Index of Leading Economic Indicators

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Index of Leading Economic Indicators

An index of indicators that have, in the past, predicted market downturns. It is published monthly by The Conference Board and is considered an important index of future movements. When the index rises, analysts expect the markets to continue to rise, and when it falls, they anticipate a fall in the markets. The components of the index change from time to time, but they generally include interest rates, price movements on the S&P 500, and the change in money supply. It is important to note that the index is not entirely accurate: it has, in the past, indicated downturns that never actually happened.

index of leading economic indicators

An index that is compiled by the Conference Board, a private-sector consulting firm. The index is designed to indicate the future direction of economic activity. A rising index signals that economic activity can be expected to increase in the near future. Although variations in this index are of interest to stock analysts, stock market price movements are also considered as a separate leading indicator; therefore, the series is not particularly useful in forecasting stock price changes.

Index of Leading Economic Indicators.

This monthly composite of ten economic measurements was developed to track and help forecast changing patterns in the economy. It is compiled by The Conference Board, a business research group.

The components are adjusted from time to time to help improve the accuracy of the index. In the past, it has successfully predicted major downturns, although it has also warned of some that did not materialize.

Consumer-related components include the number of building permits issued, manufacturers' new orders for consumer goods, and the index of consumer expectations.

Financial components include the S&P 500 Index of widely held stocks, the real money supply, and the interest rate spread.

Business-related components include the average work week in the manufacturing sector, average initial claims for unemployment benefits, nondefense plant and equipment orders, and vendor performance, which reflects how quickly companies receive deliveries from suppliers.

References in periodicals archive ?
The Conference Board reported that its index of leading indicators posted a 0.
The index of leading indicators, which predicts developments in the coming few months, fell to 106.
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In "Revising the Texas Index of Leading Indicators," senior economist and policy advisor Keith R.
In this connection, note that the Conference Board, which added the yield curve spread to its index of leading indicators in 1996, announced in June 2005 that it will adjust its procedures so as to focus on the level and not on the change.
The New York-based Conference Board reported that its Composite Index of Leading Indicators fell 0.
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The index of leading indicators, a measure of economic growth six to nine months down the road, was also revised upward to 16.
This study of cyclical indicators found: (1) the composite indexes contain more reliable turning point information than most of the individual indicators; (2) the Commerce Department's composite index would benefit by some component substitutions; (3) the ratio of the coincident to lagging indicators is more reliable in calling business cycle turning points than the composite of leading indicators, but that ratio has a poor track record in calling growth cycles; and (4) most of the individual components of the composite index of leading indicators signal growth cycle turning points better than business cycles turning points.
Comerica's Recession Watch Index is a weighted average of three leading indicators: spread in the yield curve, adjusted bank reserve growth, and the Commerce Department's Index of Leading Indicators.
In the spirit of the NASCAR Busch Series race I attended this weekend, a yellow flag was waved in front of the market this morning, in the form of the Conference Board's index of leading indicators.
Meanwhile, the index of leading indicators, a measure of economic growth six to nine months down the road, was revised upward to 33.

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