Friday, November 18, 2011

USA Monthly Leading Economic Index Continues Rising! (Chart) "Risk of economic downturn has receded"

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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 0.9 percent in October to 117.4 (2004 = 100), following a 0.1 percent increase in September, and a 0.3 percent increase in August.

Commenting on the USA LEI Says Ataman Ozyildirim, economist at The Conference Board: “The October rebound of the LEI - largely due to the sharp pick-up in housing permits - suggests that the risk of an economic downturn has receded. Improving consumer expectations, stock markets, and labor market indicators also contributed to this month’s gain in the LEI as did the continuing positive contributions from the interest rate spread. The CEI also rose somewhat, led by higher industrial production and employment.”

Trend The short-term trend continues upwards, the LEI has increased for 6 consecutive months. The intermediate-term trend (6-month moving average) has continued upwards since April 2009, for 30 consecutive months. The long-term trend (12-month moving average) trends also continues upwards and has since 2009. The October 2011 increase is the 29th increase in the past 31 months (since the March 2009 Great Recession cyclical low of 97.9).

Cycle History The Leading Economic Index for October 2011 (preliminary) is at a Post-Great Recession cyclical high of 117.4, which exceeds the previous high in September 2011 of 116.3 (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 October 2011 Leading Economic Index (preliminary) continues encouraging, grinds higher, and is at a Post-Great Recession cyclical high of 117.4. "This month’s strength in the LEI was driven by strong positive contributions from building permits, the interest rate spread, and stock market and employment indicators." The USA Monthly LEI has come a long way from the March 2009 cyclical low of 97.9 (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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