FX.co ★ U.S. Leading Economic Index Unexpectedly Increases For First Time In Two Years

On Thursday, the Conference Board released a report revealing an unexpected increase in leading U.S. economic indicators for the first time in two years, specifically in February.

According to the Conference Board, their leading economic index rose slightly by 0.1 percent in February, following a 0.4 percent drop in January. This was contrary to economists' predictions of a 0.3 percent decrease.

This surprising improvement signifies the first increase in the leading economic index since February 2022. Justyna Zabinska-La Monica, Senior Manager of Business Cycle Indicators at the Conference Board, attributes this growth to an increase in weekly hours worked in the manufacturing sector, growing stock prices, the Leading Credit Index™, and an uptick in residential construction.

Despite these positive developments, indicators such as consumers' expectations and the ISM® Index of New Orders are yet to see recovery. Additionally, the six- and twelve-month growth rates of the Leading Economic Index (LEI) are still negative.

The Conference Board explained that the LEI shrank by 2.6 percent between August 2023 and February 2024. Despite being a contraction, this is a lesser decrease compared to the 3.8 percent decline seen over the preceding six months.

Even with the positive growth in February, Zabinska-La Monica indicates that the Index still presents some obstacles to future growth. The Conference Board anticipates a slowdown in the annualized U.S. GDP growth over Q2 to Q3 2024, as the growing consumer debt and high-interest rates could curb consumer spending.

The report further indicated that the coincident economic index rose by 0.2 percent in February, a slight climb from a 0.1 percent increase the previous month. Simultaneously, the lagging economic index also saw a 0.3 percent rise in February, identical to the increase witnessed the month before.