Sunday, November 25, 2012

USA Leading Economic Index Increases: "Modestly expanding economic activity"

The Conference Board: USA Monthly Leading Index

The October 2012 USA Monthly Leading Economic Index slightly increased +0.2 to 96.0 (preliminary), which is a post-recession high. Overall, slow economic growth is forecast but downside risk exists via the global economy becoming a drag.

USA Monthly Leading Economic Index The 12-month moving average is 95.3 as of October 2012.

Ataman Ozyildirim, economist at The Conference Board, said "The U.S. LEI increased slightly in October, the second consecutive increase. The LEI still points to modestly expanding economic activity in the near term. Over the last six months, improvements in the residential construction and financial components of the LEI have offset weak consumer expectations, manufacturing new orders and labor market components. Meanwhile, the coincident economic index also increased slightly in October."

USA Monthly Composite Indexes The October 2012 readings are chart highs for the Lagging and Leading Indicators and a nearly a chart high for the Coincident Indicator. The Indexes have been revamped with benchmark revisions (2004 = 100.00).

Ken Goldstein, economist at The Conference Board, said "Based on current trends, the economy will continue to expand modestly through the early months of 2013. Hurricane Sandy, which is not yet fully reflected in the LEI, will likely adversely affect consumer spending and home building in the short-term, but it’s too soon to gauge the net impact. In addition, the outcome of the fiscal cliff debates is another factor which could alter the outlook."

USA LEI Components: Four of the ten indicators that make up The Conference Board LEI for the U.S. increased in October. The positive contributors – beginning with the largest positive contributor – were the interest rate spread, the Leading Credit Index (inverted), average weekly initial claims for unemployment insurance (inverted), and manufacturers’ new orders for nondefense capital goods excluding aircraft*. The negative contributors – beginning with the largest negative contributor – were building permits, average consumer expectations for business conditions, the ISM new orders index, and stock prices. Average weekly manufacturing hours and manufacturers’ new orders for consumer goods and materials* held steady in October.


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