Leading indicators forecast moderate economic growth

A monthly index forecasting economic performance in the United States has picked back up, signaling moderate growth for the remainder of the year.

The Conference Board reported that its Leading Economic Indictor rose eight-tenths of a percent to 104.4 in September.

While the LEI was unchanged for August, the index has increased 3.5 percent over the past six months, a faster pace than the 2.7 percent growth for the six-month span before that. Meanwhile, the 10 components of the index have gained strength.

Measures of current and past economic performance also increased in September.

“The outlook for improving employment and further income growth are expected to support the moderate expansion in the U.S. economy for the remainder of the year,” said Ataman Ozyildirim, an economist for the Conference Board.

Ken Goldstein, another economist with the business research and membership association, agreed. “The financial markets are reflecting turmoil and unease, but the data on the leading indicators continue to suggest moderate growth in the short term,” Goldstein said. “Meanwhile, the weak advances in the housing market remain a bigger risk to the outlook than short-term financial gyrations.”

For September, nine of the 10 components of the Leading Economic Index advanced, including average weekly manufacturing hours, building permits, interest rate spread, a leading credit index, new orders for consumer and capital goods, a new orders index and stock prices. A decline in average weekly initial claims for unemployment benefits pushed up the index, while less upbeat consumer expectations for business conditions pulled the index down.

The Coincident Economic Index, a measure of current performance, increased four-tenths of a percent to 110.2. The index has increased 1.4 percent over the past six months.

For September, all four components of the index increased: industrial production, nonfarm payrolls, personal income and sales.

The Lagging Economic Index, a measure of past performance, edged up a tenth of a percent  to 125.1. The index has increased six-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 a decrease in the average duration of unemployment. The price of services declined. Inventories, labor costs and the average prime interest rate charged by banks all held steady.