Leading index forecasts more growth ahead

A monthly index forecasting economic performance in the United States continues to increase, signalling moderate growth in the month to come.

The Conference Board Leading Economic Index rose two-tenths of a percent to 103.8 in August. Over the last six months, the index has advanced 3.9 percent with widespread strength among the individual indicators that make up the index.

Separate measures of current and past economic performance also increased in August.

“The leading indicators point to an economy that is continuing to gain traction, but most likely won’t repeat its stellar second quarter performance in the second half,” said Ken Goldstein, an economist with the Conference Board.

Gross domestic product, the broad measure of goods and services produced in the country, grew at an annual rate of 4.2 percent during the second quarter, after contracting 2.1 percent in the first quarter.

Ataman Ozyildirim, another economist with the business research and membership association, said the lackluster performance in new home construction and new orders for capital goods has slowed the index. But the overall outlook remains upbeat, Ozyildirim said. “Despite concerns about investment picking up, the economy should continue expanding at a moderate pace for the remainder of the year.”

For August, just three of 10 indicators of the Leading Economic Index advanced: interest rate spread and leading credit and new orders indexes. Four indicators retreated, including building permits, new orders for capital goods and stock prices. An increase in average weekly initial claims for unemployment insurance also pulled down the index. Average weekly manufacturing hours, consumer expectations for business conditions and new orders for consumer goods all held steady.

The Coincident Economic Index, a measure of current economic performance, also increased two-tenths of a percent in August, climbing to 109.7. The index has increased 1.4 percent over the past six months.

For August, three of four indicators of the index advanced: nonfarm payrolls, personal income and sales. Industrial production declined.

The Lagging Economic Index, a measure of past performance, rose three-tenths of a percent in August to 125.1. The index has increased 1 percent over the past three months.

For August, three of seven components of the index advanced, including commercial and industrial financing and consumer credit. A decline in the average duration of unemployment also bolstered the index. The cost of labor and services retreated. Inventories and the average prime rate charged by banks remained unchanged.