Leading Indicators Signal More Growth for Rest of 2013
The Conference Board has released its index of leading economic indicators (LEI). While the name sounds like much a of a preview, it is a July number and we would caution that many of the components inside the total tally are already known and visible before this was released. July's leading indicators were up by 0.6%, and Bloomberg was calling for a consensus reading of 0.5%, from a range of 0.2% to 0.7%. June's reading was flat at 0.0% after May was up 0.2% and April was up 0.8%. The overall tone is very positive with widespread gains.
The Conference Board indicated that this is now pointing to a gradually strengthening expansion through the end of the year. Ken Goldstein, economist at the Conference Board, said:
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The improvement in the LEI, and pick up in the six-month growth rate, suggest better economic and job growth in the second half of 2013. However, the biggest uncertainties remain the pace of business spending and the impact of slower global growth on U.S. exports.
The Coincident Economic Index increased 0.2% in July to 106.3, after a 0.1% increase in June and a 0.3% increase in May. The Lagging Economic Index fell by 0.2% in July to 118.2 after a 0.2% gain in June and a 0.3% gain in May.
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Again, much of the data making up the "leading indicators" is known ahead of time, which is why we often say that leading indicators are not exactly all that leading. Here are the indicators used for the reading:
Average weekly hours, manufacturing
Average weekly initial claims for unemployment insurance
Manufacturers' new orders, consumer goods and materials
ISM Index of New Orders
Manufacturers' new orders, nondefense capital goods excluding aircraft orders
Building permits, new private housing units
Stock prices, 500 common stocks
Leading Credit Index
Interest rate spread, 10-year Treasury bonds less federal funds
Average consumer expectations for business conditions
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