Conference Board Leading Economic Index: Third Month Of Growth

by: Doug Short

The Latest Conference Board Leading Economic Index (LEI) for September was released this morning. The index rose to 0.7 percent to 97.1 percent from the previous month's 96.4, a slight downward revision from 96.6 (2004 = 100). has forecast a 0.6 percent increase.

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

The Conference Board LEI for the U.S. increased for the third consecutive month in September. Improvement in the LEI was driven by positive contributions from the financial indicators, initial claims for unemployment and new orders. In the six-month period ending September 2013, the leading economic index increased 3.0 percent (about a 6.0 percent annual rate), much faster than the growth of 1.2 percent (about a 2.4 percent annual rate) during the previous six months. In addition, the strengths among the leading indicators have become more widespread than the weaknesses. (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 weakened in 2012 but began trending higher in the latter part of the year.

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

The September LEI suggests the economy was expanding modestly and possibly gaining momentum before the government shutdown," said Ken Goldstein, Economist at The Conference Board. "Beyond the immediate fallout of the shutdown, the biggest challenge is whether relatively weak consumer demand, pinned down by weak wage growth and low levels of confidence, will recover during the final stretch of 2013 and into 2014."

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.