The Conference Board Leading Economic Index (LEI) for April was released this morning. The index declined 0.1 percent in April to 95.5 (2004 = 100), following a 0.3 percent increase in March, and a 0.7 percent increase in February. This was the first decline in seven months. The Briefing.com consensus had been for 0.2 percent.
Earlier this year the Conference Board has subjected the LEI to a major overhaul, which was reflected in the January update for December. For more information on the overhaul, see this commentary and the First Look by Dwaine van Vuuren.
Here is the overview of today's release from the LEI technical notes:
The Conference Board LEI for the U.S. decreased for the first time in seven months. Half of the components contributed negatively to the index this month, led by building permits, initial unemployment insurance claims (inverted) and consumer expectations. In the six-month period ending April 2012, the leading economic index increased 1.8 percent (about a 3.7 percent annual rate), more rapidly than the growth of 0.1 percent (about a 0.2 percent annual rate) during the previous six months. In addition, the strengths among the leading indicators have become more widespread. [Full notes in PDF format]
Here a chart of the LEI series with documented recessions as identified by the NBER.
For a more details on the latest data, here is an excerpt from the press release:
Says Ataman Ozyildirim, economist at The Conference Board: "The LEI declined slightly in April. Falling housing permits, rising initial claims for unemployment insurance and subdued consumer expectations offset small gains in the remaining components. The LEI's six-month growth rate fell slightly, but remains in expansionary territory and well above its growth at the end of 2011. The CEI, a measure of current economic conditions, has also increased for five consecutive months."
Says Ken Goldstein, economist at The Conference Board: "The indicators reflect an economy that's still struggling to gain momentum. Growth is slow, but choppy, and consumers, executives and investors are looking for more progress."
For a better understanding of the relationship between the LEI and recession, the next chart shows the percentage off the previous peak for the index.
Here is a look at the rate of change, which gives a closer look at behavor of the index in relation to recessions.
And finally, here is the same snapshot, zoomed in to the data since 2000.
The next release is scheduled for June 21.
Source: Advisor Perspectives
