U.S. Leading Economic Indicators Rise Slightly

The Conference Board's Composite Index of Leading Economic Indicators edged 0.1% higher (5.9% y/y) during October following a 0.6% September gain, revised from 0.5%. It was the smallest rise since May. No change in the index level had been expected in the Action Economics Forecast Survey. The series is comprised of 10 components which tend to precede changes in the overall economy.

Movement amongst the components of the index remained mixed last month. Weakness was led by declines in the unemployment insurance claims component as well as lower stock prices and fewer building permits. Offsetting these negative influences were improved consumer expectations for business/economic conditions, a steeper interest rate spread between 10-Year Treasuries & Fed funds, higher ISM New Orders index and more nondefense capital goods orders. The average workweek and new orders for consumer goods had no effect on the index.

Three-month growth in the leading index declined to 4.8% (AR), the weakest growth since June.

The Index of Coincident Economic Indicators increased 0.2% (2.2% y/y) in October following a 0.1% uptick. Each of the index components contributed positively including changes in personal income less transfer payments, industrial production, nonagricultural payroll employment and manufacturing & trade sales.

Three-month growth in the coincident index held steady at 2.3% (AR). It remained improved from 1.6% growth early in the year, but below its 3.6% peak as of December.

The Index of Lagging Economic Indicators increased 0.4% (2.4% y/y) after a 0.2% decline, revised from -0.1%. It was the largest rise since May. The median duration of unemployment, the average prime rate charged by banks, the CPI for services and the consumer installment credit/personal income ratio contributed positively to the index change. The change in commercial & industrial loans outstanding and the change in unit labor costs contributed negatively to the index change. The ratio of business inventories-to-sales had no effect on the index change.

The three-month growth in the lagging index jumped to 1.9%, the quickest growth since June.

The ratio of coincident-to-lagging indicators is often considered to be another leading indicator of economic activity. As economic slack diminishes relative to current performance, the ratio will rise. It eased to 99.2 last month and reversed most of its September rise.

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.

The Labor Force Participation Rate Trend and Its Projections from the Federal Reserve Bank of San Francisco can be found here.