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Related to leading indicator: Lagging indicator
A change in a measurable economic factor that is evident before the economy starts to follow a specific trend.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.
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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
leading indicatora 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.
Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005