The Conference Board said that its Leading Economic Index rose 0.5 percent in January, the same pace as in January. This was the third consecutive month of decent growth in the index and the fifth increase in the past six months. As such, it tends to support the view that the U.S. economy has been improving of late, with rising levels of activity. Ken Goldstein, an economist with the Board noted, “The U.S. economy is growing slowly now, and with this reading increases hope that it may pick up some momentum in the second half of the year. However, this latest report does not yet capture the recent effects of sequestration, which could dampen the pickup in GDP.”
Looking specifically at the components of the Leading Economic Index, the increased value in February stemmed mainly from improvements in the average workweek for production workers, higher building permits, and measures of credit conditions. After providing a drag on the index in January, new orders for manufactured goods were more mixed in February, with the decline in core capital goods orders outweighing strengths elsewhere. Sub-par consumer confidence also lowered the index.
Meanwhile, the Coincident Economic Index – which measures the current climate – increased 0.2 percent in February, partially reversing the 1.0 percent decline in January. The previous month’s decrease resulted from a sharp decline in personal income in January, with the impending fiscal cliff shifting some payouts into December. February’s data, on the other hand, had all four of its component data measures go higher. The largest contributions came from strong industrial production and nonfarm payrolls for the month.
Chad Moutray is chief economist, National Association of Manufacturers.