Thursday, September 22, 2011

USA Monthly Leading Economic Index at Post-Recession High! (Chart) *Increasing concerns about expansion*


The Conference Board: USA Monthly Leading Index

Official Statement by The Conference Board The Conference Board Leading Economic Index (LEI) for the U.S. increased 0.3 percent in August to 116.2 (2004 = 100), following a 0.6 percent increase in July and a 0.3 percent increase in June.

Commenting on the USA LEI Says Ataman Ozyildirim, economist at The Conference Board: “The August increase in the U.S. LEI was driven by components measuring financial and monetary conditions which offset substantially weaker components measuring expectations. The growth trend in the LEI has moderated and positive and negative contributors to the index have been roughly balanced. The leading indicators point to rising risks and volatility, and increasing concerns about the health of the expansion.”

Trend The short-term trend continues upwards, the LEI has increased for 4 consecutive months. The intermediate-term trend (6-month moving average) has continued upwards since April 2009, for 28 consecutive months. The long-term trend (12-month moving average) trends also continues upwards and has since 2009. The August 2011 increase is the 27th increase in the past 29 months (since the March 2009 Great Recession cyclical low of 97.9).

Cycle History The Leading Economic Index for August 2011 (preliminary) is at a Post-Great Recession cyclical high of 116.2, which exceeds the previous high in July 2011 of 115.9 (revised). 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, including the March 2009 Great Recession cyclical low of 97.9 through the latest month reported.

Commentary The August 2011 Leading Economic Index (preliminary) is encouraging, grinds higher, and a Post-Great Recession cyclical high of 115.9. However, the increase mostly was a result of financial and monetary indicators, not from manufacturing, consumer expectations, and employment indicators. "The growth trend in the LEI has moderated and positive and negative contributors to the index have been roughly balanced". The USA Monthly LEI has come a long way from the March 2009 cyclical low of 97.9 (see chart above), but a dip in the LEI could occur in the next month or two.

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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