Conference Board Leading Economic Index Improves for Seventh Consecutive Month

The Conference Board composite indexes for October point to continued economic recovery for the near term. The Leading Economic Index increased for the seventh consecutive month, while the Coincident Economic Index remained unchanged. The Conference Board Lagging Economic Index declined slightly in October.

"The data indicates that economic recovery is finally settling in," says Ken Goldstein, economist at The Conference Board. "We can expect slow growth through the first half of 2010. The pace of growth, however, will depend critically on how much demand picks up, and how soon."

The Leading Economic Index (LEI) for the U.S. increased 0.3% in October, with positive contributions from the interest rate spread, initial unemployment claims and stock prices more than offsetting declines in consumer expectations, residential building permits and the index of supplier deliveries. The LEI now stands at 103.8 (2004=100).

Based on revised data, this index increased 1.0% in September and increased 0.4% in August. The six-month change in the index stands at 5.0% (a 10.2% annual rate) for the period through October 2009, up from -0.7% (a -1.4% annual rate) for the previous six months. In addition, the strengths among the leading indicators have remained widespread in recent months.

The Coincident Economic Index (CEI) for the U.S. was unchanged in October, with employment continuing to fall and industrial production rising slightly. Between April and October 2009, the index decreased 0.7% (a -1.4% annual rate), slower than the decline of 4.1% (a -8.0% annual rate) for the previous six months.

The Conference Board CEI for the U.S. now stands at 99.8 (2004=100). This index decreased 0.1% in September and increased 0.1% in August. During the six-month period through October, the coincident economic index decreased 0.7%, with one out of four components advancing.

In October, the lagging economic index decreased again, and with the coincident economic index remaining unchanged, the coincident-to-lagging ratio increased further. Meanwhile, real GDP expanded at a 3.5% annual rate in the third quarter, its first increase since the second quarter of last year.

The Conference Board LAG for the U.S. stands at 108.9 (2004=100) in October, with two of the seven components advancing. Based on revised data, the lagging economic index decreased 0.5% in September and decreased 0.4% in August.