Leading Indicators Point to Stronger Economy This Summer

American flagThe Conference Board's Leading Economic Index increased in March, its third consecutive gain. More importantly, the Conference Board suggests this hints at accelerated growth likely into the summer. That will be good news for those looking at gross domestic product gains later in the year.

March's Leading Economic Index reading rose by 0.8% in March to 100.9, following a 0.5% increase in February and a 0.2% gain in January. Components of the index were as follows:

  • The Conference Board's Coincident Economic Index was up by 0.2% in March to 108.3, versus a gain of 0.4% in February and a 0.1% decline in January.
  • The Conference Board's Lagging Economic Index component in the reading was up by 0.6% in March to 123.0, versus a 0.3% gain in February and a 0.6% gain in January.
  • The Leading Index, which matters the most, rose by 0.8% to 100.9, versus 100.1 in February and 99.6 in January.

As far as what this means for the economy, the leading indicators were seen to be gaining momentum after a winter pause and economic growth is gaining traction. That being said, labor market indicators and the interest rate spread largely drove the March increase, with a negative contribution from building permits. The consumer outlook is much less negative, for what was said to be the first time in many months.

Ken Goldstein, Economist at The Conference Board, said of the report:

The March increase in the LEI suggests accelerated growth for the remainder of the spring and the summer. The economy is rebounding from widespread inclement weather and the strengthening in the labor market is beginning to have a positive impact on growth. Overall, this is an optimistic report, but the focus will continue to be on whether improvements in the labor market can be sustained, fueling stronger economic performance over the next few months.

As a reminder, the "leading" nature of this report is perhaps not as leading as some may think. Much of the data has already been seen.

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