leading indicators


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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 indicators

the statistical time series that past experience has shown tends to reflect later changes, and which 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 for SALES FORECASTING.
References in periodicals archive ?
Recent evidence from Diebold and Rudebusch (1991a, b) suggests that such revisions may be important, the predictive performance of leading indicators apparently deteriorating when analysed within a real time forecasting framework.
Societies, like economies, have "leading indicators" that give great insight into the future.
These five are nonfarm employment, which counts most wage and salary earners; industrial production, which measures the production of goods and services by manufacturing, mining and utilities companies; retail sales, which measures consumer spending; the leading indicators index, which can predict major economic shifts; and the consumer price index, which gauges inflation.
The most popular approach for forecasting business cycle turning points is to look at the Commerce Department's composite index of leading indicators. Various "rules of thumb" have been devised, for example, three months of consecutive declines in the leading indicator composite, to alert one to an upcoming recession.
BLS diffusion indexes measure the breadth of employment change across industries, which is helpful in assessing the overall state of the economy, while also serving as a potential leading indicator of manufacturing employment levels
In fact, indexes of leading indicators use very few prime movers.
The black lines connecting the data points indicate that the data point in the preceding box is a primary leading indicator for the data point in the following box.
Looking at its six-month growth rate, a signal of turning points, the NHBR/e-forecasting.com Leading Indicator's six-month growth rate stood at 3.2 percent in April.
Looking ahead, the business climate is expected to improve over the next six months as the local leading indicator gained 8.4 index points due to strong growth in building plans passed and commercial vehicle imports.
In January, the composite index of leading indicators stood at 130.4, up one point from last December.
In "Beyond Test Scores: Leading Indicators for Education," Foley and colleagues (2008) define leading indicators as those that "provide early signals of progress toward academic achievement" (p.
They're also concerned with assessing future performance by using "leading indicators" and past performance (lagging indicators).