Dr. Ed’s
Economic
Indicators

COMPOSITE LEADING INDEX

Release Date: Monthly
Release Coverage: Prior Month's Data
Released By: The Conference Board
Official Release: http://www.conference-board.org/data

The composite leading index is an index published monthly by The Conference Board and used to predict the direction of the economy's movements in the months to come. The index is made up of 10 economic components, whose changes tend to precede changes in the overall economy:

  •   1. Average number of initial applications for unemployment insurance
  •   2. Number of manufacturers' new orders for consumer goods and materials
  •   3. Speed of delivery of new merchandise to vendors from suppliers
  •   4. Amount of new orders for capital goods unrelated to defense
  •   5. Amount of new building permits for residential buildings
  •   6. The S&P 500 stock index
  •   7. Inflation-adjusted money supply (M2)
  •   8. Spread between long and short interest rates (the yield curve)
  •   9. Consumer sentiment
  • 10. Average weekly hours worked by manufacturing workers
  •  

WHAT DR. ED SAYS:

The composite leading index acts as a predictor of the future movement of the overall economy. Monitoring this index can give you insight into the likelihood of a slowdown within the following three to six months. Although different weights are given to the 10-indicator composite, it has become increasingly important to watch for a broader movement across the full composite before expectations of expansion or contraction. It is considered optimal to see the index rise at an annual rate of 2.5-3.5% each month.

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