The Newly Revised Leading Economic Index Finishes 2011 With Three Monthly Gains
Seven of the ten indicators that make up The Conference Board LEI for the U.S. contributed positively in December. The positive contributors – beginning with the largest positive contributor – were interest rate spread, average weekly initial claims for unemployment insurance (inverted), average weekly manufacturing hours, stock prices, ISM new orders index, manufacturers’ new orders for nondefense capital goods excl. aircraft, and manufacturers’ new orders for consumer goods and materials*. The negative contributors – beginning with the largest negative contributor – were average consumer expectations for business and economic conditions and Leading Credit Index(inverted). Building permits held steady in December."
MP: The revisions to the leading index included replacing three of the ten individual components with new economic variables, and making a minor adjustment to another component. The Leading Index has been on an upward trend since April 2009 as it signalled that the recession was coming to an end in June of that year, and the LEI has increased in 30 out of the last 33 months since the upward trend started in 2009. While the newly revised index has been relatively flat for the last 8 months, the index increased in each of three months at the end of 2011, and there's nothing to suggest a pending slowdown in economic growth this year.