Leading Economic Indicators Decline by Most Since Last September

Bloomberg details:

The index of U.S. leading economic indicators fell more than forecast in June, a sign the U.S. economic expansion is slowing.

The Conferences Board’s gauge of the outlook for the next three to six months decreased 0.3 percent after a revised 0.4 percent increase in May, the New York-based group said today. Economists projected the gauge would drop by 0.1 percent, according to the median estimate in a Bloomberg News survey.

Source: Conference Board

Leading Indicators Up in May

Marketwatch reports:

The risk of a downturn in the second half of this year is relatively low, the Conference Board said Thursday as it reported that its index of leading economic indicators rose 0.3% in May. "Economic data in general reflect a U.S. economy that is growing modestly, neither losing nor gaining momentum," said Ken Goldstein, economist at the Conference Board.

Update: while leading economic indicators held up in May, first signs of June are UGLY.

Source: Conference Board

Leading Economic Indicators Turn Negative

Source: Conference Board

Leading Economic Indicators (less Fed Control) Negative

Excluding the components the Fed impacts, the index is negative for the second time in three months, dragged down by the decline in the average work week.

Source: Conference Board

Leading Economic Indicators Show Strength in February

Ken Goldstein, economist at The Conference Board details:

“Recent data reflect an economy that improved this winter. To be sure, an unseasonably mild winter has contributed to many of the recent positive economic reports. But the consistent signal for the leading series suggests that progress on jobs, output, and incomes may continue through the summer months, if not beyond.”

Source: Conference Board

Leading Economic Indicators "May" Have Risen 0.4%

The reason "may" is in the title is because by my calculations, leading economic indicators grew by 0.55% in aggregate, not the 0.4% listed by the Conference Board (if you want to see for yourself, the components that add up to 0.55% are listed in Table 2). Perhaps the 0.4% is what the leading indicators would have shown under the old methodology (the methodology changed just last month... see here for details).

Assuming the components are actually correct, the below chart shows that the "headline" (i.e. reported) LEI index continues to improve at a decent clip off of summer / fall lows, while "core" (i.e. those components not affected by the Fed) also continue to show expansion, albeit at a slower pace.

Source: Conference Board

We're #1

Ahead of tomorrow's leading economic indicator release, let's take a look at economic indicators for the G-7 countries over the last twelve months.

A severe downturn for those without monetary control (correlation does not necessarily equal causation) and surprising strength in Japan (though it is important to note that indicators do not equal actual growth).

Source: OECD

The New (and Improved) Leading Economic Indicator Shows Expansion

Bloomberg details:

The Conference Board’s gauge of the outlook for the next three to six months increased 0.4 percent after climbing 0.2 percent in November, the New York-based group said today. The median forecast of 44 economists surveyed by Bloomberg News called for a gain of 0.7 percent.

The article also outlines a change in a major component of the index (the first change in the index since 1996):

Changes in the components of the leading index were announced earlier this month. Instead of the inflation-adjusted money supply, the Conference Board used its own Leading Credit Index, which aggregates measures of the yield curve, interest- rate swaps and the Fed’s senior loan officer survey. The Institute for Supply Management’s supplier deliveries gauge was replaced by the group’s index of new orders.

The change from money supply to credit index is a major change, removing a component that was directly in the hands of the Fed (money supply), with one that is only partially in the hands of the Fed (credit index). Note that in past months, EconomPic has removed the money supply component, as well as stock and interest rate components, for an index excluding Fed involvement.

A comparison of the new (revised) index, the old index, and the "EconomPic" index that excluded Fed control is shown below. What we see is the new index is much more aligned with one excluding the Fed's control and shows the index likely overstated underlying economic strength over the summer.

Source: Conference Board

Leading Economic Indicators Rise in November

BusinessWeek details:

The index of U.S. leading indicators climbed more than forecast in November, a sign that the world’s largest economy will keep growing in early 2012.

The Conference Board’s gauge of the outlook for the next three to six months rose 0.5 percent after a 0.9 percent October increase, the New York-based research group said today. The median forecast of 54 economists surveyed by Bloomberg News projected the gauge would advance 0.3 percent.

Source: Conference Board

Leading Indicators... Full Steam Ahead

Whether or not the U.S. can truly break away from European concerns is still an open question, but recent economic data points to a decreased likelihood of a double dip.

Bloomberg details:

The index of U.S. leading indicators climbed more than forecast in October, signaling the world’s largest economy will keep growing in early 2012.

The Conference Board’s gauge of the outlook for the next three to six months rose 0.9 percent, the biggest jump since February, after a 0.1 percent September increase, the New York- based research group said today. The median forecast of 56 economists surveyed by Bloomberg News projected the gauge would advance 0.6 percent.

Source: Conference Board

Leading Economic Indicators

Bloomberg details:

The index of U.S. leading economic indicators increased in September at a pace that suggests a slower rate of growth in the coming months.

The Conference Board’s gauge of the outlook for the next three to six months climbed 0.2 percent after a 0.3 percent gain in August, the New York-based research group said today. The September increase, the lowest since a decline in April, matched economists’ projections, according to the median forecast in a Bloomberg News survey.

A Federal Reserve survey published yesterday said the economy maintained its expansion last month even as more companies reported more doubt about the strength of the recovery. An acceleration in growth is needed to support the job gains that drive household spending, the biggest part of the U.S. economy.

Source: Conference Board

Leading Indicators Outside the Fed's Control Remain Weak

While leading economic indicators expanded 0.3% during August, the expansion remains focused on areas controlled by monetary policy rather than the underlying economy. For the third month in a row (and four of the past five), indicators outside the Fed's control were negative.

Source: Conference Board

Leading Indicators Outside of Fed's Control Weaken

Source: Conference Board

Leading Economic Indicators Steady in June

Source: Conference Board

Leading Indicators Bounce

With everything going on in Europe, this release feels worthless, but here it is anyway.



Source: Conference Board

Leading Indicators Turn Negative in April

Bloomberg details:

The index of U.S. leading indicators fell in April after nine months of gains, depressed by a pickup in jobless claims that reflects temporary setbacks including auto-plant shutdowns.

The Conference Board’s gauge of the outlook for the next three to six months decreased 0.3 percent after a revised 0.7 percent gain in March, the New York-based group said today. Economists forecast a 0.1 percent increase, according to the median estimate in a Bloomberg News survey.

The chart below shows the broader concern of what will happen to the US economy when the Fed is no longer as accommodating as they have been with monetary easing (low interest rates + QE + QEII). Excluding those levers they can pull, leading indicators were down 0.65 month to month.



Source: Conference Board

Leading Indicators Up Slightly in January

Marketwatch details:

The economy's expansion is expected to continue in coming months, though current conditions, which are slowly improving, remain weak, the Conference Board said Thursday as it reported that its leading economic index rose 0.1% in January.

Six of the 10 indicators included in the LEI made positive contributions in January, led by the interest rate spread. The largest negative contribution came from building permits. Economists polled by MarketWatch had expected the overall index to rise 0.2% in January.

Source: Conference Board

Housing Market Drives Leading Economic Indicators?

Bloomberg details:

The index of U.S. leading economic indicators increased in December more than forecast, a sign the recovery will gather steam in the new year.

The Conference Board’s gauge of the outlook for the next three to six months rose 1.0 percent after a 1.1 percent gain in November, the New York-based group said today. The December reading, the sixth consecutive monthly increase, exceeded the 0.6 percent gain in the median forecast of economists surveyed.

And the biggest driver of that growth...

• The improving job market? Nope.
• The rising equity market? Nope.
• The steep yield curve? Nope

So what is it? Building permits.



The level of permits in December, excluding the recent downturn, was the lowest figure since records began in 1960 (when the U.S. population was about 40% smaller), yet this was the biggest driver of the leading indicators.

Why?

Addition by the elimination of subtraction.

In other words, it can't get any worse than this, thus it can only get better (much more detail on this over at Calculated Risk).

Source: Conference Board

Leading Indicators Strong in November

Source: Conference Board

Leading Indicators Rise in October

Marketwatch details:

A “mild pickup” may be in store for the U.S. economy this spring following a post-holiday lull, the Conference Board said Thursday as it reported that its leading economic index rose 0.5% in October.

Economists polled by MarketWatch had expected the index, a weighted gauge of 10 indicators that are designed to signal business cycle peaks and troughs, to gain 0.6%. October’s result was supported by gains in the financial components.

Six of the 10 indicators rose in October, with the largest contribution from the interest rate spread. Among the two negative contributors, the largest negative contribution came from the index of supplier deliveries. Two of the indicators held steady in October.

Source: Conference Board