US Equity And Economic Review: We Continue To Grind Slower

The latest LEIs and CEIs showed continued weakness. Half the leading indicators declined. The manufacturing slowdown was evident, with the ISM new orders number negative for the last 6 months and manufacturers new orders down in 3 of the last 6 months.In contrast, 3/4 of the coincident indicators rose.However, the pace of increases for both numbers is slowing:

The LEIs six month rate of change slowed from 2 six months ago to a mere .3 in the latest reading.The CEIs 6 month figure is more constant, but still fluctuating between .9 and 1.2.In his analysis, Doug Short notes the LEIs moved sideways since April and their 6-month rate of change is nearing the 0 level.Here’s the Conference-Board’s overall assessment of the data:

The Conference Board LEI for the U.S. increased slightly in February, but the pace of growth has eased compared to six months ago. Meanwhile, The Conference Board CEI for the U.S. has been rising at a slow and steady pace. Taken together, the current behavior of the composite indexes and their components suggest that the expansion in economic activity should continue in the near term, albeit at a moderate pace.

Retail sales continue their weakness, declining .1%. And the December to January number was revised sharply lower, moving from +.2% to -.4%. My co-blogger was less than impressed with these numbers. Retail sales have moved sideways since 2Q15:

Housing news was positive. Although building permits were down 3.1% M/M, they rose 6.3% Y/Y. Housing starts, however, are on fire: they increased 5.2% M/M and a whopping 30.9% Y/Y. And the increase occurred in 1-unit structures, as this chart from Calculated Risk shows:

Ed Leamer famously argued that housing is the business cycle. Given some of the weakness we’ve seen in other indicators, let’s hope he’s right. 

Industrial production declined .5%. The Fed reports the data in two groupings: both show weakness:

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