Leading index slips, but still forecasts growth

A monthly index forecasting economic performance in the United States has slipped, but continues to signal moderate growth in the months ahead.

The Conference Board reported that its Leading Economic Index fell two-tenths of a percent to 124.1 in August. Separate measures of current and past economic conditions increased.

“Although strengths and weaknesses among the leading indicators are roughly balanced, positive contributions from the financial indicators were more than offset by weakening of nonfinancial indicators, such as leading indicators of labor markets, suggesting some risks to growth persist,” said Ataman Ozyildirim, an economist with the Conference Board, a business research and membership association.

The Leading Economic Index has increased nine-tenths of a percent over the past six months, a faster pace than the two-tenths of a percent gain over the six months before that.

Gross domestic product, the broad measure of goods and services produced in the country, grew at an annual rate of 1.1 percent in the second quarter after increasing eight-tenths of a percent in the first quarter.

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

The Coincident Economic Index, a measure of current performance, edged up a tenth of a percent to 114.1. The index has gained eight-tenths of a percent over the past six months.

For August, three of four indicators of the index advanced: nonfarm payrolls, personal income and sales. Industrial production retreated.

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

For August, four of seven indicators of the index rose, including consumer credit, the cost of services and labor costs. A decrease in the average duration of unemployment also bolstered the index. Commercial and industrial financing declined. Inventories and the average prime rate charged by banks held steady.