Leading Economic Indicators Advance for Fourth Month in a Row

DSNews:  Author: Tory Barringer January 23, 2015

A measure of leading U.S. economic indicators rose again in December, advancing for a fourth straight month as most components improved.

The Conference Board’s Leading Economic Index (LEI), which gauges the near-term economic outlook based on a variety of indicators, increased 0.5 percent in December to 121.1, the group reported Friday. The increase fell between November’s gain of 0.4 percent and October’s larger 0.6 percent improvement.

Conference Board economist Ataman Ozyildirim said December’s gain was driven by growth in a majority of its components, “suggesting the short-term outlook is getting brighter and the economy continues to build momentum.”

There remain a few problem areas, however.

“[A] lack of growth in residential construction and average weekly hours in manufacturing remains a concern,” Ozyildirim said.

Despite recently seeing their strongest year in more than half a decade, housing starts are still running below their long-term average of about 1.5 million annually—and that situation isn’t expected to normalize for at least another few years, if economists’ forecasts are right.

At the same time, other indicators look good: Job growth remained strong to finish out 2014, and consumer confidence is slowly coming up as Americans express more optimism in their financial prospects. Those trends helped push the Conference Board’s gauge of current economic conditions up 0.2 percent to 111.4.

The final measure, the Lagging Economic Index, also climbed, matching November’s 0.3 percent gain to reach 115.0.

“Current economic conditions measured by the coincident indicators show employment and income gains are helping to keep the U.S. economy on a solid expansionary path despite some weakness in industrial production,” Ozyildirim said.

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