goldstein added.
Over the past six months, the LEI has increased 2.3 percent with more widespread strength among the 10 indicators used to calculate the index.
For February, eight of the 10 indicators advanced: average weekly manufacturing hours, building permits, interest rate spread, a leading credit index, new orders for consumer goods and materials, a new orders index and stock prices. A decline in average weekly claims for unemployment benefits also boosted the index. Two indicators retreated: consumer expectations and new orders for capital goods.
The Coincident Economic Index (CEI), a measure of economic performance, rose two-tenths of a percent in February to 105.1. The index has gained 1 percent over the past six months.
For February, all four indicators of the CEI advanced: industrial production, nonfarm payrolls, personal income and sales.
The Lagging Economic Index (LAG), a measure of past performance, edged up a tenth of a percent in February to 118. The index has gained 1.7 percent over the past three months.
For February, four of seven components advanced: commercial and industrial financing, consumer financing, the cost of services and labor costs. An increased in the average duration of unemployment pulled down the index. Inventory levels and the average prime interest rate charged by banks held steady.