February 2018 Leading Economic Index
Submitted by Atlas Indicators Investment Advisors on April 2nd, 2018
Economic output should continue moving higher for the foreseeable future according to data from the Conference Board. Their Leading Economic Index (LEI) increased for the fifth consecutive month in February 2018. Contributions to the uptick were widespread; only building permits and stock prices were lower in the period.
Positive signs accompanied the other eight components. Production workers’ workweek added the largest amount to the index. Falling average weekly initial claims for state unemployment benefits as well as the New Orders Index from the Institute for Supply Management added the next largest to the total. A widening in the interest rate spread between the 10-year Treasury bonds and the overnight Fed Funds rate provided a healthy contribution as well. Expectations for business conditions were the final contributor making more than a marginal difference. The other three (manufacturers’ new orders for consumer goods and materials, the Leading Credit Index, and manufacturers’ new orders for capital equipment) also added to the total, but their upticks were relatively small.
There was some hope for economic acceleration within the data as well. In the six-month period ending February 2018, the LEI increased 4.0 percent, nearly doubling the uptick of the prior six-month period. Adding to the fact that this most recent uptick was pervasive, February’s acceleration suggests the period of economic deceleration could be short-lived, and the economy’s growth pace could begin picking up in the months ahead. Atlas looks forward to a renewed acceleration should one come. Writing “deceleration” is getting old.