Haver Resources
Sep 19

U.S. Leading Indicators Weaken in August

Summary
  • Component movement in leading index is mixed.
  • Coincident indicators rebound.
  • Lagging indicators hold steady.

The Conference Board’s Composite Index of Leading Economic Indicators eased 0.2% (-5.0% y/y) during August, following an unrevised 0.6% July decline. A 0.3% decline in the August index had been expected in the Action Economics Forecast Survey. The Leading Index is comprised of 10 components which tend to precede changes in overall economic activity.

Component increases in the leading indicators index included an improved factory sector workweek, lower unemployment insurance claims, factory orders for consumer goods, nondefense capital goods orders, building permits and the leading credit index. Putting negative pressure on the leading index were the ISM new orders index, stock prices in the S&P 500, the interest rate yield curve and consumer expectations for business/economic conditions.

The Index of Coincident Economic Indicators increased 0.3% last month (1.4% y/y) after easing 0.1% in July, revised from no change. Each of the four component series contributed positively to the August gain including industrial production, nonfarm payrolls, real personal income and real manufacturing & trade sales.

The Index of Lagging Indicators was unchanged last month (+1.4% y/y) after easing an unrevised 0.1% in July. A higher business inventory-to-sales ratio contributed minimally to the index change. The duration of unemployment, factory unit labor costs, C&I loans outstanding and the 6-month change in the services CPI contributed negatively. The prime rate charged by banks and the consumer installment credit/income ratio had no effect on the index change.

The ratio of the coincident-to-lagging indicators, considered another leading indicator, rose slightly last month following no change in July.

The Conference Board figures are available in Haver’s BCI database; the components are available there, and most are also in USECON. The expectations are in the AS1REPNA database. Visit the Conference Board’s website for coverage of leading indicator series from around the world.

About The Author

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Thomas J. Moeller

Haver Analytics is pleased to bring Thomas J. Moeller’s commentaries on the state of the U.S. economy to its clients.

Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters’ Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.

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