The Conference Board reported that its Leading Economic Index fell 0.1 percent in August, reversing the 0.4 percent gain in July. These figures reflect recent weaknesses in the domestic and global marketplace, with reduced manufacturing activity contributing the decline.
Fewer new orders, shorter average workweeks for production workers, higher unemployment claims, less building permitting, and diminished consumer confidence helped to drag the index lower. Meanwhile, higher stock values, nondefense capital goods orders, and overall financial liquidity helped to offset those losses somewhat.
Nonetheless, the Leading Indicators figure was a disappointment, with the index lower than expected. The Coincident Economic Index also declined. Weak data on industrial production was the main contributor to the negative value. Other factors contributing to this value were higher, including nonfarm payrolls, personal income, and manufacturing and trade sales.
Overall, these numbers suggest that the economic road ahead remains a choppy one. The Leading Economic Indicators have been negative three of the past six months, reflecting the on-again-off-again nature of our current economic environment. More worrisome for the manufacturing sector is that fewer new orders, global weaknesses, and domestic uncertainties are hampering manufacturers’ ability to produce and employ more. We see this in a number of recent data points, including this one.
Chad Moutray is chief economist, National Association of Manufacturers.