Leading index signals growth

A monthly index forecasting economic performance in the United States continues to rise, signaling growth ahead.

The Conference Board reported that its Leading Economic Index climbed to 99.8 in February, up a half of a percent. The LEI has increased 2.7 percent over the past six months.

Separate measures of current and lagging performance also increased in February.

“The U.S. LEI increased sharply in February, suggesting that any weather-related volatility will be short-lived and the economy should continue to improve into the second half of the year,” said Ataman Ozyildirim, an economist with the Conference Board, a business research and membership association.

Challenges remain, however, said Ken Goldstein, another economist with the group. “The biggest challenge continues to be weak consumer demand, pinned down by weak wage growth. These conditions were still in evidence the first two months of the year, but will likely improve as spring arrives.”

For February, five of the 10  components of the LEI advanced: building permits, interest rate spread, a leading credit index and new orders for both consumer and capital goods. Retreating components including average weekly manufacturing hours, consumer expectations for business conditions, a new orders index and stock prices. An increase in average weekly initial claims for unemployment insurance also pulled the index down.

The Coincident Economic Index, a measure of current performance, rose two-tenths of a percent in February to 108.2. The CEI has increased 1.1 percent over the past six months.

All four components of the CEI advanced: industrial production, nonfarm payrolls, personal income and sales.

The Lagging Economic Index, a measure of past performance, rose three-tenths of a percent to 122.1. The LAG has increased 1.2 percent over the past three months.

Five of seven components of the LAG advanced: commercial and industrial financing, consumer credit, the cost of services, inventories and labor costs. An increase in the average duration of unemployment pulled down the index, while the average prime interest rate charged by banks remained unchanged.