EmailEconomic
Last Update: 24-May-12 18:26 ET
Leading Indicators
Highlights
- The Conference Board's Leading Economic Indicators Index fell 0.1% in April after increasing 0.3% in March. That was the first decline in the index since September 2011. The Briefing.com consensus expected the index to increase 0.2%.
Key Factors
- The contraction in the leading indicators are not a sign of lasting weakness in the economic situation.
- The initial claims level, which contributed -0.19 percentage points to the index, was biased from seasonal adjustments problems following the Easter holiday. That entire negative contraction will be reversed in the May data.
- Furthermore, heavy volatility in building permits in March and April resulted in a 0.23 percentage point contribution one month and an immediate 0.20 percentage point reduction the next. When the volatility settles down, building permits should contribute minor positive gains to the overall index.
- Since eight of the 10 components of the index were known prior to the release, the difference between the consensus and the actual data is typically minor and generally comes from the two estimated components: manufacturing orders of nondefense capital goods excluding aircraft and manufacturer orders of consumer goods.
- In this case, however, the data for building permits -- which were released after economists made their estimates -- were much weaker than expected (-7.0% vs. -2.3%). This caused the minor downside surprise in the leading indicators data.
Big Picture
- The underlying details show the fall in the leading indicators is likely a one-off event and not the start of a weakening trend.
| Category | APR | MAR | FEB | JAN | DEC |
|---|---|---|---|---|---|
| Total Index | -0.1% | 0.3% | 0.7% | 0.1% | 0.4% |
| Manufacturing Workweek | 0.07% | -0.13% | 0.07% | 0.13% | 0.07% |
| Initial Claims | -0.19% | 0.04% | 0.09% | 0.00% | 0.12% |
| Cons. Gds Orders | 0.02% | -0.07% | 0.04% | -0.18% | 0.13% |
| ISM New Orders | 0.06% | -0.02% | -0.01% | 0.04% | -0.01% |
| Nondef. Cap Gds Orders, exc. Aircraft | 0.00% | -0.01% | 0.09% | -0.14% | 0.12% |
| Building Permits | -0.20% | 0.23% | 0.09% | -0.07% | -0.03% |
| Stock Prices | -0.01% | 0.10% | 0.15% | 0.17% | 0.05% |
| Leading Credit Index | 0.03% | 0.07% | 0.09% | 0.07% | -0.01% |
| Interest Rate Spread | 0.20% | 0.22% | 0.20% | 0.20% | 0.20% |
| Consumer Expectations | -0.07% | -0.08% | -0.05% | -0.10% | -0.12% |
