Conference Board Leading Economic Index: Six-Month Growth At Zero

The Conference Board Leading Economic Index (LEI) for November was released this morning. The index declined 0.2 percent to 95.8 (2004 = 100), following a 0.3 percent increase in October, and a 0.4 percent increase in September. The Briefing.com consensus had expected a 0.2 percent increase, although Briefing.com's own forecast was for a 0.3 percent decline. Today's press release puts the six-month growth rate at zero, which is somewhat less encouraging than the key phrase two months ago: "Fluctuating around a slow-growth trend."

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

The Conference Board LEI for the U.S. declined in November, the fourth time this year. Large negative contributions from initial claims for unemployment insurance (inverted), stock prices and the ISM® new orders index more than offset the positive contributions from building permits and the remaining financial components. In the six-month period ending November 2012, the leading economic index was unchanged, after increasing by 1.8 percent (about a 3.6 percent annual rate) during the previous six months. In addition, the weaknesses among the leading indicators have become slightly more widespread.
[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 quite week in 2012.


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

"The U.S. LEI decreased slightly in November, bringing its six-month growth rate to zero," says Ataman Ozyildirim, economist at The Conference Board. "The LEI points to increasing risks of slowing economic activity in the near term, but the coincident economic index, measuring current conditions, continued to increase in November. Gains in the residential construction and financial components of the LEI have been roughly balanced with weak consumer expectations, manufacturing new orders and labor market indicators over the last six months."

Says Ken Goldstein, economist at The Conference Board: "The indicators reflect an economy that remains weak in the face of strong domestic and international headwinds, as it faces a looming fiscal cliff. Growth will likely be slow through the early months of 2013."

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.