Leading index slips, but growth still expected

An index forecasting economic conditions in the United States has declined for the first time in a year in the aftermath of hurricane damage, but growth is expected to continue.

The Conference Board reported its Leading Economic Indicator slipped two-tenths of a percent to 128.6 in September.

Ataman Ozyildirim, an economist with the business research and membership association, said the decrease is likely short-lived. “The source of weakness was concentrated in labor markets and residential construction, while the majority of the LEI components continued to contribute positively. Despite September’s decline, the trend in the U.S. LEI remains consistent with continuing solid growth in the U.S. economy for the second half of the year.”

The Leading Economic Index has increased 1.7 percent over the past six months, slower than the 2.2 percent gain over the six months before that.

Gross domestic product, the broad measure of goods and services produced in the country, grew at annual rate of 3.1 percent during the second quarter after increasing 1.2 percent in the first quarter.

For September, six of 10 indicators of the Leading Economic Index advanced, including consumer expectations for business conditions, interest rate spread, a leading credit index, new orders for consumer goods, a new orders index and stock prices. Average weekly manufacturing hours, building permits and new orders for capital goods retreated. An increase in initial claims for unemployment insurance also pulled down the index.

The Coincident Economic Index, a measure of current conditions, edged up a tenth of a percent to 115.7 in September. The index has increased seven-tenths of a percent over the past six months.

For September, three of four indicators of the index advanced: industrial production, personal income and sales. Nonfarm payrolls retreated.

The Lagging Economic Index, a measure of past performance, slipped a tenth of a percent to 125.2. The index has increased four-tenths of a percent over the past three months.

For September, three of seven components of the index advanced: commercial and industrial financing, consumer credit and the cost of services. Inventories and labor costs retreated, while an increase in the average duration of unemployment also pulled down the index. The average prime rate charged by banks remained unchanged.