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"The October rebound of the LEI – largely due to the sharp pick-up in housing permits – suggests that the risk of an economic downturn has receded," says Ataman Ozyildirim, economist at The Conference Board. "Improving consumer expectations, stock markets, and labor market indicators also contributed to this month’s gain in the LEI as did the continuing positive contributions from the interest rate spread. The CEI also rose somewhat, led by higher industrial production and employment."
The Conference Board LEI for the U.S. now stands at 117.4 (2004=100). In the six-month period ending October 2011, the leading economic index increased 3.0 percent (about a 6.1 percent annual rate), similar to the growth of 3.5 percent (about a 7.2 percent annual rate) during the previous six months. In addition, the strengths among the leading indicators became slightly more widespread than the weaknesses over the past six months.
The Conference Board CEI for the U.S., a measure of current economic activity, rose to 103.5 in October, with all four indicators that make up the index increasing. The index rose 0.7 percent (about a 1.4 percent annual rate) between April 2011 and October 2011, about half as fast as the growth of 1.3 percent (about a 2.6 percent annual rate) for the previous six months.
In October, the lagging economic index increased more than the CEI, and the coincident-to-lagging ratio decreased, as a result. The Conference Board LAG for the U.S. stands at 110.9 (2004=100) in October, with three of the seven components advancing. Meanwhile, real GDP grew at a 2.5 percent annual rate in the third quarter of 2011, following an increase of 1.3 percent annual rate in the second quarter.
"The LEI is pointing to continued growth this winter, possibly even gaining a little momentum by spring," says Ken Goldstein, economist at The Conference Board. "The lack of confidence has been the biggest obstacle in generating forward momentum, domestically or globally. As long as it lasts, there is a glimmer of hope."