leading indicator


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Related to leading indicator: Lagging indicator

Leading indicator

A change in a measurable economic factor that is evident before the economy starts to follow a specific trend.

Leading Economic Indicator

An indicator that occurs before an economy has started moving in a particular direction and is therefore used to predict the economy's movement. For example, a reduction in the average number of hours worked by manufacturing employees is considered a leading indicator because it usually precedes an economic slowdown or a recession. Among the indicators used by the Composite Index of Leading Indicators are the change in the money supply and the number of new building permits issued for residences. Leading economic indicators are used to help predict the direction of the economy; investors and businesses can use them to make their decisions accordingly.

leading indicator

a run of statistical data that past experience has shown tends to reflect later changes in some related areas of the economy and thus can be used to forecast these changes because they precede the changes in a consistent manner and by a relatively constant time interval. For example, current birth statistics would provide a firm basis for predicting primary school admissions five or six years ahead. Leading indicators, like orders for new machine tools, overtime/short-time working in manufacturing and housebuilding starts, are frequently used to forecast cyclical changes in macroeconomic variables like GNP. See FORECASTING, TIME-SERIES ANALYSIS, LAGGING INDICATOR.
References in periodicals archive ?
A desirable property of the leading indicator is that it should lead industrial production, but that industrial production should not lead the indicator.
At each date the seven selected series were then combined into a leading indicator index.
"Until now, relatively little research has been conducted on the correlation between the use of 'leading indicators' and safer construction jobsites," says ABC President Michael Bellaman.
That said, the leading indicators have started to change direction in the last couple of months.
Most news stories headline, "Inflation rate down," without pointing out that the leading indicator has gone up for three straight months.
The composite New Hampshire index of state leading indicators, which is produced jointly by e-forecasting.com and NHBR, had increased 0.2 percent in April after rising 0.1 percent in March.
The OECD's leading indicator for the euro area rose to 100.5 in July from 100.3, which it said was a sign of growth gaining momentum.
"Composite leading indicators for March 2009 continue to point to a strong slowdown in the OECD," the organisation said.
This conclusion is based on the most recent Leading Indicators report (September 2007) published by the statistics agency.
The measures, called leading indicators, resemble those that financial forecasters used to predict economic performance.
This will be followed by tracking forecasting performance of the P-star model based leading indicator of inflation.
NTC Research said its leading indicator rose to 102.1 last month from 101.1 in July and has remained above its long-term average for three months running.