October Leading Economic Indicators

According to the Conference Board, their Index of Leading Economic Indicators (LEI) rose 0.2% in October. We warned in last month’s piece on this report that the temporary government shutdown would likely cause the October figure trouble as its unemployment component suffered some instability and such proved to be the case. Perhaps hand in glove was weakness seen in consumer expectations which also tugged the total down a bit. Still, the monthly number remained positive and a 0.2 upward revision to September (now +0.9%) added some oomph as well.

This index has ten components. The two which ran negative in October are highlighted above. The remaining eight more than made up the difference, resulting in another positive month that brings the total up to 97.5, the highest level seen since April, 2008.

While the preponderance of sub-components suggesting continued improvement in our economy is encouraging, some red clouds hover in the morning sky. Unemployment remains surprisingly intractable. And importantly, fiscal uncertainty and the upcoming budget battle in Washington continue to place a bit of drag on corporate expansion. Unfortunately, how these issues will ultimately affect this specific indicator will not be known for another couple of months or so. (by J R)