Index signals growth, but shutdown effects unknown

While an index forecasting economic performance in the United States continues to rise, the full effects of a federal government shutdown remain unknown.

The Conference Board reported that its Leading Economic Index (LEI) advanced another seven-tenths of a percent to 97.1 in September.

Separate measures of current and past economic performance also increased.

The latest gain in the leading index adds to a 1.1 percent increase over the preceding two months. The index has risen 3 percent over the six-month period ending in September, more than twice as fast as the six months before that.

“The September LEI suggests the economy was expanding modestly and possibly gaining momentum before the government shutdown,” said Ken Goldstein, an economist at the Conference Board,  a business research and membership group.

“Beyond the immediate fallout of the shutdown, the biggest challenge is whether relatively weak consumer demand, pinned down by weak wage growth and low levels of confidence, will recover during the final stretch of 2013 and into 2014,” Goldstein added.

The partial federal government shutdown began Oct. 1 and lasted 16 days.

For September, seven of 10 indicators of the LEI advanced: building permits, interest rate spread, leading credit and new orders indexes, new orders for consumer goods and stock prices. A decline in average weekly claims for unemployment insurance also bolstered the index.

Average weekly manufacturing hours retreated, as did consumer expectations and new orders for capital goods.

The Conference Board Coincident Economic Index (CEI) rose two-tenths of a percent to 106.6 in September. The CEI has climbed 1 percent over the past six months.

For September, all four components of the CEI advanced: industrial production, nonfarm payrolls, personal income and sales.

The Conference Board Lagging Economic Index (LAG) rose six-tenths of a percent to 119.3 in September. The LAG has gained nine-tenths of percent over the past three months.

For September, five of seven components of the LAG advanced: commercial and industrial financing, the cost of services, consumer credit and labor costs. A decline in the average duration of unemployment also bolstered the index. Inventories retreated, while the average prime rate charged by banks remained unchanged.