Leading index forecasts U.S. growth

A monthly index forecasting economic performance in the United States continues to increase, signaling growth through the holiday season and into next year.

The Conference Board reported that its Leading Economic Index rose nine-tenths of a percent to 105.2 in October. The index has increased 4 percent over the past six months, a faster pace than the 2.7 percent growth during the previous six-month span.

“The LEI suggests the U.S. expansion continues to be strong,” said Ataman Ozyildirim, an economist with the Conference Board, a business research and membership association.

Ken Goldstein, another economist with the group, agreed. “The upward trend in the LEI points to continued economic growth through the holiday season and into early 2015. This is consistent with our outlook for relatively good, but not great, consumer demand over the near term. Going forward, there are continued concerns about slow business investment and lackluster income growth,” Goldstein added.

For October, eight of 10 indicators of the Leading Economic Index advanced: building permits, consumer expectations for business conditions, interest rate spread, a leading credit index, new orders for consumer and capital goods and a new orders index. A decline in average weekly initial claims for unemployment benefits also pushed up the index. Stock prices declined, while the average manufacturing workweek remained unchanged.

The Coincident Economic Index, a measure of current performance, edged up a tenth of a percent to 110.2 in October. The CEI has gained 1.2 percent over the past six months.

Three of four components of the index advanced in October: nonfarm payrolls, personal income and sales. Industrial production declined.

The Lagging Economic Index, a measure of past performance, slipped a tenth of a percent to 124.9 in October. The LAG has gained a half of a percent over the past three months.

For October, two of seven components of the index advanced, while three retreated and two held steady. Consumer credit and inventories increased. Commercial and industrial financing and labor costs decreased. An increase in the average duration of unemployment also pulled down the index. The price of services and the average prime interest rate charged by banks remained unchanged.