Leading index forecasts continued growth

Ataman Ozyildirim

A monthly index forecasting economic conditions has rebounded, signaling what likely will be continued growth through early 2020.

The Conference Board reported its Leading Economic Indicator (LEI) rose eight-tenths of a percent to 112.1 in January. The gain is more than double a three-tenths of a percent loss in December .

A measure of current economic performance edged up, while a measure of past performance held steady.

“The LEI’s six-month growth rate has returned to positive territory, suggesting that the current economic expansion — at about 2 percent — will continue through early 2020,” said Ataman Ozyildirim, senior director of economic research at the Conference Board.

The Leading Economic Index edged up a tenth of a percent over the past six months, slower than the eight-tenths of a percent gain over the previous six months.

Gross domestic product, the broad measure of goods and services produced in the country, grew at an annual rate of 2.1 percent in the fourth quarter, the same pace as the third quarter.

For January, eight of 10 indicators of the Leading Economic Index advanced, including building permits, consumer expectations, interest rate spread, a leading credit index, new orders for both capital and consumer goods and stock prices. A decline in average weekly claims for unemployment benefits also bolstered the index. A new orders index retreated, while average manufacturing hours held steady.

The Coincident Economic Index, a measure of current performance, edged up a tenth of a percent to 107.3. The index increased eight-tenths of a percent over the past six months.

For January, three of four indicators advanced: income, payrolls and sales. Industrial production retreated.

The Lagging Economic Index, a measure of past performance, remained unchanged at 108.7. The index increased four-tenths of a percent over the past three months.

For January, three of seven indicators advanced: commercial and industrial financing, consumer debt and the cost of services. The cost of labor and inventories retreated. An increase in the average duration of unemployment also pulled down the index. The average prime rate charged by banks held steady.