The Conference Board announced this morning that its Leading Economic Index rose 0.6% in September. Despite the monthly rise, which came after a 0.4% drop in August, the LEI's rise over the past six months of just 0.3% shows a marked deceleration from its 2.6% increase from September 2011 to March 2012.
The index, which is designed to forecast future economic activity, follows 10 separate indicators that economists believe act as good predictors for the future. Six of the 10 indicators rose, with an 11% jump in building permits providing the biggest boost to the index. Continuing wide interest rate spreads between 10-year Treasuries and the Fed Funds rate as well as strong stock market performance during September also played a significant role in the rise.
Among the four indicators holding the index back were the Institute for Supply Management's New Orders Index, along with poor expectations of business conditions among consumers and rising initial claims for unemployment insurance.
Conference Board economist Ataman Ozyildirim characterized the numbers as "signaling an economy that is fluctuating around a slow growth trend." The Conference Board's other indexes also pointed to slow growth, with its Coincident Economic Index rising 0.2% and its Lagging Economic Index posting a 0.1% gain.
Economist Ken Goldstein, also of the Conference Board, said that "the single biggest challenge remains weak demand, domestically and globally. The struggle to regain firmer ground -- in financial markets, international trade and global industrial output -- continues because of weak consumer demand and a lack of more robust business investment."
The next release of the LEI will come Nov. 21. Click here to open a PDF version of today's release.