A sharp increase in a monthly index forecasting economic performance in the United States offers promise that what long has been slow growth could accelerate next year.
The Conference Board reported that its Leading Economic Index (LEI) rose nearly 1 percent to 117.4 in October.
“The LEI is pointing to continued growth this winter, possibly even gaining a little momentum by spring,” said Ken Goldstein, an economist with the Conference Board, a business research and membership group.
“The lack of confidence has been the biggest obstacle in generating forward moment, domestically or globally. As long as it lasts, there is a glimmer of hope,” Goldstein added.
Ataman Ozyildirim, another economist with the Conference Board, attributed the October gain in the LEI mostly to an increase in housing permits. But consumer expectations and the labor market also contributed to the gain.
Over the six months ending in October, the LEI advanced 3 percent. That compares to a 3.5 percent gain during the previous six-month period. Strength among the 10 indicators of the index have become slightly more widespread than weaknesses.
For October, nine of the 10 indicators advanced, including average weekly manufacturing hours, building permits, consumer expectations, the interest rate spread on 10-year treasury bonds, the money supply, new orders for capital and consumer goods and stock prices. Moreover, average weekly claims for unemployment benefits declined. Supplier deliveries was the single retreating indicator.
The Coincidence Economic Index (CEI), a measure of current economic conditions, rose two-tenths of a percent to 103.5. The CEI has increased seven-tenths of a percent over the past six months.
For October, all four indicators of the CEI advanced: nonfarm payrolls, personal income, productivity and sales.
The Lagging Economic Index (LAG), a measure of past economic performance, rose six-tenths of a percent to 110.9. The LAG has increased nine-tenths of a percent over the past three months.
For October, three of seven indicators of the LAG advanced, including business loans and consumer credit. The average duration of unemployment declined. Four indicators held steady: average prime interest rate, inventories, labor costs and the price of services.