A monthly index forecasting economic conditions in the United States has increased sharply, but doesn’t yet signal significant growth.
The Conference Board Leading Economic Index jumped seven-tenths of a percent to 122.3 in April. Separate measures of current and past economic conditions also increased.
“April’s sharp increase in the LEI seems to have helped stabilize its slowing trend, suggesting the paltry economic growth in the first quarter may be temporary,” said Ataman Ozyildirim, an economist with the Conference Board, a business research and membership association.
“However, the growth of the LEI does not support a significant strengthening in the economic outlook at this time,” Ozyildirim added. “The improvement in building permits helped to drive the index up this month, but gains in other components, in particular the financial indicators, have been somewhat more muted.”
The leading index has increased 2 percent over the past six months, slower than the 3.5 percent gain in the six-month span before that. Gross domestic product, the broad measure of goods and services produced in the country, edged up at an annual rate of two-tenths of a percent in the first quarter.
For April, seven of 10 components of the leading index advanced, including building permits, consumer expectations, interest rate spread, a leading credit index, new orders capital goods and stock prices. A decrease in average weekly initial claims for unemployment benefits also bolstered the index. A new orders index retreated, while average manufacturing hours and new orders for consumer goods held steady.
The Coincident Economic Index, a measure of current conditions, rose two-tenths of a percent to 112 in April. The index has increased 1.3 percent over the past six months.
For April, three of four indicators of the index advanced: nonfarm payrolls, personal income and sales. Industrial production retreated.
The Lagging Economic Index, a measure of past conditions, edged up a tenth of a percent to 116.6 in April. The index has increased eight-tenths of a percent over the past three months.
For April, just two of seven components of the index advanced: consumer credit and inventories. Labor costs declined, and a decrease in the average duration of unemployment also pulled down the index. The average prime rate charged by banks, commercial and industrial financing and the cost of services all remained unchanged.