Tuesday, December 25, 2012

USA Leading Economic Index Dips: "Six-month growth rate to zero"

The Conference Board: USA Monthly Leading Index

The November 2012 USA Monthly Leading Economic Index slightly decreased -0.2 to 95.8 (preliminary), just below the October 2012 post-recession high of 96.0. 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 95.5 as of November 2012.

“The U.S. LEI decreased slightly in November, bringing its six-month growth rate to zero,” says Ataman Ozyildirim, economist at The Conference Board. “The LEI points to increasing risks of slowing economic activity in the near term, but the coincident economic index, measuring current conditions, continued to increase in November. Gains in the residential construction and financial components of the LEI have been roughly balanced with weak consumer expectations, manufacturing new orders and labor market indicators over the last six months.”

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

Says Ken Goldstein, economist at The Conference Board: “The indicators reflect an economy that remains weak in the face of strong domestic and international headwinds, as it faces a looming fiscal cliff. Growth will likely be slow through the early months of 2013.”

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


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