Leading Economic Indicators Up 3rd Straight Month

The Conference Board, New York, said its Leading Economic Index for the U.S. Increased in January, marking the third consecutive monthly improvement.

The report said the LEI increased by 0.5 percent in January to 110.3, following an 0.4 percent increase in December and an 0.9 percent increase in November.

“While the pace of increase in the U.S. LEI has slowed since mid-2020, January’s gains were broad-based and suggest economic growth should improve gradually over the first half of 2021,” said Ataman Ozyildirim, Senior Director of Economic Research with The Conference Board. “As the vaccination campaign against COVID-19 accelerates, labor markets and overall growth are likely to continue improving through the rest of this year as well.”

The Conference Board now expects the U.S. economy to expand by 4.4 percent in 2021, after a 3.5 percent contraction in 2020.

The report said the Coincident Economic Index for the U.S. increased by 0.2 percent in January to 103.3, following an 0.1 percent increase in December and no change in November. The Lagging Economic Index for the U.S. decreased by 0.6 percent in January to 106.2, following an 0.5 percent increase in December and no change in November.

“The fact that building permits account for only 2.9% of the total index kept the overall contribution to ‘just’ 0.29 percentage points,” said Tim Quinlan, Senior Economist with Wells Fargo Securities, Charlotte, N.C. “

Quinlan noted consumer measures do not yet capture the “brighter” economic outlook. “Consumer goods orders rose by a scant 0.01% and consumer expectations were slightly down in January,” he said. “Although, other measures of consumer activity are brighter. The January retail sales report, for example, came in well above consensus expectations. Between that and rising expectations for a bigger COVID-relief bill from Congress, we expect consumer spending to surge in the second and third quarter of this year.”