A monthly index forecasting economic conditions has edged up, but the latest results don’t reflect what could be the substantial effects of a coronavirus pandemic.
“Declines in stock prices, consumers’ outlook on economic conditions, manufacturing new orders, average workweek in manufacturing and rising unemployment claims will begin to negatively impact the economy. As a result, the economy may already be entering into a period of contraction,” said Ataman Ozyildirim, senior director of economic research at the Conference Board.
The business research and membership associated reported its Leading Economic Index rose a tenth of a percent to 112.1 in February, but doesn’t reflect the effects of the coronavirus outbreak that fully hit the United States in early March, Ozyildirim said.
The Leading Economic Index increased three-tenths of a percent over the past six months, slightly slower than the four-tenths of a percent gain over the prior six-month period.
For February, four of 10 indicators of the index advanced: average weekly manufacturing hours, consumer expectations for business conditions, a leading credit index and new orders for consumer goods. Building permits, the interest rate spread and a new orders index retreated. An increase in average weekly claims for unemployment benefits also pulled down the index. New orders for capital goods held steady.
The Coincident Economic Index, a measure of current performance, rose three-tenths of a percent to 107.6. The index has increased seven-tenths of a percent over the past six months.
For February, all four indicators of the index increased — industrial production, nonfarm payrolls, personal income and sales.
The Lagging Economic Index, a measure of past performance, rose four-tenths of a percent to 109.1. The index has increased three-tenths of a percent over the past three months.
For February, four of seven indicators increased, including consumer debt, inventories and the cost of labor. A decrease in the average duration of unemployment also bolstered the index. Commercial and industrial financing decreased. The average prime rate charged by banks and the cost of services remained unchanged.