Conference Board Leading Economic Index Continues to Expand in October

The Latest Conference Board Leading Economic Index (LEI) for October increased 0.1 percent to 124.5 from September's 124.4. The latest indicator value came in at the month-over-month percent forecast by Investing.com.

The Conference Board LEI for the U.S. increased slightly in October, for a second consecutive month. Large positive contributions from the yield spread and average weekly manufacturing hours more than offset the negative contributions from weekly initial claims for unemployment insurance (inverted) and the ISM® new orders index. In the six-month period ending October 2016, the leading economic index increased 0.7 percent (about a 1.5 percent annual rate), more than double its growth of 0.3 percent (about a 0.7 percent annual rate) during the previous six months. In addition, the strengths among the leading indicators remain slightly more widespread than the weaknesses. [Full notes in PDF]

Here is a log-scale chart of the LEI series with documented recessions as identified by the NBER. The use of a log scale gives us a better sense of the relative sizes of peaks and troughs than a more conventional linear scale.

Conference Board's LEI

For additional perspective on this indicator, see the latest press release, which includes this overview:

"The U.S. LEI increased in October for a second consecutive month. Although its six-month growth rate has moderated, the index still suggests that the economy will continue expanding into early 2017," said Ataman Ozyildirim, Director of Business Cycles and Growth Research at The Conference Board. "The interest rate spread and average weekly hours were the main drivers of October's improvement, helping to offset some of the weaknesses in claims for unemployment insurance and new orders.

For a better understanding of the relationship between the LEI and recessions, the next chart shows the percentage off the previous peak for the index and the number of months between the previous peak and official recessions.

LEI from Peak