Submitted by Atlas Indicators Investment Advisors on September 26th, 2017
Economic activity should continue advancing in the near-term according to data from the Conference Board’s Leading Economic Index (LEI). This forward-looking indicator improved 0.4 percent in August 2017 after advancing 0.3 percent in July. In the six months ending August 2017, the LEI advanced 2.3 percent (roughly 4.7 percent on an annualized basis), an improvement relative to the 2.0 percent uptick in the previous six months.
Six of the ten components were positive in the period, one was negative and the other three were unchanged. After a weak showing in July, building permits mounted a comeback in August by adding the most to the overall tally. Interest rates were next in line as the relationship between the overnight rate banks charge each other and the 10-year treasury yield remained positive. Consumers continue believing business conditions remain robust, and the Institute for Supply Management’s New Order Index stayed healthy. Only weekly claims for state unemployment insurance were negative during the period; a growing number of Americans signed up for the benefit during August.
Taken at face value, this indicator suggests relatively smooth sailing for the remainder of the year. However, much of the data were gathered prior to the devastating hurricanes. These recent storms will have a lasting impact on our economy and should influence this leading indicator in the months ahead. Nonetheless, prior to these exogenous events, America’s output was humming along nicely.
