Conference Board Leading Economic Index Down In December, Annual Revisions

The latest Conference Board Leading Economic Index (LEI) for December was down 0.3% from the revised November figure of 111.5.

This month's release incorporates annual benchmark revisions to the composite economic indexes, which bring them up-to-date with revisions in the source data. These revisions do not change the cyclical properties of the indexes. The indexes are updated throughout the year, but only for the previous six months. Data revisions that fall outside of the moving six-month window are not incorporated until the benchmark revision is made and the entire histories of the indexes are recomputed. As a result, the revised indexes, in levels and month-on-month changes, will not be directly comparable to those issued prior to the benchmark revision.

The Conference Board LEI for the U.S. decreased in December, after a small improvement in November. Large negative contributions from initial claims for unemployment insurance (inverted), the ISM® New Orders Index and building permits fueled the recent decline. Over the second half of 2019, the leading economic index declined by 0.4 percent (about a -0.7 percent annual rate), a reversal from its growth of 0.5 percent (about a 0.9 percent annual rate) over the first half of 2019. In addition, the weaknesses among the leading indicators have become slightly more widespread than the strengths. The diffusion index is now below 50.

The Conference Board CEI for the U.S., a measure of current economic activity, edged up in December. The coincident economic index rose 0.8 percent (about a 1.5 percent annual rate) between June and December 2019, slightly faster than its growth of 0.5 percent (about a 0.9 percent annual rate) over the previous six months. The strengths among the coincident indicators have remained very widespread, with all components advancing over the past six months. The lagging economic index declined, while the CEI improved, causing the coincident-to-lagging ratio to increase. Real GDP expanded at a 2.1 percent annual rate in the third quarter of 2019, after increasing 2.0 percent (annual rate) in the second quarter. [Full notes in PDF]

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