The Conference Board said that the Leading Economic Index (LEI) rose 0.2 percent in October, the fourth straight month of gains. The main drivers of the increase in October were increased building permits, a rising stock market, favorable credit conditions, and the interest rate spread. Manufacturing activity provided a modest contribution to the monthly increase with continuing strength in new orders. There were also factors that weakened the LEI in October, including reduced consumer confidence and increases in average weekly unemployment claims.
Putting this data in perspective, Ken Goldstein, an economist with the Conference Board, said, “Overall, the data reflect strengthening conditions in the underlying economy. However, headwinds still persist from the labor market, accompanied by business caution and concern about federal budget battles. The biggest challenge to date has been relatively weak consumer demand, which continues to be restrained by weak wage growth and slumping confidence.”
Meanwhile, the Coincident Economic Index (CEI), which assesses current economic conditions, also rose by 0.2 percent in October. It was the third consecutive monthly increase, building on the 0.3 percent gain of September. The CEI had positive contributions from growth in nonfarm payrolls, personal income, and manufacturing and trade sales. With that said, industrial production, which was off 0.1 percent in October, subtracted a little from the CEI. Note that decreased output stemmed largely from weaknesses in the mining and utilities sectors, with manufacturing production up 0.3 percent.
Chad Moutray is the chief economist, National Association of Manufacturers.
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