Leading index signals more economic “pep”

A monthly index forecasting economic performance in the United States continues to signal growth.

But questions persist about the housing and labor markets as well as a potential impasse over the federal budget.

The Conference Board reported that its Leading Economic Index (LEI) rose seven-tenths of a percent in August to 96.6.

The LEI has climbed 2.1 percent over the past six months as components of the index have strengthened.

Separate measures of current and past economic performance also increased in August, suggesting growth will continue and could gradually accelerate.

“The latest reading points to more pep in the pace of economic activity in the near term,” said Ken Goldstein, an economist with the Conference Board, a business research and membership group.

“One unknown is how resilient confidence will remain, both consumer and business, given mixed signals from the housing and labor markets,”

Goldstein added. “Perhaps the bigger question is a satisfactory resolution to federal budget squabbles.”

For July, seven of 10 indicators of the LEI advanced, including average weekly manufacturing hours, interest rate spread, leading credit and new orders indexes and new orders for consumer and capital goods. A decline in average weekly claims for unemployment insurance also bolstered the index. Building permits retreated, while consumer expectations and stock prices held steady.

The Conference Board Coincident Economic Index (CEI), a measure of current economic performance, increased two-tenths of a percent to 106.3.

The CEI has climbed nine-tenths of a percent over the past six months with widespread strength among the components of the index.

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

The Conference Board Lagging Economic Index (LAG) rose three-tenths of a percent in August to 118.6. The LAG has increased a half of a percent over the past three months.

For August, four of seven components of the LAG advanced: commercial and industrial financing, consumer credit,  inventories and labor costs. The cost of services pulled down the index, as did an increase in the average duration of unemployment. The average prime rate charged by banks remained unchanged.