Leading Economic Indicators Rise In September

The index of leading economic indicators rose an outsized 0.8 percent in September against an easy August comparison when the index was unchanged. Low interest rates were the major factor contributing to the strength which was very broad based with only one of the 10 components, consumer expectations, in the negative column. The improvement in the labor market was a very strong positive for the month as was the month's strength in manufacturing. Early indications on October's readings are mixed with interest rates moving even lower and the consumer sentiment and consumer comfort indexes both showing strength. On the flat side, however, are unemployment claims and early manufacturing readings.

Recent History Of This Indicator:
The Conference Board's index of leading indicators for August eased off a very robust July. On average, the leading index suggests moderately economic growth ahead. The index of leading economic indicators edged only 0.2 percent higher in August following, however, an upwardly revised and very sharp gain of 1.1 percent in July. Looking at the trend, the index is likely pointing to only moderate economic growth through the remainder of the year. Weakness in building permits has been dragging on the LEI all year. Permits dropped 5.6 percent in August and made for the month's biggest negative. The biggest positive was the yield spread, which reflects the Fed's still stimulative policy, followed by the ISM's very strong new orders index. The report's coincident index, like the leading index, was also showing no more than moderate growth, at plus 0.2 percent in August following gains of only 0.1 and 0.3 percent in the two prior months.