U.S. Leading Economic Index Shows Modest Drop In December
22 January 2016 - 9:35PM
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With a drop in housing permits and weak new orders in
manufacturing leading the decline, the Conference Board released a
report on Friday showing a modest decrease in leading U.S. economic
indicators in the month of December.
The Conference Board said its leading economic index edged down
by 0.2 percent in December after climbing by a revised 0.5 percent
in November. Economists had expected the index to slip by 0.1
percent.
Ataman Ozyildirim, Director of Business Cycles and Growth
Research at the Conference Board, said, "The index continues to
suggest moderate growth in the near-term despite the economy losing
some momentum at the end of 2015."
"While the LEI's growth rate has been on the decline, it's too
early to interpret this as a substantial rise in the risk of
recession," he added.
The modest decrease by the leading economic index reflected
negative contributions from five of the ten indicators that make up
the index.
The negative contributors included the ISM new orders index,
building permits, average weekly initial jobless claims, stock
prices, and average consumer expectations for business
conditions.
Meanwhile, positive contributions from the interest rate spread,
the Leading Credit Index, manufacturers' new orders for non-defense
capital goods excluding aircraft, and manufacturers' new orders for
consumer goods and materials helped limit the downside.
The Conference Board also said the coincident economic index
inched up by 0.1 percent in December, matching the uptick seen in
November.
The modest increase reflected positive contributions from
employees on non-farm payrolls, personal income less transfer
payments and manufacturing and trade sales.
Additionally, the report said the lagging economic index rose by
0.2 percent in December following a 0.3 percent increase in
November.
The positive contributors included the average duration of
unemployment, the average prime rate charged by banks, the ratio of
consumer installment credit outstanding to personal income, and the
ratio of manufacturing and trade inventories to sales.
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