Consumer Sentiment and Leading Indicators Point Higher

Friday’s markets have been roiled by overseas news out of China and with fears about Greece leaving or being booted out of the eurozone. Now two economic reports in the United States are pointing higher. The Conference Board released its Leading Economic Index (LEI) for March and the University of Michigan’s Consumer Sentiment index was released with a first look at April.

The Leading Economic Index, which we usually call leading indicators, is a good news and bad news report. The good news is that the index increased again. The bad news is that the Conference Board warns that weaker growth may be coming.

LEI for the United States increased by 0.2% to 121.4 in March. This LEI report follows a 0.1% increase in February and a 0.2% increase in January. The Conference Board Coincident Economic Index rose 0.1% in March to 112.0, following a 0.2% increase in February and a 0.2% increase in January. Its Lagging Economic Index rose by 0.4% in March to 116.2, versus a 0.3% increase in February and a 0.3% increase in January. The Conference Board said:

Although the leading economic index still points to a moderate expansion in economic activity, its slowing growth rate over recent months suggests weaker growth may be ahead. Building permits was the weakest component this month, but average working hours and manufacturing new orders have also slowed the LEI’s growth over the last six months.

The University of Michigan’s consumer sentiment reading came in stronger than expected. The preliminary April report was 95.9, versus a final March reading of 93.0 and a mid-March reading of 91.2. This is up from the Bloomberg consensus estimate of 95.0, and the range from economists was 92.0 to 100.0. Economists and investors might want to keep in mind here that this index hit an eight-year high of 98.1 just in January.

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The University of Michigan further showed that current conditions and the expectations components both rose, boding well for future retail sales and perhaps even for jobs.

The S&P 500 Index was down 22 points and the DJIA was down by 257 points at 10:15 — neither getting any immediate boost from these economic reports.