An index forecasting economic performance in the United States continues to signal growth in the new year, although challenges remain.
The Conference Board reported that its Leading Economic Indicator rose eight-tenths of a percent to 98.3 in December. The index has gained 3.1 percent over the past six months.
“Improving labor markets and new orders in manufacturing, combined with strong financial indicators, drove November’s gain. However, consumers’ outlook for the economy and the drop in housing permits continue to pose risks in 2014,” said Ataman Ozyildirim, an economist with the Conference Board, a business research and networking association.
Ken Goldstein, another economist with the Conference Board, said the index reflects expanding conditions. “The trend in the Leading Economic Index is stronger, signaling for some time that the economy is developing forward momentum and will continue to strengthen through early 2014.”
Gross domestic product, the broad measure of goods and services produced in the country, increased at an annual rate of 3.6 percent during the third quarter of 2013.
For November, eight of 10 indicators that make up the leading index advanced: interest rate spread, leading credit and new orders indexes, new orders for capital and consumer goods, manufacturing hours and stock prices. A decrease in average weekly claims for unemployment insurance also bolstered the index. Two indicators retreated: building permits and consumer expectations for business conditions.
The Coincident Economic Index, a measure of current performance, rose four-tenths of a percent to 107.2 in November. The index has increased 1.1 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, held steady in November at 119.9. The index has increased nine-tenths of a percent over the past three months. For November, three of seven indicators retreated, including commercial and industrial financing and the cost of services. An increase in the average duration of unemployment also pulled down the index. Two indicators advanced: consumer credit and labor costs. Two more indicators remained unchanged: the average prime interested rate charged by banks and inventories.