Conference Board Leading Economic Index Increased Again in November

December 18, 2014

by Doug Short

The Latest Conference Board Leading Economic Index (LEI) for November is now available. The index rose 0.6 percent to 105.5. October was revised to downward 104.9 percent (2004 = 100). The latest number came in slightly above the 0.5 percent forecast by Investing.com.

Here is an overview from the LEI technical notes:

The Conference Board LEI for the U.S. increased again in November. Positive contributions from the financial components and the ISM® new orders index offset the large negative contributions from initial claims for unemployment insurance (inverted) and building permits. In the six-month period ending November 2014, the leading economic index increased 3.6 percent (about a 7.4 percent annual rate), faster than the growth of 2.4 percent (about a 4.9 percent annual rate) during the previous six months. In addition, the strengths among the leading indicators remained very widespread. [Full notes in PDF]

Here is a chart of the LEI series with documented recessions as identified by the NBER.

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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.

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For a more details on the latest data, here is an excerpt from the press release:

“The increase in the LEI signals continued moderate growth through the winter season,” said Ken Goldstein, Economist at The Conference Board. “The biggest challenge has been, and remains, more income growth. However, with labor market conditions tightening, we are seeing the first signs of wage growth starting to pick up.”

“Widespread and persistent gains in the LEI point to strong underlying conditions in the U.S. economic expansion,” said Ataman Ozyildirim, Economist at The Conference Board. “The current situation, measured by the coincident economic index, has been improving steadily, with employment and industrial production making the largest contributions in November.”

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.

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Here is a look at the rate of change, which gives a closer look at behavior of the index in relation to recessions.

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And finally, here is the same snapshot, zoomed in to the data since 2000.

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Check back next month for an updated analysis.

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