U.S. Leading Economic Indicators Ease in January
by:Tom Moeller
|in:Economy in Brief
Summary
- Index declines for tenth straight month.
- Coincident indicators rise slightly.
- Lagging indicators continue to increase.
The Conference Board's Composite Leading Economic Indicators Index fell 0.3% (-5.9% y/y) during January following a 0.8% December drop, revised from -1.0%. The Action Economics Forecast Survey expected a 0.4% decline in the index for January.
Four of the Leading Index's ten components made negative contributions to the index change in January. Declining influences came from the ISM new orders diffusion index, the interest rate yield curve, consumer expectations for business/economic conditions and the leading credit index. Positive contributions came from the average workweek, initial claims for jobless insurance, factory orders for consumer goods, orders for nondefense capital goods and stock prices. Building permits were unchanged.
The Index of Coincident Economic Indicators edged up 0.2% last month (1.3% y/y) after a holding steady in December, revised from a 0.1% rise. Each of the four index components rose minimally, including payroll employment, real personal income less transfers, real business sales and industrial production. The diffusion index of the percent of components rising over the last six months has been zero since November.
The Index of Lagging Economic Indicators increased 0.2% in January (6.9% y/y) following a 0.6% December rise, revised from 0.3%. A rise in the banks’ prime rate, the consumer credit-to-personal income ratio and the 6-month change in the services CPI contributed positively to the index change. The average duration of unemployment, unit labor cost growth and C&I loans outstanding contributed negatively. The six-month change in the lagging index stood at 5.6%, down from its May high of 9.4%.
The ratio of the Coincident index to the Lagging index also is seen as a leading indicator as it measures current economic performance versus excesses. The ratio held steady last month but has been steadily declining since December of 2021, suggesting rising recession risks.
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.
Disinflation: Progress and Prospects from James Bullard, President & CEO, Federal Reserve Bank of St. Louis is available here.
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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