Leading index forecasts continued U.S. growth

An index forecasting economic conditions in the United States continues to signal growth in the new year.

The Conference Board reported its Leading Economic Index rose four-tenths of a percent to 130.9 in November. Separate measures of current and past economic performance also increased.

Ataman Ozyildirim, an economist with the Conference Board, said the Leading Economic Index suggests “solid” economic growth will continue into the first half of 2018. “In recent months, unemployment insurance claims have returned to pre-hurricane levels. In addition, improving financial indicators, new orders in manufacturing and historically high consumer sentiment have propelled the U.S. LEI even higher,” Ozyildirim said.

The index has increased 1.7 percent over the past three months and 3 percent over the past six months.

Gross domestic product, the broad measure of goods and services produced in the United States, increased at an annual rate of 3.3 percent  in the third quarter of 2017 and 3.1 percent in the second quarter.

For November, six of 10 indicators of the Leading Economic Index advanced, including  consumer expectations, interest rate spread, a leading credit index, a new orders index, new orders for consumer goods and stock prices. Building permits and new orders for capital goods retreated. An increased in initial claims for unemployment insurance also pulled down the index. Average weekly manufacturing hours held steady.

The Coincident Economic Index, a measure of current conditions, increased three-tenths of a percent to 116.5. The index has climbed 1 percent over the past six months.

For November, all four indicators of the index advanced: industrial production, nonfarm payrolls, personal income and sales.

The Lagging Economic Index, a measure of past performance, edged up a tenth of a percent to 125.6. The index has increased three-tenths of a percent over the past three months.

For November, consumer credit advanced. A decrease in the average duration of unemployment also pushed up the index. Commercial and industrial financing retreated, as did inventories. The cost of labor and services held steady, as did the average prime rate charged by banks.