Thursday, May 19, 2011

USA Monthly Leading Index Dips in April (Chart) "Strengthening business conditions near-term"


The Conference Board: USA Monthly Leading Index

Official Statement by The Conference Board NEW YORK, May 19, 2011 - The Conference Board Leading Economic Index (LEI) for the U.S. declined in April, the first decrease since June 2010. A majority of the components contributed negatively to the index this month, led by weekly initial unemployment insurance claims (inverted), supplier deliveries, and building permits. With this month’s decline, the six-month change in the index moderated to 3.5 percent (a 7.2 percent annual rate), but it remains above the growth rate of 1.4 percent (a 2.8 percent annual rate) for the previous six months. In addition, the strengths among the leading indicators have been widespread in recent months.
Trend The short-term trend is now downwards. The intermediate-term (6 months) and long-term (12 months) trends continue upwards. The April 2011 decrease is only the second decrease since the March 2009 Great Recession cyclical low, that is, the 2nd decrease in the past 25 months.

Cycle History The Leading Economic Index reached a Post-Great Recession cyclical high in March 2011 of 114.3. The Great Recession cyclical low was 97.9 in March 2009.

Monthly Leading Economic Index (Chart) Below is a chart of the The Conference Board LEI from the March 2009 Great Recession cyclical low of 97.9 through the latest month reported.

Commentary The April 2011 Leading Economic Index (preliminary) dipped below the prior month March 2011 Post-Great Recession cyclical high of 114.3 and is only the 2nd decrease since the March 2009 Great Recession cyclical low of 97.9. Although not a good sign, the LEI continues at very encouraging levels, at least for the interim. Regardless, 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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