Thursday, February 17, 2011

USA Monthly Leading Economic Index Up in January (Chart) "Still pointing to economic expansion in coming months"


The Conference Board: USA Monthly Leading Index

USA Monthly Leading Economic Index Up in January

Official Statement by The Conference Board The Conference Board Leading Economic Index® (LEI) for the U.S. increased 0.1 percent in January to 112.3 (2004 = 100), following a revised 0.8 percent increase in December, and a 1.1 percent increase in November. Says Ataman Ozyildirim, economist at The Conference Board: “With January’s slight increase, following two large gains, the U.S. LEI is still pointing to economic expansion in the coming months. Falling housing permits and weakening labor market indicators were barely offset by the continued positive contributions of the financial components. The LEI remains on a rising trend, with its growth rate picking up in recent months. However, current economic conditions, as measured by the coincident economic index, while improving slowly, remain weak.” Says Ken Goldstein, economist at The Conference Board: “The economy gained some momentum in late fall, and the latest data suggest that trend will continue. The cumulative change in the U.S. LEI over the last six months is a sharp 3.0 percent, signaling continued expansion.”

Trend As noted by The Conference Board, the general trend is upwards. This is the 4th consecutive monthly increase and 19th in the last 22 months (since March 2009 Great Recession cyclical bottom). The January LEI of 112.3 (preliminary) is above the ascending 12-month moving average of 110.2. The current LEI is also above the ascending 24-month moving average of 106.3. (The 12-month and 24-month moving averages charts are not shown on this page).

Cycle History The current LEI in January of 112.3 (preliminary) is a Post-Great Recession cyclical high. The Great Recession cyclical low was in March 2009.

Monthly Leading Economic Index (Chart) Below is a chart of the latest 23 months of The Conference Board LEI from the March 2009 Great Recession cyclical low through the latest month reported, January 2011. January 2011 is a Post-Great Recession cyclical high.

Commentary The January LEI (preliminary) posted yet another gain to set yet another Post-Great Recession cyclical high of 112.3 (preliminary), which is very encouraging for the USA economy. The LEI has come a long way from the March 2009 cyclical low. (See chart above)

About The Conference Board Leading Economic Index® (LEI) for the U.S.

The composite economic indexes are the key elements in an analytic system designed to signal peaks and troughs in the business cycle. The leading, coincident, and lagging economic indexes are essentially composite averages of several individual leading, coincident, or lagging indicators. They are constructed to summarize and reveal common turning point patterns in economic data in a clearer and more convincing manner than any individual component – primarily because they smooth out some of the volatility of individual components.

The ten components of The Conference Board Leading Economic Index® for the U.S. include:
Average weekly hours, manufacturing
Average weekly initial claims for unemployment insurance
Manufacturers’ new orders, consumer goods and materials
Index of supplier deliveries – vendor performance
Manufacturers' new orders, nondefense capital goods
Building permits, new private housing units
Stock prices, 500 common stocks
Money supply, M2
Interest rate spread, 10-year Treasury bonds less federal funds
Index of consumer expectations

About The Conference Board

The Conference Board is a global, independent business membership and research association working in the public interest. Our mission is unique: To provide the world’s leading organizations with the practical knowledge they need to improve their performance and better serve society. The Conference Board is a non-advocacy, not-for-profit entity holding 501 (c) (3) tax-exempt status in the United States.

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