U.S. Leading Economic Index Increased in August But Lost Steam
September 18 2020 - 10:43AM
Dow Jones News
By Maria Martinez
An economic index that measures U.S. business cycles rose in
August for the fourth straight month but at a slower pace than in
previous months, data from the Conference Board showed Friday.
The Leading Economic Index was 106.5 in August, up 1.2% compared
with July. Economists polled by The Wall Street Journal expected
the indicator to increase at a pace of 1.4%. In July, the index
rose by an upwardly revised 2.0% compared with June.
August' s rise, albeit slower than that of July, posts a fourth
consecutive month of increases in the index, which registered in
March the steepest monthly fall in the survey's history as the
coronavirus pandemic took hold.
The Conference Board Leading Economic Index is based on 10
components, among them initial claims for unemployment insurance,
manufacturers' new orders, building permits of new private housing
units, stock prices and consumers expectations. It is intended to
signal swings in the business cycle and to smooth out some of the
volatility of individual indicators.
"While the U.S. LEI increased again in August, the slowing pace
of improvement suggests that this summer's economic rebound may be
losing steam heading into the final stretch of 2020," Conference
Board Senior Director of Economic Research Ataman Ozyildirim
said.
Despite the improvement, the LEI remains in recession territory,
still 4.7% below its February level.
"Weakening in new orders for capital goods, residential
construction, consumers' outlook, and financial conditions point to
increasing downside risks to the economic recovery," Mr. Ozyildirim
said.
Looking ahead to 2021, the LEI suggests that the U.S. economy
will start the new year under substantially weakened economic
conditions, Mr. Ozyildirim said.
The Coincident Economic Index rose 0.6% in August to 100.8,
while the Lagging Economic Index decreased 0.6% in August to 107.6,
data from the Conference Board showed.
Write to Maria Martinez at maria.martinez@wsj.com
(END) Dow Jones Newswires
September 18, 2020 10:28 ET (14:28 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.