U.S. Leading Economic Indicators Ease in December
by:Tom Moeller
|in:Economy in Brief
Summary
- Leading index decline is smallest since March 2022.
- Coincident Indicators increase steadily.
- Lagging Economic Index drop for first time in five months.
The U.S. Leading Economic Index slipped 0.1% in December after an unrevised 0.5% November decline, according to a report released today by The Conference Board. The 7.1% y/y decline during all of last year followed a 6.4% falloff in 2022. The December index of 103.1 was the lowest level since May 2020. A 0.3% decline had been expected in the Action Economics Forecast Survey.
Four of ten components contributed negatively to the overall index in December including the average workweek for production workers, the ISM new orders index, the spread between the 10-year Treasury and the Fed funds rate and consumer expectations for business/economic conditions. Initial claims for unemployment insurance, building permits, stock prices and the leading credit index contributed positively. New orders for capital goods and new orders for consumer goods made minimal positive contributions to the index change.
The 0.2% increase in the Coincident Economic Index in December followed an unrevised 0.2% November rise. The 1.9% y/y advance last year followed a 0.8% increase in 2022. All four of the component series made positive contributions to the coincident index in December, including personal income less transfers, industrial production, nonagricultural payroll employment and real manufacturing & trade sales.
The Lagging Economic Index declined 0.2% last month after increasing 0.5% in November. Two of the four of the index’s seven components made negative contributions last month led by the average duration of unemployment and commercial & industrial loans outstanding. The six-month change in the services CPI contributed positively and the remaining components were little or unchanged.
The ratio of the coincident index to the lagging index is also viewed as a leading indicator of economic activity. This measure rose 0.3% in December, following two straight monthly declines.
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 website for coverage of leading indicator series from around the world.
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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