Conference Board Leading Economic Index
Edged Up in January
Note from dshort: I didn't post my routine monthly update of the Conference Board's Leading Economic Index on Thursday because I spent much of the day in travel mode, returning from two-weeks of semi-vacation in southern California. So, in the spirit of "better late than never", here is my update.
The Latest Conference Board Leading Economic Index (LEI) for January was released this morning. The index rose to 0.3 percent to 99.5 percent from the December's 99.2, a downward revision from 92.3. Likewise the November number was revised downward from 99.3 to 99.2 (2004 = 100). The latest number was slightly below the 0.4 percent increase forecasted by Investing.com.
Here is an overview from the LEI technical notes:
The Conference Board LEI for the U.S. increased in January after no change in December. Positive contributions from initial unemployment claims (inverted) and financial indicators more than offset the negative contributions from building permits and hours worked in manufacturing. In the six-month period ending January 2014, the leading economic index increased 3.1 percent (about a 6.3 percent annual rate), up from the growth of 1.8 percent (about a 3.6 percent annual rate) during the previous six months. In addition, the strengths among the leading indicators remain more widespread than the weaknesses. [Full notes in PDF
Here is a chart of the LEI series with documented recessions as identified by the NBER.
And here is a closer look at this indicator since 2000. We can more readily see that the recovery from the 2000 trough weakened in 2012 but began trending higher in the latter part of the year.
For a more details on the latest data, here is an excerpt from the press release:
"The U.S. Leading Economic Index continues to fluctuate on a monthly basis, but the six-month average growth rate has been relatively stable in recent months, which suggests that the economy will remain resilient in the first half of 2014 and underlying economic conditions should continue to improve," said Ataman Ozyildirim, Economist at The Conference Board. "Correspondingly, the U.S. Coincident Economic Index, which measures current conditions, has continued rising steadily."
"The increase in the Leading Economic Index reflects an economy that is expanding moderately, although the pace is somewhat held back by persistent and severe inclement weather in most parts of the country," said Economist Ken Goldstein. "If the economy is going to move on to a faster track in 2014 compared to last year, consumer demand and especially investment will need to pick up significantly from their current trends."
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.
Here is a look at the rate of change, which gives a closer look at behavior of the index in relation to recessions.
And finally, here is the same snapshot, zoomed in to the data since 2000.
Check back next month for an updated analysis.