Conference Board Leading Economic Index Increased Sharply in January

The Latest Conference Board Leading Economic Index (LEI) for January increased to 125.5 from a revised 124.7 in December. The last two months were revised. The latest indicator value beat the month-over-month 0.5 percent increase forecast by Investing.com.

The Conference Board LEI for the U.S. increased in January, driven mainly by positive contributions from the yield spread, building permits and average weekly initial claims for unemployment insurance (inverted). In the six-month period ending January 2017, the leading economic index increased 1.6 percent (about a 3.3 percent annual rate), much faster than the growth of 0.9 percent (about a 1.8 percent annual rate) during the previous six months. In addition, the strengths among the leading indicators have become more widespread. [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. Leading Economic Index increased sharply again in January, pointing to a positive economic outlook in the first half of this year,” said Ataman Ozyildirim, Director of Business Cycles and Growth Research at The Conference Board. “The January gain was broad based among the leading indicators. If this trend continues, the U.S. economy may even accelerate in the near term.”

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