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Economy in Brief

U.S. Leading Economic Indicators Continue to Rise
by Tom Moeller  March 22, 2018

The Conference Board's Composite Index of Leading Economic Indicators increased 0.6% during February following a 0.8% January gain, revised from 1.0%. The y/y change rose to 6.5%, its strongest since July 2014. A 0.5% rise had been expected in the Action Economics Forecast Survey.

Gains in the component series were widespread, including a longer average workweek, fewer initial claims for jobless insurance, a higher ISM new orders index, a steeper interest rate spread between 10-Year Treasuries & Fed funds and improved consumer expectations for business/economic conditions. More orders for consumer as well as capital goods had minimal positive contributions. Contributing negatively to the index change were fewer building permits and lower stock prices. Three-month growth in the leading index improved slightly to 8.9% (AR).

The Index of Coincident Economic Indicators increased 0.3% (2.3% y/y) following a unrevised 0.1% rise. Each of the component series contributed positively to the total's rise including personal income less transfer payments, business sales, payroll employment and industrial production. Three-month growth in the index held steady at a firm 2.4% (AR).

The Index of Lagging Economic Indicators gained 0.4% (2.5% y/y) during February after an unrevised 0.1% uptick. A lessened average duration of unemployment, the consumer credit/personal income ratio, more C&I loans outstanding and the business inventory-to-sales ratio had positive effects on the index. The 6-month % change in the services CPI contributed negatively. Three-month growth in the lagging index increased to 4.3%, up from 0.8% as of November.

The ratio of coincident-to-lagging indicators is often considered to be a leading indicator of economic activity. As economic slack diminishes relative to current performance, the ratio will rise. It declined last month to 99.0 and matched the 1975 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.

Business Cycle Indicators (%) Feb Jan Dec Feb Y/Y 2017 2016 2015
Leading 0.6 0.8 0.7 6.5 4.1 1.2 4.2
Coincident 0.3 0.1 0.2 2.3 1.8 1.3 2.2
Lagging 0.4 0.1 0.6 2.5 2.6 2.9 3.7
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