Leading Indicators Ticked Higher in March

The index reading of each month’s leading indicators is often a bit misleading by name. It has a one-month look back, so this report covered the month of March — hardly “leading” for those looking for direction in upcoming data in the coming weeks and months. Also consider is that much of the data (from 10 composite index readings) is completely known ahead of time.

March’s leading indicators rose by 0.2% to a reading of 123.4. Bloomberg was calling for a gain of 0.5%, with the Econoday range being 0.1% to 0.5%. The Wall Street Journal called for a 0.4% gain in March. This new reading followed two months of decline: −0.1% in February and −0.2% in January.

The Conference Board Coincident Economic Index, which measures current conditions, was unchanged in March at 113.3. This followed a 0.1% increase in February and a 0.3% increase in January.

The Conference Board Lagging Economic Index, which has a look back, increased by 0.4% in March to 120.9. The lagging index followed a 0.5% increase in February and a 0.1% increase in January.
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Ataman Ozyildirim, Director of Business Cycles and Growth Research at The Conference Board, said of March’s reading:

With the March gain, the U.S. LEI’s six-month growth rate improved slightly but still points to slow, although not slowing, growth in the coming quarters. Rebounding stock prices were offset by a decline in housing permits, but nonetheless there were widespread gains among the leading indicators. Financial conditions, as well as expected improvements in manufacturing, should support a modest growth environment in 2016.

Again, much of the data that makes up this index is already known before the actual report. The 10 components of The Conference Board Leading Economic Index are the following:

• 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