An index forecasting economic performance in the United States has edged up, signaling modest growth in the months ahead.
A number of factors could change the outlook, though, including the effects of Hurricane Sandy and a looming “fiscal cliff” of federal tax increases and spending cuts.
The Conference Board reported that its Leading Economic Indicator (LEI) rose two-tenths of percent to 96 in October.
Separate measures of current and past economic performance also increased.
“Based on current trends, the economy will continue to expand modestly through the early months of 2013,” said Ken Goldstein, an economist with the Conference Board, a business research and membership group.
Goldstein added two caveats, however: “Hurricane Sandy, which is not yet fully reflected in the LEI, will likely adversely affect consumer spending and home building in the short term, but it’s too soon to gauge the net impact. In addition, the outcome of the fiscal cliff debates is another factor which could alter the outlook.”
Based on revised information, the LEI has increased a half of a percent over the past six months, slower than the 1.8 percent growth during the six-month span before that.
For October, four of the 10 indicators used in the LEI advanced, four retreated and two remained unchanged. The interest rate spread, a leading credit index and new orders for capital goods all increased. A drop in average weekly claims for unemployment insurance also boosted the index. Declining indictors included building permits, consumer expectations for business conditions, a new orders index and stock prices. Average weekly manufacturing hours and new orders for consumer goods held steady.
The Coincident Economic Index (CEI), a measure of current economic performance, edged up a tenth of a percent to 104.8. The CEI has increased eight-tenths of a percent over the past six months.
For October, three of four indicators used in the CEI advanced: nonfarm payrolls, personal income and sales. Industrial production retreated.
The Lagging Economic Index (LAG), a measure of past economic performance, climbed three-tenths of a percent to 117.1. The LAG has gained seven-tenths of a percent over the past three months.
For October, four of seven indicators used in the LAG increased: commercial and industrial financing, consumer financing, the cost of services and inventories. Labor costs and the increased duration of unemployment pulled down the index. The average prime rate charged by banks remained unchanged.