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Economy in Brief

U.S. Leading Economic Indicators Recover
by Tom Moeller  October 20, 2016

The Conference Board's Composite Index of Leading Economic Indicators rebounded 0.2% (1.5% y/y) during September following an unrevised 0.2% decline. The increase matched expectations in the Action Economics Forecast Survey. The six-month change in the index improved to 2.3% (AR), but was below its peak growth of 7.1% roughly one year ago.

Contributing positively to the index last month were more building permits, fewer initial claims for jobless insurance, a steeper interest rate yield curve, more factory orders for consumer goods and better consumer expectations for business/economic conditions. These gains were offset by negative readings from a decline in stock prices, a shorter average workweek, a lower ISM new orders diffusion index, fewer capital goods orders, lower stock prices and the leading credit index.

The coincident index increased 0.2% (1.4% y/y) following no change, revised from 0.1%. Six-month growth rose to 1.8%, its best since October. Each of the component series contributed positively to the index, including nonfarm payrolls, personal income less transfers, manufacturing & trade sales and industrial production.

The lagging index rose 0.2% (2.8% y/y) after an unrevised 0.2% gain. Three-month growth fell to 2.2% versus a 4.9% high early last year. The services CPI, the average duration of unemployment, the 6-month change in unit labor costs and the consumer installment credit/income ratio contributed positively to the index. The number of consumer & industrial loans outstanding contributed negatively for the fourth straight month.

The ratio of coincident-to-lagging indicators also is a leading indicator of economic activity. It measures excesses in the economy relative to its ongoing performance. This ratio held steady m/m, and was up slightly from the May low.

The Conference Board figures are available in Haver's BCI database; the components are available there, and most are also in USECON. The expectations are in the AS1REPNA database. Visit the Conference Board's site for coverage of leading indicator series from around the world.

Bad Credit, No Problem? Credit and Labor Market Consequences of Bad Credit Reports from the Federal Reserve Bank of New York is available here.

Business Cycle Indicators (%) Sep Aug Jul Sep Y/Y 2015 2014 2013
Leading 0.2 -0.2 0.5 1.5 4.3 5.8 2.9
Coincident 0.2 0.0 0.3 1.4 2.5 2.6 1.4
Lagging 0.2 0.2 0.0 2.8 3.7 3.7 3.9
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