Courtesy of Doug Short.
The Conference Board Leading Economic Index (LEI) for January was released this morning. The index increased 0.4 percent in January to 94.9 (2004 = 100), following a 0.5 percent increase in December and a 0.3 percent increase in November. The Briefing.com consensus had been for 0.5% and Briefing.com’s own estimate was spot-on at 0.4%. For information on recent overhaul of the LEI, see this commentary and the First Look by Dwaine van Vuuren.
Here is the overview from the LEI technical notes:
|The Conference Board LEI for the U.S. increased for the fourth consecutive month in January. Positive contributions from the financial indicators and manufacturing data offset the negative contributions from average consumer expectations of business conditions and rising unemployment claims. In the six-month period ending January 2012, the leading economic index increased 0.5 percent (about a 1.1 percent annual rate), much slower than the growth of 2.8 percent (about a 5.7 percent annual rate) during the previous six months. However, the strengths among the leading indicators have been somewhat more widespread than the weaknesses through January. [Full notes in PDF format]|
Here a chart of the LEI series with documented recessions as identified by the NBER.
For a more specific explanation of the January data, here is an excerpt from the press release:
| Said Ataman Ozyildirim, economist at The Conference Board: “This fourth consecutive gain in the LEI reflected fairly widespread strength among its components, pointing to somewhat more positive economic conditions in early 2012. The LEI?s increase in January was led not only by improving financial and credit indicators, but also rising average workweek in manufacturing. These both offset consumers? outlook about the economy, which remained pessimistic, though slightly less so. Meanwhile, the CEI rose again in January as employment, income, and sales data all point to improving current economic conditions despite a lack of contribution from industrial production.”
Added Ken Goldstein, economist at The Conference Board: “Recent data reflect an economy that started the year on a positive note. The CEI shows some small signs of economic strengthening in the fourth quarter and continued to point in this direction in January. The LEI suggests these conditions will continue and could possibly even pick up this spring and summer.” [See the full release here.]
For a better understanding of the relationship between the LEI and recession, the next chart shows the percentage off the previous peak for the index.
Here is a look at the rate of change, which gives a closer look at behavor of the index in relation to recessions.
And finally, here is the same snapshot, zoomed in to the data since 2000.
The next release is scheduled for March 22.