November’s Leading Indicators

The Conference Board’s November Leading Economic Indicators report produced a 0.9% increase, a reading that is quite strong, coming in above the consensus 0.7% estimated increase.  One major source of strength remains the yield curve, a rather arcane piece of data comparing short-term interest rates to their long-term counterparts.  Monitoring the “spread” or difference between the two leads many economic tea leaf readers to certain conclusions.  In this particular case the conclusion is bullish for our economy over the next few months.  Another source of strength, initial jobless claims, may suffer a significant revision when more recent and somewhat negative data gets figured in to next month’s calculation, but for November it adds to the plus column.  Two other positive contributors are more straight forward; gains in both the stock market and factory workweek furnished some acceleration to the upside.  Detractors were less significant given their small magnitude.  A slight pullback in consumer confidence and a weak advance in delivery times carried little countervailing weight. The conclusion we can make from this month’s report is that it provides some further evidence the U.S. economy continues to build mild but positive momentum to carry it into the new year.  After everything we have experienced in 2009, we’ll take it.