WASHINGTON (9/21/15)--The Conference Board’s leading indicator index edged higher by 0.1% in August, signaling that economic conditions may strengthen in the coming months (Economy.com Sept. 18).
Five out of 10 components tracked by the Conference Board made positive contributions, including manufacturers’ new orders for consumer goods and materials; building permit issuances; credit; interest rate spreads; and average consumer expectations for business conditions.
The coincident indicator, which includes nonfarm payrolls, industrial production, personal income (less transfer payments), and manufacturing and trade sales, also rose 0.1%.
While that marks a small step back from the 0.4% increase seen in July, analysts still see it as a positive trend.
“The increase in the coincident indicator indicates that the economy is strengthening,” said Efua Afful, Moody’s analyst (Economy.com). “Payroll employment is growing at a healthy pace of 2.1% on a year-ago basis, a mere percentage point below the precession high of 2.2%.”
The leading indicator’s six-month annualized growth rate rose to 4.7% in August, while the coincident index’s rate increased to 1.4%.
“The economy is expected to improve in the near term but not as much as expected,” Afful said. “Growth in output, on a year-ago basis, will accelerate in the next quarter as low interest rates fuel investment. Low interest rates will also encourage household borrowing,” which will boost consumption.