Leading Indicator Index Improves Again

Submitted by Ronald Tennant with Metrocities Mortgage:

MBA (5/20/2008 ) Velz, Orawin
The Conference Board Index of Leading Indicators—a gauge of future business activity three to six months ahead—rose by 0.1 percent in April, following the same increase in March. This is the first time the index has risen for two consecutive months since September and October 2006.

Since its peak in January 2006, the index has declined more than 2 percent. According to The Conference Board, the index is consistent with a weak economy “but not one in recession.”

Six of the 10 components of the leading economic indicators increased during the month. These included a surprise increase in residential building permits and higher stock prices. Weaker consumer confidence and a decline in the manufacturing average weekly hours were the biggest drags in the index.

The Conference Board’s index is designed to forecast economic activity and turning points in the business cycle based on 10 economic components. However, the arbiter of the business cycle is the National Bureau of Economic Research. Its Business Cycle Dating Committee uses a different set of variables to decide when the economy slips into a recession. Overall, the index supported other recent economic reports showing reduced risks that the economy will weaken further.