US leading economic indicators rise 0.5 index points in Dec

24 January 2013 17:49  [Source: ICIS news]

HOUSTON (ICIS)--The US economy continues to show promising signs of recovery, according to a key index released on Thursday.

The Conference Board’s Leading Economic Index (LEI) for the US, which looks at a host of factors to predict the direction of the economy in the months to come, rose 0.5 index points in December to 93.9. The index had risen to 93.4 in October and had remained there in November.   

Ataman Ozyildirim, an economist at The Conference Board, a private business analysis group in New York City, said a large improvement in initial claims for unemployment insurance, as well as a positive contribution from the interest rate spread, spurred the LEI’s rise. Roughly two-thirds of the LEI’s 10 components have advanced in the last six months, although two of them - consumer expectations and manufacturers' new orders - remain weak, he said.

“The latest data suggest that a pickup in domestic growth is now more likely, compared to a few months ago,” said Ken Goldstein, another economist at The Conference Board. “Housing, which has long been a drag, has turned into a positive for growth and will help improve consumer balance sheets and strengthen consumption. However, for growth to gain more traction, we also need to see better performance on new orders and an acceleration in capital spending.”

The 10 components of the US LEI are average weekly hours, manufacturing; average weekly initial claims for unemployment insurance; manufacturers’ new orders, consumer goods and materials; the ISM Index of New Orders; manufacturers' new orders, nondefense capital goods excluding aircraft orders; building permits, new private housing units; stock prices, 500 common stocks; the Leading Credit Index; interest rate spread, 10-year treasury bonds less federal funds; and average consumer expectations for business conditions.

Meanwhile, The Conference Board announced on Thursday that its Coincident Economic Index (CEI) for the US, which looks at current economic conditions, increased 0.2 indext points in December to 104.9, following a 0.5 index points increase in November and no change in October.

The four components of the CEI are employees on non-agricultural payrolls; personal income, less transfer payments; the Index of Industrial Production; and manufacturing and trade sales.

By: Jeremy Pafford
+1 713 525 2653

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