Economy Watch: Leading Economic Indicators Hint at Late-Year Growth

A 0.3 percent increase in the Conference Board's Leading Economic Index seems to point to the continual recovery of the U.S. economy, despite weak first-quarter GDP growth.
Source: The Conference Board Leading Economic Index®, April 2017

Source: The Conference Board Leading Economic Index®, April 2017

The Conference Board’s Leading Economic Index increased 0.3 percent in April to 126.9 (2010 = 100), the organization reported on Thursday. The uptick follows a 0.3 percent increase in March, and a 0.5 percent increase in February.

According to Ataman Ozyildirim, director of business cycles and growth research at the Conference Board, this upward trend, along with the positive outlook of consumers and financial markets—at least until this week—continues to point to a growing economy, perhaps even a cyclical pickup.

“First quarter’s weak GDP growth is likely a temporary hiccup as the economy returns to its long-term trend of about 2 percent,” Ozyildirim said. While the majority of leading indicators have been contributing positively in recent months, housing permits followed by average workweek in manufacturing have been the sources of weakness among the index’s components.

The organization’s economic indexes are composite averages of several individual indicators. The Conference Board says that they summarize and reveal common turning point patterns in economic data in a clearer manner than any individual component, primarily because they smooth out some of the volatility of individual components.