Posted by Joseph Y. Calhoun, III

The LEI rose in November:

The Conference Board Leading Economic Index™ (LEI) for the U.S. increased 0.9 percent in November, following a 0.3 percent gain in October, and a 1.2 percent rise in September.

Says Ataman Ozyildirim, Economist at The Conference Board: “The Conference Board LEI has been on an uptrend for more than half a year and it is now slightly higher than its latest peak in July 2007. Improving financial conditions, labor market indicators, and housing permits have helped the LEI continue its gains in November. However, its six-month growth rate has slowed somewhat in recent months.”

Says Ken Goldstein, Economist at The Conference Board: “The indicators point to a bright new year. The U.S. LEI increased for the eighth consecutive month. Looking ahead, we can expect a slowly improving economy through 2010. The Conference Board Coincident Economic Index™ (CEI) for the U.S. also increased in November. Employment largely held steady, making this the first month since December 2007 that it did not make a negative contribution to the index.”

The Conference Board Coincident Economic Index™ (CEI) for the U.S.rose 0.2 percent in November, following no change in October, and a 0.1 percent decline in September. The Conference Board Lagging Economic Index™ (LAG) declined 0.4 percent in November, following a 0.2 percent decline in October, and a 0.5 percent decline in September.

Details:

Six of the ten indicators that make up The Conference Board LEI for the U.S. increased in November. The positive contributors – beginning with the largest positive contributor – were the interest rate spread, average weekly initial claims for unemployment insurance (inverted), average weekly manufacturing hours, building permits, stock prices and real money supply*. The negative contributors – beginning with the largest negative contributor – were the index of supplier deliveries (vendor performance), the index of consumer expectations, and manufacturers’ new orders for nondefense capital goods*. The manufacturers’ new orders for consumer goods and materials* held steady in November.

The Conference Board LEI for the U.S. now stands at 104.9 (2004=100). Based on revised data, this index increased 0.3 percent in October and increased 1.2 percent in September. During the six-month span through November, the leading economic index increased 4.7 percent, with eight out of ten components advancing (diffusion index, six-month span equals 80 percent).

The biggest disappointment is the new orders for nondefense capital goods which is a good proxy for capital spending. This recovery will not last long if capital spending doesn’t pick up.