Leading Economic Indicators Up, Barely

The Conference Board, New York, said its Leading Economic Index increased slightly in February, the first uptick in three months.

The LEI increased by 0.1 percent in February to 123.2, following an 0.2 percent decline in January and an 0.3 percent decline in December. The Coincident Economic Index increased by 0.1 percent in February to 113.3, following an 0.3 percent increase in January and an 0.2 percent increase in December. The Lagging Economic Index increased by 0.4 percent in February to 120.4, following an 0.1 percent increase in October and no change in December.

“Housing permits, stock prices, consumer expectations and new orders remain sources of weakness,” said Ataman Ozyildirim, Director of Business Cycles and Growth Research with The Conference Board. “Although the LEI’s six-month growth rate has moderated considerably in recent months, the outlook remains positive with little chance of a downturn in the near-term.”

Tim Quinlan, economist with Wells Fargo Securities, Charlotte, N.C., said indicators from the factory sector continue to point to a challenging environment for manufacturing.

“The manufacturing sector remains under pressure from a strong dollar, slow global growth and low commodity prices, meaning rapid improvement in this component is unlikely,” Quinlan said. “In addition, core capital goods orders weighed on the LEI in February, albeit following a solid increase in January.”

However, Quinlan noted credit conditions continue to support growth in the LEI, “and the labor market has also improved over the past six months.”