Leading Economic Indicators Fall

The index of leading economic indicators fell 0.2 percent in January following a revised 0.3 percent decline in December. Four of this index's 10 components track the factory sector which offers some explanation for the weakness. But the stock market is also tracked and has also been a negative factor. A positive has been the rate spread which remains favorable due to the Fed's still low policy rate though the decrease underway in long rates will limit this component's strength for February. A special negative factor for January was the month's rise in unemployment claims though this component for February looks to be a major positive given the decrease underway this month. Building permits were also a negative for January.

Recent History Of This Indicator:
Losses in the stock market and a rise in jobless claims will likely depress the index of leading indicators which is expected to decline 0.2 percent in January. But for most of second-half last year, this index, boosted by low short-end rates as well as the report's credit component, pointed to respectable first-half growth for the economy this year.