Leading Indicators Fall, But Trend Still Points to Growth Ahead

The Conference Board, New York said its Leading Economic Index declined by 0.2 percent in August to 124.1, following an 0.5 percent increase in July and an 0.2 percent increase in June.

The Coincident Economic Index increased by 0.1 percent in August to 114.1, following an 0.3 percent increase in July and an 0.3 percent increase in June. The Lagging Economic Index increased by 0.2 percent in August to 122.1, following an 0.2 percent increase in July and an 0.2 percent decline in June.

“While the U.S. LEI declined in August, its trend still points to moderate economic growth in the months ahead,” said Ataman Ozyildirim, Director of Business Cycles and Growth Research with The Conference Board. “Although strengths and weaknesses among the leading indicators are roughly balanced, positive contributions from the financial indicators were more than offset by weakening of nonfinancial indicators, such as leading indicators of labor markets, suggesting some risks to growth persist.”

Tim Quinlan, economist with Wells Fargo Securities, Charlotte, N.C., said the dip in the LEI is just the third monthly decline in 2016 but “consistent with the current slow growth environment.”

“While we do not view this report as a reason to panic about a recession, it is a reminder of the fact that after three straight quarterly declines in productivity, potential growth is lower–a reality that is reflected in the Fed’s own diminished forecast for longer run GDP growth,” Quinlan said.