Conference Board Leading Economic Index: "Fluctuating Around A Slow-Grow

The Conference Board Leading Economic Index (LEI) for August was released this morning. The index increased 0.6 percent in September to 95.9 (2004 = 100), following a 0.4 percent decline in August, and a 0.4 percent increase in July. The Briefing.com consensus had been for 0.2 percent. "Fluctuating around a slow-growth trend" is the summary phrase from today's press release, an upgrade from last month's "fluctuating around a flat trend."

Here is the overview of today's release from the LEI technical notes:

The Conference Board LEI for the U.S. increased in September after declining in the previous month. Large positive contributions from building permits and the financial components offset the negative contributions from ISM® new orders index, consumer expectations for business conditions and weekly initial claims for unemployment insurance (inverted). In the six-month period ending September 2012, the leading economic index increased 0.3 percent (about a 0.6 percent annual rate), much slower than the growth of 2.6 percent (about a 5.2 percent annual rate) during the previous six months. In addition, the strengths and weaknesses among the leading indicators have become balanced in recent months.
[Full notes in PDF format]

Here is a chart of the LEI series with documented recessions as identified by the NBER.


And here is a closer look at this indicator since 2000. We can more readily see that the recovery from the 2000 trough has been more or less flatlining in recent months.


For a more details on the latest data, here is an excerpt from the press release:

Says Ataman Ozyildirim, economist at The Conference Board: "The U.S. LEI increased in September, more than offsetting the decline in August. The LEI has been signaling an economy that is fluctuating around a slow growth trend. The six-month growth rate has slowed substantially, but still remains in growth territory due to positive contributions from the housing and financial components. Meanwhile, the coincident economic index also increased in September."

Says Ken Goldstein, economist at The Conference Board: "The single biggest challenge remains weak demand, domestically and globally. The struggle to regain firmer ground – in financial markets, international trade and global industrial output – continues because of weak consumer demand and a lack of more robust business investment."

For a better understanding of the relationship between the LEI and recessions, the next chart shows the percentage off the previous peak for the index and the number of months between the previous peak and official recessions.


Here is a look at the rate of change, which gives a closer look at behavior of the index in relation to recessions.


And finally, here is the same snapshot, zoomed in to the data since 2000.


Check back next month for an updated analysis.