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Economic growth on track as leading index improves again

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Economic growth is expected to continue through the holidays and into the new year, officials with The Conference Board said after announcing its Leading Economic Index increased again in October.

The LEI for the United States increased 0.9 percent in October to 105.2 (2004 = 100), following a 0.7 percent increase in September, and no change in August.

"The LEI rose sharply in October, with all components gaining over the previous six months," said Ataman Ozyildirim, economist at The Conference Board. "Despite a negative contribution from stock prices in October, and minimal contributions from new orders for consumer goods and average workweek in manufacturing, the LEI suggests the U.S. expansion continues to be strong."

"The upward trend in the LEI points to continued economic growth through the holiday season and into early 2015," saidKen Goldstein, economist at The Conference Board. "This is consistent with our outlook for relatively good, but not great, consumer demand over the near term. Going forward, there are continued concerns about slow business investment and lackluster income growth."

The Conference Board Coincident Economic Index®(CEI) for the U.S. increased 0.1 percent in October to 110.2 (2004 = 100), following a 0.3 percent increase in September, and a 0.1 percent increase in August.

The Conference Board Lagging Economic Index®(LAG) for the U.S. declined 0.1 percent in October to 124.9 (2004 = 100), following a 0.1 percent increase in September, and a 0.5 percent increase in August.

The composite economic indexes are the key elements in an analytic system designed to signal peaks and troughs in the business cycle. The leading, coincident, and lagging economic indexes are essentially composite averages of several individual leading, coincident, or lagging indicators. They are constructed to summarize and reveal common turning point patterns in economic data in a clearer and more convincing manner than any individual component – primarily because they smooth out some of the volatility of individual components.

The ten components ofThe Conference Board Leading Economic Index®for the U.S. include:

  • Average weekly hours, manufacturing
  • Average weekly initial claims for unemployment insurance
  • Manufacturers' new orders, consumer goods and materials
  • ISM® Index of New Orders
  • Manufacturers' new orders, nondefense capital goods excluding aircraft orders
  • Building permits, new private housing units
  • Stock prices, 500 common stocks
  • Leading Credit Index™
  • Interest rate spread, 10-year Treasury bonds less federal funds
  • Average consumer expectations for business conditions

For more information about The Conference Board global business cycle indicators:http://www.conference-board.org/data/bci.cfm

 

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