A composite index of ten economic indicators that should lead overall economic activity. This indicator was initially compiled by the Commerce Department but is now compiled and produced by The Conference Board. It has been revised many times in the past 30 years - particularly when it has not done a good job of predicting turning points. Why Investors Care
| Released on 4/17/08 For Mar 2008 | ||||||||||||
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Highlights
The Conference Board's index of leading economic indicators may be pointing more to a flat economy than an outright recession. The index rebounded 0.1 percent in March after declining 0.3 percent in February and dropping 0.4 percent in January. However, the March number was marginally below the market forecast for a 0.2 percent comeback. Nonetheless, a zigzag pattern may be emerging, making it difficult to forecast a full-fledged recession just yet. For the latest month, component gains were seen in the factory workweek, new orders for consumer goods, the yield spread, vendor performance, and money supply. Declines were seen in stock prices, initial unemployment claims, building permits, and consumer expectations. New orders for nondefense capital goods were flat.
The index of coincident indicators also rebounded, gaining 0.1 percent after a 0.2 percent fall in February. Barring downward revisions, there now appears to be a good chance for the first quarter to not be the quarter a recession officially began.
These indexes do not get a lot of attention usually but with today's release there are indications that the economy is merely flat rather than declining. On the other hand, the second quarter is not getting off to a good start as indicated by a very negative Philly Fed index for April. That release will likely outweigh leading indicators' relatively good news.
The Conference Board's index of leading indicators has been pointing toward recession in recent months while the coincident index has yet to show recession - unless there are downward revisions. The Conference Board's index of leading economic indicators declined 0.3 percent in February, following drops of 0.4 percent in January and 0.1 percent in December. For the latest month, component declines were seen in stock prices, initial unemployment claims, vendor performance, building permits, and consumer expectations. However, the coincident index does not yet indicate we are in recession. The coincident index is heavily considered by the National Bureau of Economic Research when marking the start of recession. This index was flat in February, following no change the previous two months. But the numbers do get revised and the biggest component is payroll employment which fell in March and was revised down for January and February. Look for the coincident index to be revised down and then provide key validation that a contraction started in January.
Leading indicators Consensus Forecast for March 08: +0.2 percent
Range: -0.1 to +0.4 percent
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