Conference Board Leading Economic Index: February Highest in Decade
The Latest Conference Board Leading Economic Index (LEI) for February increased to 126.2 from 125.5 in January. November's figure was revised downward slightly. The latest indicator value beat the month-over-month 0.4 percent increase forecast by Investing.com.
The Conference Board LEI for the U.S. increased sharply again in February, with positive contributions from all of its underlying components except for building permits. In the six-month period ending February 2017, the leading economic index increased 2.3 percent (about a 4.6 percent annual rate), much faster than the growth of 0.8 percent (about a 1.6 percent annual rate) during the previous six months. In addition, the strengths among all ten leading indicators have become very 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.
For additional perspective on this indicator, see the latest press release, which includes this overview:
“After six consecutive monthly gains, the U.S. LEI is at its highest level in over a decade. Widespread gains across a majority of the leading indicators points to an improving economic outlook for 2017, although GDP growth is likely to remain moderate,” said Ataman Ozyildirim, Director of Business Cycles and Growth Research at The Conference Board. “Only housing permits contributed negatively to the LEI in February, reversing gains over the previous two months.”
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.