A monthly index forecasting economic conditions in the United States continues to rise, signaling growth in the months ahead.
The Conference Board reported that its Leading Economic Index increased a half a percentage point to 121.1 in December.
With the latest gain, the fourth in as many months, the index has advanced 3.3 percent over the past six months with widespread strength in the components of the index. That’s slightly faster than the 3 percent growth in the first half of 2014.
“December’s gain in the LEI was driven by a najority of its components, suggesting the short-term outlook is getting brighter and the economy continues to build momentum,” said Gad Levanon, an economist for the Conference Board, a business research and membership association.
“Still, a lack of growth in residential construction and average weekly hours in manufacturing remain a concern. Current economic conditions as measured by the coincident index show employment and income gains are helping to keep the U.S. economy on a solid expansionary path despite some weaknesses in industrial production,” Levanon added.
Eight of 10 components of the Leading Economic Index advanced in December, including consumer expectations for business conditions, interest rate spread, leading credit and new order indexes, new orders for consumer and capital goods and stock prices. A decline in average weekly claims for unemployment insurance also bolstered the index. Building permits declined, while average weekly manufacturing hours held steady.
The Coincident Economic Index, a measure of current conditions, rose two-tenths of a percent to 111.4. The index has advanced 1.5 percent over the past six months.
For December, three of four indicators of the index increased: nonfarm payrolls, personal income and sales. Industrial production decreased.
The Lagging Economic Index, a measure of past performance, rose three-tenths of a percent to 115. The index has advanced six-tenths of a percent over the past three months.
For December, five of seven components of the index increased: commercial and industrial financing, consumer credit, labor costs and the cost of services. A decrease in the average duration of unemployment also boosted the index. Inventories and the average prime rate charged by banks remained unchanged.